Watch CBSN Live

Landmark HMO Case Settled

In Texas on Tuesday there was a landmark settlement of a case involving the HMO practice of giving bonuses to doctors who hold down costs and penalizing -- even firing -- those who don't. CBS correspondent Maureen Maher reports.

Dr. David Winter is one doctor who has opted out of the HMO industry, concerned some are more focused on the management of money -- and less on the health care of patients.

"Some of the things that insurance companies were dictating to us were getting in the way of the quality care for patients," says Winter.

Many physicians are especially critical of programs that reward doctors who keep the cost of treatment down -- and penalize those who don't. Patients contend the practice leads to inadequate care. The Texas Attorney General agreed, filing a class action lawsuit and Tuesday announced a settlement with one of the state's largest insurers -- Aetna, U.S. Healthcare, Inc.

"This settlement places medical decisions precisely where they belong, and that is in the hands of the patient and the physicians," said Texas Attorney General John Comyn.

The deal prohibits Aetna from fining doctors who exceed medical budgets or rewarding those who come in under. It also includes a laundry list of improvements including: a system where patients only need to get a referral once, encouraging doctors to offer preventive care and offering coverage for experimental care in cases of life threatening illness. In exchange Aetna admits no wrongdoing and will not pay any fines.

"It's a win-win for everybody," claims Arthur Leibowitz of Aetna.

But some industry analysts like Larry Levit say the settlement stops short of curing what ails managed care the most, emphasizing money over medicine.

"It'll make it easier for patients to deal with problems they have. It'll eliminate the most egregious financial incentives that doctors face in deciding which type of care to provide, but it really is more of a baby step," says Levit.

Still, it's a step that more and more HMOs may be willing to take, with the managed care industry under attack, Congress considering a patients bill of rights and a number of class action lawsuits still pending.

©MMII CBS Worldwide Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed

View CBS News In
CBS News App Open
Chrome Safari Continue