Case and Commentary
Jan 2001

Financial Incentives in Managed Care

Kayhan Parsi, JD, PhD
Virtual Mentor. 2001;3(1):3. doi: 10.1001/virtualmentor.2001.3.1.hlaw1-0101.


Mr. Nelson presents to Dr. Porter's office complaining of bitemporal headaches for a couple of weeks. A medical history reveals that Mr. Nelson has been experiencing difficulties and stress in his marriage, and a complete neurological physical exam is nonfocal. Based on his evaluation, Dr. Porter believes that the headaches are stress-related and can be managed by NSAID pain relievers and stress management. Mr. Nelson, however, believes that his headaches may have a more serious etiology and would like a CAT scan to rule out anything of greater concern. Mr. Nelson has read in the news that some health plans use financial incentives that reward physicians who save the plan money by ordering fewer expensive tests. Mr. Nelson asks Dr. Porter: "Are you not ordering the CAT scan because it is too expensive to get?"

Questions for Discussion

  1. Some have advocated that disclosure of financial incentives be considered a part of the informed consent process. Should physicians be legally required to disclose this information? See Neade v. Portes.
  2. Beyond the legal judgment on the matter, does Dr. Porter have an ethical obligation to disclose any financial incentives to Mr. Nelson?

See what the AMA Code of Medical Ethics says about this topic in Opinion 8.054 Financial incentives and the practice of medicine. American Medical Association. Code of Medical Ethics 1998-1999 Edition. Chicago, IL: American Medical Association; 1998.


Virtual Mentor. 2001;3(1):3.



The people and events in this case are fictional. Resemblance to real events or to names of people, living or dead, is entirely coincidental. The viewpoints expressed in this article are those of the author(s) and do not necessarily reflect the views and policies of the AMA.