AMA releases report on insurance coverage ethics

Program outlines criteria for ethical decision making

Removing financial incentives to providers and employers that are designed to influence coverage decisions and recruiting patient representatives to participate in designing health care benefit packages are two measures that can help ensure that health care coverage decisions are fair and equitable, says a new report from an independent research arm of the American Medical Association (AMA) in Chicago.

The report, "Ensuring Fairness in Health Care Coverage Decisions," was issued in February by the AMA’s Institute for Ethics’ Ethical Force Program, a collaborative group charged with developing systemwide performance measures for ethics in health care. The panel includes representation from patient groups, providers, health care delivery organizations, accrediting bodies, government agencies, purchasers, academics, and others.

"This report is groundbreaking because of the diversity of the group that came to consensus on these difficult issues, the clarity of the agenda the report sets out, and the actionable steps it recommends organizations take to ensure that coverage decisions are credible, understandable, and fair for patients," says Myrl Weinberg, CAE, president of the National Health Council and chair of the Ethical Force Program.

The report outlines five basic criteria for making ethical coverage decisions and then includes specific recommendations for each criterion. The criteria state that health care coverage decisions should be participatory, equitable and consistent, compassionate, sensitive to value (consider available resources and the existing limits on them), and transparent.

The report features more than 70 specific recommendations in these key areas, including:

  • Financial incentives should not be placed on decision makers to affect coverage decisions.
  • Special monitoring is needed to ensure that vulnerable people, such as the elderly, disabled, and those with health literacy problems, receive appropriate care.
  • Coverage denials should be explained in writing, using basic and direct language that patients can easily understand.
  • Organizations should have an ombudsman to explain coverage decisions.
  • Patient representatives should be involved in designing health benefit packages.

Founded in 1997, the Ethical Force Program is charged with developing ethical standards and performance measures for the entire health care system, not just providers, says AMA spokesman Ross Fraser.

Although AMA members are bound by the association’s code of ethics, and other participants in the health care system may be bound by other individual professional codes of ethics, leaders at the Institute of Ethics felt that there needed to be some set of shared, fundamental ethical principles that could be agreed upon by all stakeholders.

The program’s Fair Coverage Decisions Initiative is the second ethical focus area for the group; the first involved developing patient privacy and confidentiality standards.

The program’s oversight committee decided to examine ethics in coverage decisions because it felt that ensuring the integrity and fairness of the processes for making health coverage decisions were the cornerstone of fostering trust in health care organizations, the authors of the report explained.

However, coverage decisions can be ethically complex in that each group involved in designing and administering health care benefits packages has unique and, sometimes, conflicting responsibilities that must be weighed against one another.

For example, employers, unions, government and other purchasers generally decide what sorts of benefits packages to offer, the authors state. They design packages for beneficiaries.

And health plans and clinicians are charged with administering these packages — thus, making coverage decisions for individuals.

But sometimes purchasers are involved in administration issues, especially when they self-insure and perform both administration and payment functions, the report states. And health plans frequently negotiate with purchasers, brokers, unions, and others about benefit package designs that they must then administer.

Added to these overlapping responsibilities, each participant in the health care system may recognize different competing demands on available resources as well as different ethical standards as to what are considered "good" decisions.

"Valid distinctions often exist between professional ethics, business ethics, public health ethics, and personal ethics," the report states. "Given the varying standards and priorities (ethical and otherwise) within organizations, deciding how to apply different criteria when designing and administering health benefits packages is one of the most complex and potentially divisive challenges health care leaders now face."

The program members felt that questions about the fairness of coverage decisions tended to arise in three basic areas: access to care, benefits package design, and benefits administration.

However, the final report focuses only on package design and benefits administration when developing recommendations, the authors note.

The issue of access to health care coverage — basically, the problem of large numbers of uninsured Americans — presented unique ethical and social challenges that were beyond the scope of the report and recommendations and deserved separate consideration.

In the context of this report, "coverage decisions" are decisions about which products and services are covered for which population, not decisions about which populations or people are eligible for coverage.

Hiding underlying inequalities?

By only focusing on covered populations, some members felt the report would inappropriately hide underlying inequalities in the health care system and conceal large, unethical coverage decisions.

"Improving the ethical legitimacy of coverage decisions within small, isolated pieces of a structurally unfair system could lead to complacency about the system as a whole, especially if it fails to challenge, or, worse, masks the inequities of the underlying system," the report states. "For example, an organization might do a very good job of allocating resources for health care within its covered population, but intentionally exclude from this population, the ill, the infirm, or those at higher risk of illness."

Although many think of coverage decisions as the sole responsibility of third-party payers and employers, the report emphasizes the role that other participants in the health system play.

Often, practitioners and patients demonize third-party payers and others involved in benefit administration roles, which reinforces distrust in the health care system as a whole, and also fails to acknowledge their responsibility for plan design and administration, the report states.

Some groups are becoming scapegoats, while others are escaping scrutiny. For example, they note, the important role of health care purchasers in designing benefits packages may not be recognized when insurers and practitioners are seen implementing restrictions on benefits.

Important trade-offs between cost and coverage may not be apparent to consumers/patients who ultimately pay for benefits packages but have no role in designing them.

Copies of the program’s final report are available for download from the AMA’s Ethical Force program web site at The report also will be published in the June 2004 issue of the American Journal of Bioethics.


  • American Medical Association, Institute for Ethics Ethical Force Program, 515 N. State St., Chicago, IL 60610. Phone: (312) 464-5260. Fax: 312-464-4613.