AHM 250—28: Ethics

28 Ethics
Ethics are the principles and values that guide the actions of an individual or an organization when faced
with questions of right and wrong. Ethics are not the same as laws, although both reflect the values of a
community. Laws are enforceable in our court system, but ethics are not; some actions may be legal but
not necessarily ethical.1

We expect businesses not only to adhere to applicable laws but also to be ethical—to “do the right
thing” as they conduct their activities. And the expectation of ethical behavior is especially high for
organizations and individuals involved in health care or health care benefits. Patients generally believe
that those in the health care system will act in their (the patients’) best interest.

Ethical questions arise under any health care system, but the nature of health plans creates particular
issues. Health plans have multiple goals—accessibility, cost-effectiveness, and quality of care—and this
creates the potential for a variety of ethical dilemmas, both for the health plan and for health care
providers.

Learning Objectives

After completing this lesson, you should be able to:

• Name and define the five main ethical principles for health plans.

• Describe the ways health plans can implement these principles, including codes of conduct and
task forces.

• Discuss some of the ethical concerns that arise with health plan providers.

• Discuss some of the ethical concerns that arise in health coverage sales.

Ethical Principles for Health Plans

The five principles listed are widely accepted as important foundations of ethics in health care and are
applied to the activities of health plans. None of the principles is absolute; each is qualified by the
others. Additionally, principles must always be considered and weighted in the context of the particular
decision.

• Autonomy. Health plans and their providers must respect the right of plan members to make
decisions about the course of their lives.

• Non-maleficence (not doing harm). Health plans and their providers must not do harm to their
members.

• Beneficence (doing good). Health plans and their providers must promote the good of both
individual plan members and the members as a group.

• Justice and equity. Health plans and their providers should allocate resources in a way that fairly
distributes benefits and burdens among members.

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• Truth-telling and promise-keeping. Health plans and their providers must present information
honestly and honor commitments.2

These principles are important criteria in ethical decision-making and underpin statements of rights,
duties, and obligations. But there are other ethical concepts that merit consideration, the most
important of which is virtue. Virtues are traits of character generated by community and tradition that
dispose individuals to act honorably. Virtues are those values that, when endorsed by an individual,
create (in the words of Aristotle) “a habitual disposition to act well.” A health plan can behave virtuously
not only toward its members, but also toward the community at large. It can adopt corporate policies
that encourage health care professionals to provide uncompensated care, it can respond to community
needs in time of crisis (such as a natural disaster), and it can offer community outreach programs.

A considered balance of ethical principles and virtues can promote better ethical decision-making than
grounding decisions on either alone. In the same way that it is the foundation of all positive human
relationships, virtuous behavior is inherent in the caring aspect of health care. An emphasis on caring is
both unique and ethically imperative in the delivery of health care.3

As mentioned previously, the multiple objectives of health plans may create ethical issues. Health plans
strive to keep treatment costs down, for the benefit of each patient and also of the plan membership as
a whole. The goal is not only that the individual will receive appropriate, quality care but also that the
entire membership will have affordable premiums and can be offered additional benefits. In other
words, health plans are not exclusively focused on the treatment needs of individual patients but also
are attentive to the needs of the group. In this way, ethical issues for health plans can be different than
for health care providers, particularly individual providers, who tend to look at each individual patient in
isolation.4

Implementing Ethical Principles in a Health Plan

Promoting an Ethical Corporate Culture

Health plans can promote and support an ethical organizational environment in a number of ways:

• Encouraging honest, effective, and open communication between the plan, potential members,
providers, members, and members’ families.

• Adopting and honoring statements of rights and responsibilities for members, providers, and the
plan.

• Educating members about how the system works.

• Educating employees, providers, and members about ethical issues and the mechanisms that
the plan has available for understanding and responding to those issues.

• Having policies and procedures in place to provide guidance to providers and members
confronted with ethical issues, and involving providers and members in developing and
implementing these policies and procedures.

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• Developing and maintaining a culture where ethical considerations are integrated into decision-
making at all levels.

• Ensuring that organizations with which the plan contracts have policies, procedures, and
practices that are compatible with those of the plan.

• Developing formalized methods for managing ethical conflicts.

The Ethics Task Force

Some health plans establish a special committee, task force, or advisory group to consider ethical issues.
Others may use bioethics consultants or network with other organizations that have expertise in this
area.

An ethics task force typically includes a broad cross-section of those working for or interacting with the
health plan: plan staff, network physicians, consumers, purchasers, brokers, and external health system
and ethical leaders. The role and functions of an ethics task force are generally understood to be to:

• Provide a forum for the discussion of ethical issues

• Promote ethics education in the organization

• Generate and review policy statements related to ethics

• Provide case consultation to providers, patients, and their families facing ethical questions or
conflicts

Example

The ethics advisory group of ABC Health Plan discusses whether ABC should pay benefits for an
erectile dysfunction drug. Some members of the group feel that such drugs, although approved by
the FDA, are a lifestyle choice and that the costs should be borne by individual members. Other
members think such drugs should be covered because they restore a basic bodily function. After
discussion, the group recommends that limited benefits be paid for such drugs.

This example shows how a task force’s ethical analysis and discussion can make a meaningful
contribution to tough decision-making about allocating plan resources. This approach makes such
decisions deliberative and transparent and includes a wide range of stakeholders.

Corporate Codes of Conduct and Ethics

Health plans also use corporate codes of conduct and ethics to help guide the behavior of employees,
contractors, and others who interact with the plan and its members. These go by different names, such
as Standards of Conduct and Ethical Behavior, Codes of Ethics and Principles of Conduct, or Principles of
Business Ethics. Their purpose is to instill the importance of acting with integrity in the conduct of
business and the delivery of services.

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A code of conduct and ethics may include directives and commitments in these areas:

• Integrity—making honest commitments and honoring them; recognizing and addressing

conflicts of interest.

• Accountability—for complying with application laws, regulations, and contractual obligations,

on the part of both the organization and individuals.

• Fair competition—seeking competitive advantage only through legal and ethical business
practices.

Example of an unfair practice. To sell coverage to large employer, a representative of a health plan
makes a gift to a charity designated by an officer of the employer.

• Information—appropriately safeguarding the privacy and security of personal information.

• Stewardship—protecting company assets (including intellectual property, reputation, and

goodwill) from misuse, improper disclosure, or destruction.

• Corporate citizenship—acting in a socially responsible way (for instance, contributing to

nonprofit organizations in the plan’s community).

• Workplace equality—promoting equal opportunity in employment and preventing workplace

harassment.

Health Care Providers

Health plans also have an obligation to take steps to ensure that the health care providers employed or
contracted by them behave ethically.

Practitioners

Physicians and other health care practitioners have traditionally taken an oath of commitment to serve
humanity through their profession. Typically derived from the ancient Hippocratic Oath, these oaths are
viewed as a statement of medical ethics and further reinforce the provider’s responsibility to place the
patient’s health above other considerations.5 (See the appendix for a modern version of the Hippocratic
Oath.)

Health care providers are supported in their efforts to act ethically by institutions of their professions.
Medical schools, nursing schools, and other professional schools provide training in health care ethics.
The American Medical Association (AMA) includes ethics groups that focus on ways to improve patient
care and the health of the public by examining and promoting physician professionalism. The AMA
produces a Code of Medical Ethics. Other professional organizations have their own ethics groups and
codes of conduct.

Hospitals

Most hospitals are required to have an ethics committee, and many have expanded such committees to
more comprehensive programs addressing both clinical and organizational issues. Traditionally, ethics

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committees draw members from diverse backgrounds, including clinicians (physicians and nurses) from
different areas of practice, social workers, and community representatives. The committee is charged
with supporting three primary functions:

• Providing consultation in clinical ethics—often to resolve conflicts or answer questions

• Developing and revising policies pertaining to clinical ethics and hospital procedures such as
advance directives, informed consent, and organ procurement

• Facilitating education on issues dealing with clinical ethics.

The underlying goals of ethics committee are to promote:

• Patients’ rights

• Shared decision-making between patients and their physicians (or other health care providers)

• Fair policies and procedures that maximize the likelihood of achieving positive, patient-
centered outcomes

An Issue: Step Therapy

Many health plans, in an effort to hold down costs and premiums, require step therapy for some
expensive drugs. This means that a member must usually try a lower-cost alternative drug first; if that
drug does not work, the plan will authorize benefits for the higher-cost drug. Step therapy raises ethical
questions about the appropriate balance between cost-control (which benefits all plan members) and
the ability of physicians to prescribe the drug they think most likely to be effective in a case.

Example. Winston suffers from hypertension. His health plan will not cover Drug A until he tries Drug
B, a generic equivalent. Research has shown that B is just as effective and safe as A, and it is
considerably cheaper, allowing the plan to control costs and hold down premiums for all members.
This is an ethical use of step therapy.

Example. Juan has high cholesterol. Research shows that, for many people, Drug A is as safe and
effective as Drug B. But for others, it is not, and delay in the use of Drug B can result in poor health
outcomes. Requiring the use of Drug A first before benefits are paid for Drug B is ethically
questionable.

An Issue: Predictive Analytics

Predictive analytics uses “big data” and algorithms to forecast future events. In health care, very large
amounts of data from numerous medical records can be used to generate recommendations for
treatment in certain kinds of cases.

The question arises, however: How much leeway will be given to physicians to ignore the default
recommendations produced by predictive analysis for populations and take a different approach in an
individual case?

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Example. A predictive analytic program recommends that a person in Marie’s circumstances

immediately undergo surgery. However, Marie’s doctor believes that, in her case, this could induce
stress levels that could result in an adverse health event.

Health care experts generally believe that a physician should have the ability to override the default
recommendations of a predictive analytic system.

Another question: Does the system allow for patient preferences?

Example. In David’s case, the default recommendation is radical surgery for prostate cancer. If David
prefers a less invasive approach, will his choice be accommodated?

Yet another issue relates to the source of the data.

Example. A recommendation is generated based on data is drawn from a limited population rather
than a wide variety of patients. To what extent should this recommendation be relied on?6

Ethics and Health Coverage Sales

Health plan organizations sometimes sell their products through agents and brokers and pay them sales
commissions. In some cases the question can arise: Is the salesperson trying to meet the needs of her
client, or is she just trying to earn the biggest commission she can?

Example. Agent Jones sells Medicare Supplement policies from several companies. He meets with
Ruth, but instead of finding out about her needs and preferences and recommending the product
that best meets them, he persuades her to buy the policy that pays him the highest commission. This
is unethical behavior.

Example. Agent Chan sells Medicare Advantage plans offered by several companies. He meets with
Clara and undertakes detailed fact-finding to determine which plan would be best for her. He finds
out that she suffers from diabetes and recommends that she enroll in a special needs plan that
focuses on care for this condition, even though he would earn more by selling other plans. He has
behaved ethically.

Unethical and Illegal Practices

Some sales practices are not only unethical, they are also usually illegal and could costs an agent or
broker her license. Some examples:

Example. Agent Gary tells Audrey that a Medicare Advantage plan he is selling provides certain
benefits that it does not. This is misrepresentation.

Example. Agent Kelli knows that Joe is a smoker. This will make his health insurance premium higher,
making him less likely to buy the policy. So she tells him to say on the application that he does not
use tobacco. This is application fraud.

Example. Agent Bruce tells consumers that their current coverage is inadequate. In fact, he knows
that it meets their needs and the new coverage he is offering is no better. He does this so that he can

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sell more policies and earn more commissions. When an agent does this with his own clients, it is
called churning. When he targets new prospects, it is twisting.

Good Intentions

Sometimes agents, in trying to help their clients, cross ethical and legal lines.

Example. Agent George has been talking to Ken about buying a policy. Finally, Ken decides that he
wants the policy and would like the application to be submitted immediately. But he is out of the
country and cannot sign it. So George signs it for him.

Example. Another of George’s clients, Lois, has signed her application, but she inadvertently failed to
sign or initial in two places. Rather than bother her again, George signs for her.

Such actions can constitute forgery. They can put the agent and the company he represents in a
precarious legal position should the client later bring legal action.7

Final Thoughts
Good Ethics Is Good Business

Today the health plan industry is moving from a business-to-business model to a focus on individual
consumers. This makes it increasingly important for health plans and their employees, providers, and
salespeople to establish and maintain trust with both current members and prospective enrollees.

Trust takes time to establish, but it can be lost very quickly through unethical behavior. Ethical missteps
are difficult to hide, particularly in the age of social media. Failure to acknowledge and rectify
wrongdoing as soon as possible can ruin reputations and directly affect a business’s bottom line.

Example. A company sought to develop a new, more efficient blood-testing technology. Later it was
revealed that the company had faked blood tests in order to claim promising results and attract
investment capital. Result: Loss of business, major staff layoffs, and loss of personal wealth.8

Example. The manufacturer of a lifesaving allergy-reaction injector raised the price from $100 to
over $600 in just five years, even though there was no substantial increase in the cost of producing or
distributing the device. Public reaction resulted in congressional hearings, a lawsuit for racketeering,
and plummeting sales. The company did not consider the welfare of consumers as well as its own
profits, and it paid a price.9

Questions to Ask in Ethically Challenging Situations

There may be times when you are unsure of what action to pursue. Your company’s code of conduct
and ethics may not provide answers. When this occurs, ask yourself these questions:

• Would the action be legal? Would it be ethical?

• What are the possible outcomes of the action?

• What person or entity might be helped or harmed by the action?

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• If there are several possible actions, which is likely to do the least harm or the most good?

• Would you be comfortable if the action were published in the press or on the Internet? Shared
on social media? If you had to testify about it in a legal proceeding? How would you or your
family feel if the action were made public? Would you be embarrassed? Would you be proud?

Summary
All businesses must operate ethically, but for those involved in health care the expectations are
especially high. A health plan must uphold five main ethical principles: It must respect the autonomy of
its members, avoid doing harm (non-maleficence), try to do good (beneficence), share benefits and
burdens equitably among those it serves, and tell the truth and keep its commitments.

A health plan can promote and support ethics in many ways, including establishing an ethics task force
and publishing a code of conduct. Plans must take steps to ensure ethical behavior not only by its
employees but also the providers that serve its members and the agents and brokers who sell its
products. A plan’s policies regarding benefits—such as requirements for step therapy and the use of
recommendations produced by predictive analytics—must balance the need to hold down premiums for
all plan members and the obligation to provide the best care to each individual member.

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Appendix
The Hippocratic Oath – A Modern Version

I swear to fulfill, to the best of my ability and judgment, this covenant:

• I will respect the hard-won scientific gains of those physicians in whose steps I walk and gladly
share such knowledge as is mine with those who are to follow.

• I will apply, for the benefit of the sick, all measures that are required, avoiding those twin traps
of overtreatment and therapeutic nihilism.

• I will remember that there is art to medicine as well as science, and that warmth, sympathy, and
understanding may outweigh the surgeon's knife or the chemist's drug.

• I will not be ashamed to say "I know not," nor will I fail to call in my colleagues when the skills of
another are needed for a patient's recovery.

• I will respect the privacy of my patients, for their problems are not disclosed to me that the
world may know. Most especially must I tread with care in matters of life and death. If it is given
me to save a life, all thanks. But it may also be within my power to take a life; this awesome
responsibility must be faced with great humbleness and awareness of my own frailty. Above all,
I must not play at God.

• I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being,
whose illness may affect the person's family and economic stability. My responsibility includes
these related problems, if I am to care adequately for the sick.

• I will prevent disease whenever I can, for prevention is preferable to cure.

• I will remember that I remain a member of society, with special obligations to all my fellow
human beings, those sound of mind and body as well as the infirm.

If I do not violate this oath, may I enjoy life and art, respected while I live and remembered with
affection thereafter. May I always act so as to preserve the finest traditions of my calling and may I long
experience the joy of healing those who seek my help.

Written in 1964 by Louis Lasagna, Academic Dean of the School of Medicine at Tufts University and used
in many medical schools today 10

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Notes

1
Gregory F. Dean (ed.), Piecing Together the Ethical Puzzle, LUTC.
2
Syracuse University, School of Education, “Ethical Principles,”
http://soe.syr.edu/academic/counseling_and_human_services/modules/Common_Ethical_Issues/ethical_principle
s.aspx
3
Adapted from Joan D. Biblo, Myra J. Christopher, Linda Johnson, and Robert Lyman Potter, Ethical Issues in
Managed Care: Guidelines for Clinicians and Recommendations to Accrediting Organizations (Kansas City, Missouri:
Midwest Bioethics Center, 1995), pp. 3–4, 8, 11–12. Used with permission.
4
“Confronting Trade-Offs in Health Care: Harvard Pilgrim Health Care’s Organizational Ethics Program,” Health
Affairs, Vol. 26, No. 4 (2007), pp. 1129-1134; and “A Conversation with James Sabin, MD: When Values Clash,”
Managed Care, November 2009, www.managedcaremag.com/archives/0911/0911.qna_sabin.html
5
Stanford University, “What Are the Basic Principles of Medical Ethics?”
https://web.stanford.edu/class/siw198q/websites/reprotech/New%20Ways%20of%20Making%20Babies/EthicVoc
.htm
6
I. Glenn Cohen, Ruben Amarasingham, Anand Shad, Bin Xie, and Bernard Lo, “The Legal and Ethical Concerns That
Arise from Using Complex Predictive Analytics in Health Care,” Health Affairs, Vol. 33, No. 7 (2014), pp. 1139-1147.
7
“Why Agents Must Pause for Ethics,” Insurance Journal, January 25, 2016,
https://www.insurancejournal.com/magazines/mag-features/2016/01/25/395537.htm
8
Madison Malone Kircher, “Theranos Reportedly Staged Fake Blood Tests for Investors,” New York Magazine, April
21, 2017 http://nymag.com/selectall/2017/04/theranos-staged-fake-blood-tests-for-investors.htm
9
Daniel Kozarich, “Mylan’s EpiPen Pricing Crossed Ethical Boundaries,” Fortune, Sept. 27, 2016,
http://fortune.com/2016/09/27/mylan-epipen-heather-bresch/; Dan Mangan, “Mylan Hit with Racketeering Suit
over Big Price Hikes of EpiPen, CNBC, April 3, 2017 https://www.cnbc.com/2017/04/03/mylan-hit-with-
racketeering-suit-over-big-price-hikes-of-epipen.html ; Eric Sagonowsky, “Mylan’s EpiPen Sales Plummet as Pricing
Scandal Bites Back,” FiercePharma, Nov. 6, 2017 https://www.fiercepharma.com/financials/mylan-s-epipen-
crashes-q3-new-competition-higher-rebates
10
“Doctors’ Diaries,” PBS NOVA, April 7, 2009, http://www.pbs.org/wgbh/nova/body/doctors-diaries.html

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