Furthering the Fiduciary Metaphor: The Duty of Providers to the Payers of Medicare

Five years and two near-death experiences later, the Patient Protection and Affordable Care Act of 2010 (ACA) has restructured the delivery of American health care. It has provided coverage to millions of Americans who previously did not have it, outlawed discrimination in the insurance marketplace, and armed the patient with consumer-based tools to streamline their care. Its positive impact is being seen throughout the country. But it can only go so far.Separate from the goal of providing access, the most daunting challenge facing American health care, and particularly, Medicare, is controlling expenditures and utilization in an era of unprecedented enrollment growth. Efforts to control expenditure and utilization have failed in the past, and starkly conflict with the dominant paradigm in American health care that sanctifies the autonomy and nearly unlimited discretion of the American provider. This paradigm often views attempts that seek cost-effectiveness as heavy-handed government intervention. But as Medicare’s enrollment swells from 52 million today to nearly 90 million by 2040, the cost and utilization problem will not abate with age. While the ACA’s solutions may help cut down on unnecessary and unwanted care and expand coverage, they cannot fully address the overtreatment problem due to a confluence of factors — namely, the often acute emergent situation and incomparable pain patients find themselves in, the imperfect agency relationship between patients and payers, and the intractable information asymmetry that exists within the enterprise. This challenge begs for creative legal and policy-based solutions that seek to maintain provider autonomy and patients’ freedom of choice, but also construct reasonable incentives and limitations to prod providers and Medicare beneficiaries into choosing more cost-effective treatment. This challenge is made all the more difficult by Medicare’s reimbursement structure, a regime that still largely rewards and incentivizes excess. Recognizing that dichotomy, this piece nods to previous scholarship that has suggested the importation of fiduciary principles into the provider-patient relationship, but builds on it by arguing for the inculcation of fiduciary principles into the largely unrecognized payer-provider relationship. Placing a duty of loyalty on the provider that is owed to the payers in the Medicare enterprise — American taxpayers — would introduce currently absent pressures on providers to limit excessive and expensive health care by opening the door to judicial remedies for the Medicare program. This new duty would further nuance the provider’s loyalties, reflecting other professionals’ multi-layered duties of loyalty. And finally, this move would not increase regulations on providers, nor would it rob them of their dearly protected autonomy, but would limit unreasonable health care costs and utilization where possible — something that, heretofore, Medicare has spectacularly failed to do.