ABSTRACT

This chapter offers a conceptual framework to compare the use of rules and incentives to manage physicians’ clinical decisions, and discusses the challenges for health policy. Clinical rules have assumed various names as managed care has evolved: treatment protocols or algorithms, regulations, administrative constraints, practice guidelines or parameters, prospective utilization review, utilization management, “cookbook” medicine, and simply “controls.” specific rules or rulings can be contested, appealed, and changed. Physicians contribute to the development of valid rules by helping managers to understand clinical realities and uncertainties. Rules also help preserve physicians’ ability to act as patients’ advocates by allowing—perhaps encouraging—physicians to challenge management overtly in certain clinical circumstances. Managed care systems need to balance the use of rules and incentives to meet the goals of providing high-quality, cost-effective care. Policymakers also need to clarify the legal issues surrounding the use of clinical rules and incentives.