By Christopher Guadagnino, Ph.D.

Former-Rep. J. Scot Chadwick

Published March 2001

• M.D. joint negotiation bills advance (April 2000)
  

• React to this article in the Discussion Forum.

After last year’s fanfare over antitrust waiver legislation for physicians both at the federal level and in some 18 states, a conspicuous silence cloaks its prospects this year as a viable avenue for physicians to level the playing field when negotiating fees and other contract provisions with dominant health plans.

Last year’s Quality Health Care Coalition Act, H.R. 1304, was passed in the U.S. House by a vote of 276 to 136 but died in the U.S. Senate for lack of a sponsor. Its primary House sponsor and champion, Congressman Tom Campbell, is no longer in office, making the fate of that bill uncertain.

In May of 1999, Texas passed a law to allow joint physician negotiation with health plans over fees and other contractual issues with state attorney general oversight. Regulations for that law made implementation by physicians cumbersome and expensive. No Texas physician to-date has negotiated with a health plan under that statute.

A similar bill was passed last June by a 10 to 2 vote in the Council of the District of Columbia and was signed by D.C.’s mayor. In January of this year, the bill was blocked by the D.C. Control Board, which deemed the bill’s financial impact statement to be inadequate. The Medical Society of D.C. is considering legal action against the Control Board for alleged breach of procedure, according to Ed Shanbacker, the society’s executive director. He attributes the bill’s failure to heavy opposition by D.C.’s HMO association and by the Health Insurance Association of America. The bill has not been re-introduced and its future prospects are unclear.

The sponsor of an antitrust waiver bill in the Pa. Legislature, then-Rep. J. Scot Chadwick, was promised a floor vote on the bill before the end of last year’s legislative session by the House Majority Leader. No vote was taken and Chadwick is no longer in office.

Other joint physician negotiation bills in Pa. last year, one introduced by Sen. Richard A. Tilghman and one by Rep. Connie Williams, never moved out of committee. The Pennsylvania Medical Society has for the time being directed its advocacy resources away from the joint negotiation issue and is currently consumed by efforts to address tort reform and the medical liability crisis in Pa.

Only Washington state’s antitrust waiver legislation for physicians has actually resulted in private physicians negotiating jointly with a health plan with state oversight. Enacted in 1995, that statute only permits negotiations on non-fee-related health plan contract provisions, however.

While the future of antitrust waiver legislation is unclear, movement on some of these fronts indicates that the campaign is not over, although it will apparently take some time to achieve the momentum that was lost last year.

Campbell Bill

Despite passing the U.S. House by a wide margin last year, H.R. 1304 faced an uphill battle in the U.S. Senate, including opposition by Senate Majority Leader Trent Lott (R-Mississippi). The measure lost its main sponsor for three years when Tom Campbell left the House for an unsuccessful bid for a U.S. Senate seat.

Rep. John Conyers (D-Michigan), co-sponsor of the measure, does plan to reintroduce the bill within the first half of the current legislative session and hopes to find a Republican co-sponsor in the House, according to a Conyers staffer. Conyers is waiting to hear the concerns of various groups, including the American Medical Association, before finalizing the language of the bill for re-introduction.

At its February planning meeting, the AMA’s Board of Trustees made joint negotiation legislation one of its top priorities, along with a meaningful patient bill of rights, says AMA Trustee Donald J. Palmisano, M.D. The AMA is meeting with House and Senate members to address ways to solve problems related to the monopsony power of health insurers and to hear concerns from the Senate related to last year’s version of the Campbell Bill, Palmisano notes. After those discussions, the AMA will consider whether changes need to be made in the bill’s language to pre-empt legislative opposition, particularly in the Senate, he adds.

Among the concerns expressed by Congressional opponents of the Campbell Bill are that it did not offer a clear regulatory framework for oversight of negotiations, as does federal labor law through the National Labor Relations Board, notes Barbara Coufal, Washington lobbyist for AFSCME, a supporter of the Campbell Bill.

The Department of Justice and the Federal Trade Commission under the Clinton administration were vocal opponents of the Campbell Bill. A new administration under President Bush, who signed joint negotiation legislation as governor of Texas, suggests a sympathetic ear to a federal antitrust waiver bill for health care professionals and a higher comfort level among Congressional Republicans, Coufal believes, although neither she nor Palmisano has direct evidence of that yet.

Rocky Start in Texas

Although in effect since Sept. 1999, Texas’ SB 1468 has yet to produce a state-supervised negotiation between physicians and a health plan. Early on, implementation of the statute was met with frustration and disappointment by the Texas Medical Association (TMA), which regarded the Texas Attorney General’s draft implementation rules for the statute as overly burdensome and unrealistic for physicians to meet.

Final rules were promulgated last October which mitigated some of the documentation and fee hurdles required by the attorney general for application under the statute, but still require physicians to collate and submit a large amount of information, according to TMA lobbyist Connie Barron, who estimates that it takes at least one month to complete an application to use the statute under the current regulations. The TMA offers informational assistance to physicians wishing to use the statute. Of the 17 physician groups that have approached the TMA to explore the option, Barron says she is not aware of any that are close to applying.

At press time, the Texas Attorney General’s office had received its first and only application since the final regulations have been promulgated—on behalf of eleven physicians from a variety of specialties in Henderson, Texas, to jointly negotiate both fee- and non-fee-related aspects of a contract for the Blue Cross POS or BlueChoice PPO/POS plan. Representing the physicians is Linda Davis, Director of Managed Care at Henderson Memorial Hospital, who declined to comment on further specifics.

A group of 20 to 55 orthopedic surgeons in the San Antonio area is in the process of finalizing its application to the attorney general, which it hopes to complete in March, according to its representative, Jack Seddon, executive director of the Federation of Physicians and Dentists. Seddon notes that the application process is expensive and requires a copy of contracts with health plans with whom negotiations will take place, income data pertinent to the negotiations, and a set of fees to pay the attorney general’s administrative costs. Seddon hopes to demonstrate how burdensome the application rules still are by going through the process and exposing problems with and complications of the process.

The TMA is seeking administrative revisions to the application process through a bill it expects to file in the Texas Legislature by early March, says Barron. The bill would:

• Further streamline the information requirements for application.

• Require only one application process for both fee- and non-fee-related negotiations, rather than the different documentation process for each under the current regulations.

• Protect the confidentiality of sensitive application information, such as physicians’ fee data and payor contract details, which are currently subject to public disclosure through an open records request.

• Strengthen antitrust protections for physicians, e.g., if a group of physicians refuses to sign a health plan contract at the conclusion of failed negotiations, that would not be construed as a breach of antitrust law.

Health plans in Texas have warned that physicians using the joint negotiation statute are still vulnerable to antitrust lawsuits, arguing that the statute does not meet the test of "state action doctrine," which gives immunity against antitrust laws under state supervision of negotiations. In an attempt to pre-empt that concern, says Barron, the new TMA bill would actually strengthen attorney general supervision by specifying in the statute information requirements that are currently absent, such as the time of every negotiation meeting, an invitation for the attorney general’s office to sit in on every meeting, and making available copies of all correspondence.

Prospects in Pennsylvania

Rep. J. Scot Chadwick’s joint negotiation bill, HB 2685, was the subject of several public hearings held last summer by the Pa. House Insurance Committee under an agreement by its Chairman Nicholas Micozzie (R-Delaware), who also co-chaired a series of work sessions on the bill among providers, hospitals, insurers, the Pa. Attorney General’s office and the Pa. Chamber of Business and Industry. Had the parties reached an agreement by the end of the General Assembly’s summer recess last year, Chadwick had said he would modify his bill accordingly and expect it to be promptly voted out of the House Insurance Committee, of which he was a member. If no agreement could be reached, Pa. House Majority Leader John M. Perzel told Chadwick that his bill could be scheduled for a House floor vote promptly after the legislative session resumed.

Chadwick, now a government affairs specialist for the Pennsylvania Medical Society, explains that no vote was taken because Perzel later became uncomfortable with scheduling a difficult vote so close to the fall election and asked that it be scheduled after the election. Chadwick says that he was then advised by the Pennsylvania Orthopedic Society (POS), which had initially brought the bill to Chadwick for sponsorship, not to bring the bill to a floor vote because it would be difficult to pass in the Senate and virtually impossible to bring to the governor’s desk in the remaining few weeks of the legislative session.

Chadwick notes that the Pa. Senate is still a "blank slate" on the issues related to the bill, since last year’s educational efforts were focused on House members. Since the Pa. House has only 15 or so new members, he adds, educational efforts this session stand on the shoulders of the last session.

The POS is currently in discussions with a House Republican to sponsor the former Chadwick bill and introduce it in mid- to late March, says POS Lobbyist Jonathan Bigley, who notes that the bill will go to the House Insurance Committee where he believes it has enough votes to pass. The Chadwick Bill had between 120 to 140 House votes across party lines last year, and based on discussions with House leadership, retains that level of support this year, Bigley says. He adds that Perzel’s commitment to bring the bill to a vote still stands.

House Insurance Committee work sessions continue to be held on issues related to inequities between physician and health plan bargaining power, says Bigley, and legislators have asked for specific examples of what physicians would negotiate under a joint negotiation bill. The sessions are also being used to look for areas where legislative solutions may not be needed, such as instituting a uniform coding form across Pa. health plans, Bigley notes. The joint negotiation bill becomes a "hammer" for further concessions from the insurance industry, he says.

Sen. Tilghman plans to reintroduce his joint physician negotiation bill in mid-March and has circulated a memo asking for co-sponsors, according to a Tilghman staffer. Rep. Williams also plans to introduce her bill in mid-March.

The Pennsylvania Medical Society (PMS) is "organizationally occupied" with the medical liability crisis and, although it is supportive of joint negotiation bills, is not currently pushing any specific one, according to PMS Executive Vice President Roger Mecum. Last October, the PMS House of Delegates gave priority to addressing the statewide medical malpractice problem and PMS did not anticipate the extent of the problem until this year’s jury award spikes and malpractice premium increases, Mecum explains.

Whereas the Pa. Trial Bar Association has one agenda and can devote its energy and considerably larger PAC funds to the medical malpractice issue, Mecum notes, the PMS’ agenda is always filled with a variety of issues, including joint negotiation and nonphysician scope of practice. PMS hopes to shore up its physician PAC contributions, which will be needed to pursue its long-term tort reform agenda, let alone other issues.

Joint negotiation initiatives in other states have not demonstrated optimistic prospects, says Mecum, pointing to the difficulty Texas physicians have had in using their statute, and the inability of physicians in D.C. to get their bill through, even with a willing Council and mayor. A joint negotiation statute is not necessarily a solution to the problem, Mecum adds, but merely permits a process that hopefully is effective.

The PMS is pursuing other ways of working with health insurers to mitigate effects of their dominance, Mecum says, for example, meeting with Highmark Blue Cross Blue Shield CEO John Brouse to discuss ways in which physicians can be more actively engaged in medical decision-making, subcontracting opportunities using PMSCO’s data systems to reduce clinical variation, physician and consumer education programs to reduce pharmaceutical use, and medical error reduction programs with a grant from HCFA. The PMS also hopes to use the medical malpractice crisis—and the resultant statewide issue of physician flight—as an opportunity to discuss reimbursement issues with Highmark.

The PMS has scheduled similar talks with Aetna and hopes to start a dialogue with senior officers of Independence Blue Cross, says Mecum.

It is a mistake to focus entirely on tort reform, because the crisis for Pa. physicians is one of compensation—a simple formula of sinking reimbursement and increasing overhead, according to Lewis Sharps, M.D., immediate past president of the POS and chair of its Political Action Committee. Because each problem exacerbates the other, substantive relief needs to take place on two fronts, he maintains: reimbursement issues must be addressed through joint negotiation legislation and overhead issues through tort reform.

Chadwick counters that linking the two issues risks losing supporters, noting that Republican, pro-business legislators may support tort reform but many are reluctant to support joint negotiation, viewing it as the first step toward unionization.