Antitrust bills seek to restore ‘balance of power’
Antitrust bills seek to restore balance of power’
Payers exploit strong negotiating position to push all-products clauses, critics claim
Under federal labor law, everyone from baseball players to airline pilots is allowed to bargain collectively with other organizations. But when physicians try it, they invariably end up on the wrong side of federal antitrust laws, pursued by both the Federal Trade Commission and the Department of Justice (DOJ). That’s what happened two weeks ago to a physician’s group in Nevada that had the temerity to stand up to local third party payers regarding fee schedules and reimbursement rates. (See related story, page 3.)
But now some lawmakers, under heavy pressure from physicians’ groups, are saying enough is enough. Bills are now in the pipeline at both the federal and state level to ease groups of physicians around the antitrust statutes. And although there’s fierce opposition from the managed care industry, as well as the Federal Trade Commission and the DOJ, some experts are guardedly optimistic about the possibility of change.
Change is necessary, advocates say, given the fact that managed care increasingly is being dominated by a few big companies: With fewer payers in each market, there’s less competition among them, and physicians end up having to accept whatever they’re offered.
In Texas, where a bill that would allow physicians to bargain collectively appears close to being passed, physicians worry about the effects of a looming merger between Aetna/US Healthcare and Prudential. "If that merger goes through, Aetna will have in excess of 50% of the HMO business in Houston," says Ken Ortolon, a spokesman for the Texas Medical Association. "That means some physicians there will have as much as 70% of their practice dependent on one payer. If that payer presents you with a contract, you’re not in much of a position to negotiate terms. It’s getting to the point where if you walk away, the practice may not be financially viable anymore."
That’s not just a nightmare scenario, Ortolon points out. It’s already happened in Dallas, where the large Genesis Physician’s Group objected to Aetna’s notorious "all-products" clause. That clause says if physicians want to participate in one of the company’s plans, like its PPO or its fee-for-service plan, then they have to participate in all of them. Because they weren’t satisfied with the quality of the patient information Aetna provided them, the 450 physicians at Genesis opted out of Aetna’s HMO plan. In response, Aetna dropped all the Genesis physicians entirely. That decision, Ortolon says, "ended up affecting tens of thousands of patients in the Dallas market."
Because physicians aren’t allowed to bargain collectively, they’re increasingly being forced to accept such all-or-nothing contracts, adds Steven DeToy, director of government and public affairs at the Rhode Island Medical Association in Providence. Rhode Island is considering its own collective bargaining bill, but at the moment, its prospects of becoming law are slim. "A contract is supposed to be mutually agreeable to two parties," DeToy says. "But there’s no consenting done when you have these cram down’ contracts. They skewer the system and consolidate too much power with the insurance companies. They alter the balance of power in health care."
Most of the state bills, like the one in Texas, are based on draft legislation written by the Chicago-based American Medical Association’s Division of State Legislation. Currently, no state allows groups of independent physicians to collectively negotiate fees with insurance companies. Washington state does allow some collective negotiation, but not over money.
While states can’t rewrite federal antitrust laws, they can exploit a loophole created by the Supreme Court in the 1940s. Essentially, the current bills would allow independent doctors to negotiate collaboratively with insurance companies as long as the state supervises the negotiations and approves the final outcome.
Meanwhile, a bill (HR 1304) just introduced in Congress by Rep. Tom Campbell (R-CA) would actually amend federal antitrust laws to allow physicians to bargain collectively with insurers. For negotiating purposes, physicians would be "treated as an employee engaged in concerted activities and shall not be regarded as having the status of an employer, independent contractor, managerial employee, or supervisor," according to the bill.
Campbell says allowing for collective negotiating "will create a more equal balance of negotiating power, will promote competition, and will enhance the quality of patient care."
But health plans are already lining up in opposition to the bill, which they claim "confuses protection with protectionism," says Don White, spokesman for the Washington, DC-based American Association of Health Plans. "The proposal fails the fundamental test of reform because it will deprive many Americans of affordable health care. It would also provide physicians with antitrust privileges that aren’t available to other professionals."
In support of their argument, White and the AAHP point to the recent enforcement action taken against a physician corporation in Lake Tahoe, NV, which settled charges made by the Federal Trade Commission that it engaged in illegal price fixing and denied patients the benefit of competition among physicians.
"Ironically, the Campbell bill would create a loophole in the antitrust laws that would allow physicians to engage in this very kind of activity, to the detriment of patients," White says.
Ortolon, however, claims insurance companies are simply trotting out the same old objections they always make in the face of reform legislation. "They said the same things when we passed the Patient Protection Act and the HMO Liability Bill in 1997," he says. "They said those bills would send premiums skyrocketing, but that just hasn’t happened and it won’t happen this time, either."
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