April 2000 Bulletin

Texas negotiating rules in negotiation

Law was first in nation, but is hung up on rulemaking

By Sandra Lee Breisch

Eight months after Texas Gov. George Bush signed legislation allowing physicians and other health care providers to negotiate fees and other contract issues with insurers, the rulemaking process drags on with no deadline in sight.

The euphoria at the Texas Medical Association (TMA), which fought for the legislation–the first of its kind in the nation–has been replaced with the determination that the rules proposed by the state Attorney General must be revised.

"We find the new rules to be burdensome and prohibitive, especially for smaller groups of five to 10 physicians," says Donald P. Wilcox, TMA’s general counsel.

The proposed rules published in the Texas Register on November 19, 1999 states that physicians who seek to jointly negotiate contracts with health plans require "active state supervision" of the negotiation process to avoid risk of antitrust prosecution.

It also requires physicians "to provide massive amounts of paperwork with historical information on past negotiations, knowledge of their competitors’ interest in the marketplace and substantial fees related to filing for negotiation," says Wilcox.

"Obviously, we are disappointed with the depth and breadth of questions that the AG is asking for that do not comport with what’s required by the state statute. We’re hoping to narrow-down the types and quantity of information that the AG is asking for."

For instance, Wilcox says some of the things the AG is asking for "are just not relevant. The AG wants information about contracts or agreements that were in effect at any time in the last three years between any participating physician or integrated practice group and any health benefit plan, the current status of each of those contracts, and any correspondence from the past year between the health benefit plan and any participating physician or integrated practice group relating to renewal, termination or modification of those contracts," says Wilcox.

"Why would they need a contract that was in effect years ago when that contract no longer exists or even the health plan no longer exists? To pull this information together, each physician seeking to jointly negotiate could end up having and to produce 40 or 50 of these contracts–and it’s all unnecessary paperwork."

The medical association said in its formal comments on the proposed rules, "The rules should be clarified to indicate whether the documentation requirement applies only to one or the other, but not both a physician and integrated practice group. The rules only should apply to both if participating physicians are outside of the integrated practice group. The marketplace changes so rapidly that this type of voluminous historical records request is onerous and not particularly informative."

The attorney general also wants to know the number and the descriptor of the 10 current CPT codes which comprised the largest portion of the participating physicians’ revenues in the last year for which data is available. "Some physicians will not know what their billed charges are under certain contracts," says Wilcox. "Unfortunately, managed care contracts often do not reveal to the physician the fee structure. Some leeway should be provided for the inability to comply with this requirement."

Wilcox says the requirement for past information about the physicians’ representative, an attorney or other qualified person negotiating on behalf of the physician, is "burdensome and unreasonable," to provide. The proposed rules also require documentation fees, which Wilcox says are too high and should be reduced.

"Obviously, the rules are there to flesh out the provisions of the statute–but the AG has added more poundage than we believe the statute requires," says Wilcox. "The purpose of the statute is to help facilitate a leveling of the playing field and as a consequence, true negotiations which should benefit all involved not only the physicians and the plans, but the patients."

Another issue is because the AG is a state office, the TMA has expressed concerns that the information physician groups provide would not be "kept confidential," under the Texas Open Records Law. "We certainly think the AG could be a little more up-front about what would and would not be confidential," says Wilcox. "We wouldn’t want someone to put in his or her business plan and have that easily accessible to all their competitors or the health plan with whom they would negotiate–and all of those things that we think are proprietary information."

A spokesperson said the attorney general is "in the process of reviewing comments on its proposed rules. There is no deadline or timeline to anticipate any final rules."

In the meantime, the TMA remains optimistic that some changes will be made. "The AG has repeatedly reassured the TMA that he wants this statute to work and he wants to be certain that the doctors are afforded this legal defense and not left out on a limb," says Wilcox.

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