April 1999 Bulletin


Bill would allow collective bargaining with health plans

A bill in the Texas legislature would allow physicians to negotiate collectively with health plans under certain circumstances, but the bill prohibits "any express or implied threat of retaliatory collective action, such as a boycott or strike, by physicians." The bill proposes that when a health plan has "substantial market power"-defined as a plan whose market share exceeds 15 percent of covered lives-physicians in the health plan's service area be allowed to collectively negotiate with the plans the fees or prices for services; conversion factors in a resource-based relative value scale reimbursement methodology; the amount of any discount on the prices of services of the physician; and the dollar amount of capitation or fixed payment for health services. The proposed merger of Aetna/U.S. Healthcare with Prudential Healthcare is expected to result in a company with more than 30 percent of the HMO market in Texas and more than 50 percent in some Texas cities. The bill also allows competing physicians, regardless of the plan's market power, to collectively negotiate contract issues, including methods and timing of physician payment and resolution procedures for disputes between the plans and physicians.

NIAMS seeks proposals for osteoporosis research

The National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS) is soliciting proposals for research which will increase clinical application of knowledge gained from basic research on bone diseases. The goal is to cover which combination therapies for osteoporosis optimize improvements in bone mass and bone strength while minimizing deleterious side effects. It is anticipated that one to three cost reimbursement contract awards will be made for a maximum period of five years, beginning on or about Sept. 30, 1999. The solicitation is available at http://www.nih.gov/niams/grants/rfp/rfplist.htm. Proposals are due on or about April 13, 1999. Inquiries can be directed to Eileen D. Webster, contracts management branch, NIAMS, (301) 594-2543, fax (301) 480-5996, e-mail: ew52c@nih.gov.

GAO says HCFA needs strategy on practice expense RVUs

A General Accounting Office (GAO) review of the HCFA's methodology for developing resource-based practice expense relative value units (RVUs) concludes that the methodology is an acceptable approach, but said "HCFA needs a strategy for refining the practice expense RVUs during the three-year phase-in period that focuses on the data and methodology weaknesses that have the greatest effect on the RVUs. HCFA has done little in the way of sensitivity analysis to effectively target its refinement efforts. Additionally, HCFA has not developed permanent processes for future updates and revisions to the practice expense RVUs as new procedures are developed or methods of performing existing procedures shift." The GAO said HCFA needs to ensure that access to physicians is not compromised by past and ongoing changes to Medicare payments. The report is GAO/HEHS-99-30. The GAO home page is at www.gao.gov.

MedPAC urges SGR changes to reflect beneficiary changes

The Medicare Payment Advisory Commission (MedPAC) has recommended that Congress should revise the sustainable growth rate (SGR) system used to calculate annual updates to the Medicare Fee Schedule conversion factor. MedPAC believes that changes in Medicare fee-for-service enrollment and growth in gross domestic product (GDP) may not adequately reflect future beneficiary use of needed services. The aging population, approaching Medicare eligibility of the baby boomers and changes in the number of enrollees, are likely to affect expenditures for physicians' services. MedPAC recommends the SGR include a factor of growth in real GDP per capita, plus an allowance for cost increases due to improvements in medical capabilities and advancements in scientific technology. MedPAC also recommended reducing the time lags between SGR measurement periods by putting it on a calendar year basis.

PhyCor, hospital physicians agree to court mediation

PhyCor, Inc., a physician practice management company; Sparks Regional Medical Center; and a group of physicians in the Fort Smith, Ark., area who were involved in months of legal parrying, have agreed to court-ordered mediation. They have agreed to consolidate medical services under Sparks Medical Foundation, a division of the medical center, by April 30, 1999. When the consolidation is complete, the Foundation will consist of 156 physicians practicing at 37 locations. A group of physicians, who were unhappy with PhyCor's management deal with the Holt-Kroch Clinic, fled the clinic in April 1998, allegedly in violation of their 40-year non-compete covenant to practice at the hospital's Foundation. Sparks agreed to take on all liability related to legal expenses and damages for their employees related to any alleged violations of the noncompete agreement. At issue was whether or not PhyCor's covenant violated the state's public policy in preserving access to physician services.

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