August 1999 Bulletin

Bargaining bill urged to protect patients

Justice department, FTC says it would allow doctors to raise fees

A lot of doctors around the country would have nodded knowingly had they heard the description of the managed care market in Montgomery County, Pa. where 80 percent of the patients hold health insurance policies from two companies.

"When individual health care providers sit down at the negotiating table and one insurance company controls 57 percent of all managed care policies in the area, and another insurance company controls 19 percent of all patients covered by managed care, doctors cannot negotiate a fair contract," said Rep. Joseph M. Hoeffel, (D-Pa.). "With such a huge unchecked advantage, HMOs can refuse contract changes proposed by doctors and simply threaten to lock out any individual provider from a high number of patients. In the words of one health care provider in my district, the choice which HMOs offer doctors is 'take my business, or go out of business.'"

Rep. Hoeffel was testifying in June at a House Committee on Judiciary meeting on the Quality Health Care Coalition Act (H.R. 1304). The bill would "ensure and foster continued patient safety and quality of care" by allowing physicians and other health care professionals to negotiate collectively with health plans and health insurance issuers without violating federal antitrust laws.

William W. Tipton Jr., MD, AAOS executive vice president, also stressed in a written statement that the consolidation of health care insurance industry is anticompetitive and has had an adverse effect on patient care. He said managed care plans "have been able to impose contact terms, which often are not in the best interest of patients in order to maximize their profits and minimize their patient care responsibilities." Dr. Tipton pointed out that current antitrust laws "do not give physicians relief from the massive power of health insurers. Moreover, the industry enjoys its own exemption which gives them an unfair competitive advantage in the marketplace."

In urging the committee to support the bill, Dr. Tipton said it "will give physicians the negotiating ability to protect their patients in today's volatile environment."

The hearing was far from a one-sided affair. Joel L. Klein, assistant attorney general, antitrust division of the Justice department, opposed the bill, saying it would allow nonemployee health care professionals collectively to raise fees to health insurers without fear of antitrust liability and without regard to competitive market forces fostered by the antitrust laws. He dismissed the claim that the McCarran-Ferguson Act, which gives insurers a limited exemption from antitrust laws, has given insurers a significant leverage over physicians and other health care providers. Klein said the Supreme Court has held that the act does not exempt insurers' dealings with physicians from antitrust scrutiny or prosecution, when insurers' dealings with health care professionals are in violation of antitrust laws.

Robert Pitofsky, chairman of the Federal Trade Commission, based opposition to the bill on the commission's experience in investigating the impact on consumers of numerous instances of collective bargaining by independent health practitioners who sought higher fees. He added that collective bargaining does not ensure better care for patients.

Pitofsky acknowledged there is "undoubtedly a bargaining imbalance between an individual physician in solo practice and an insurance company. But the suggestion that this bill would not impose higher costs on consumers and others-on the ground that the exemption would merely create a countervailing monopoly-is premised on theoretical arguments about market conditions that do not describe most health care markets."

The American Association of Orthopaedic Surgeons has established a public service phone line that allows AAOS members and their patients to contact members of the U.S. House of Representatives to urge them to co-sponsor H.R. 1304. The phone number is (888) 812-8824.


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