San Francisco Chronicle

California doctors would be able to escape antitrust laws and band together to negotiate fees and contract provisions with health maintenance organizations under legislation introduced Friday by state Sen. Jackie Speier.

Speier, D-Hillsborough, said powerful HMOs have forced physicians — operating individually or in small group practices — to accept such low payments that doctors can’t always provide the level of care they think patients need.

She said her bill, the Quality in Health Care Contracts Act, attempts to give doctors more clout to negotiate HMO contracts with higher fees and fewer restrictions on the care they can provide.

“HMOs in California have created this green-eyed monster, and we at least want to pluck its eyes out,” said Speier.

Speier’s bill would relax antitrust rules so that a doctor or medical group could designate the California Medical Association — the state’s largest physicians’ organization and one of its most powerful lobbies — or certain other nonprofit entities to bargain on their behalf.

Speier’s SB2007 is modeled on a Texas law that went into effect in September. Five other states and the District of Columbia are considering similar legislation. These bills take advantage of court decisions that allow states to make certain exemptions from federal antitrust laws.

Jack Lewin, chief executive of the medical association, which represents 34,000 doctors, said patients would benefit if the bill became law.

“The imbalance right now is such that physicians have little or no authority in the negotiating process,” Lewin said. “It’s take it or leave it.”

But HMO lobbyist Bill Wehrle, with the California Association of Health Plans, called the bill a “brazen power grab” that would lead to higher insurance costs and more expensive health care.

“Doctors would have you believe this is all about patients and improving quality, but it’s not,” Wehrle said. “They’re asking for a license to collude. This is California’s answer to OPEC.”

CMA legislative director Norman Plotkin said Speier’s bill would spell out when doctors in private practice can escape antitrust laws that prevent other businesses from setting rates or terms of service.

For example, HMOs generally pay doctors a fixed amount per month for each patient in their care, regardless of how much care the patient receives.

Through the CMA or other bargaining agent, doctors might be able to negotiate a higher fee, or more flexible terms of service — such as what sort of approval the doctor must get from the HMO before referring patients to a specialist.

This third-party negotiator would have to be certified by the state attorney general, who would also decide whether the HMO would have to negotiate with the doctors’ representative.

In the event of an impasse, the attorney general could order an arbiter to settle the dispute. The CMA‘s Plotkin said consumers would be protected against price gouging because the attorney general would have to approve any rates or terms that resulted from such negotiations or arbitrations.

Jamie Court, a spokesman with the watchdog group Consumers for Quality Care in Santa Monica, gave the proposal a lukewarm endorsement.

“There’s such a grave imbalance between HMOs and physicians that something needs to be done,” said Court, who noted that he was still concerned about possible price fixing.

Pat Powers, president of the Pacific Business Group on Health, the San Francisco group that represents large insurance buyers, objected to Speier’s bill.

“We think competition between health care practitioners is one of the ways we have to hold down costs,” she said.

In addition to Speier’s bill and ones like hers in other states, Rep. Tom Campbell, R-Campbell, has introduced legislation in Congress to exempt doctors from federal antitrust laws.

Clinton administration antitrust officials have testified against Campbell’s proposal on the grounds that it would lead to higher health care costs. Susan Pisano, a spokeswoman with the American Association of Health Plans, the national HMO lobby, said the same criticism applies to Speier’s bill.

“Doctors can already form practice associations or medical groups that are quite large,” she said. “They don’t tell you that in many cities, one or two medical groups already bargain for most of the doctors.”

But CMA‘s Lewin said that in California, where a handful of HMOs control most of the patients, doctors are being forced to accept lower and lower fees. He said a CMA study showed that between 1990 and 1993, doctors received an average $45 per month for every HMO member in their care. By 1997 to 1999, that per-month compensation had dropped to $29.

“We don’t want to be a union, but there has to be some equity in the negotiations between doctors and HMOs,” he said.