A bill that would exempt California doctors in private practice from antitrust laws and let them link together to negotiate better fees from health insurers is shaping up as a feisty legislative battle.
State Sen. Jackie Speier, D-Daly City, unveiled the Quality in Health Care Contracts Act at a Tuesday news conference. She said physicians need more room to maneuver to cope with powerful health maintenance organizations that doctors say force them to accept low payments that don’t begin to cover the costs of providing care.
The California Medical Association, which worked closely with Speier on the bill, said the legislation will help remedy that situation.
“(HMOs) tell us what they’re going to give us and we have no choice but to accept if we want to do business,” said Dr. J.C. Pickett, an orthopedist and the medical association’s president. “It’s a take-it-or-leave-it situation.”
But the president of the California Association of Health Plans called the legislation anti-competitive, anti-consumer and downright un-American, saying it would allow doctors to fix prices for medical care.
“It’s as if all the shoemakers got together and said, ‘We’re going to charge $20 to fix a heel and no one will take a penny less,’ ” said Walter Zelman. “What the physicians are asking for is a right no one else has.”
Zelman also said doctors in California are better positioned than physicians anywhere else in the nation because many physicians are members of large doctor groups and independent physician associations that provide bargaining clout.
“Many of these are big, powerful organizations and to describe them as weak pawns of the insurance companies is a gross misrepresentation,” Zelman said.
The California Medical Association said it’s clear medical groups of all sizes are suffering under the payment system known as capitation. Under the system, health plans pay doctors a set rate each month for each member.
According to a recent survey by PricewaterhouseCoopers, monthly capitation rates fell to as little as $29 a patient between 1997 and 1999. A decade ago, capitation payments ranged between $40 and $45, according to the survey.
As capitation rates fell, the number of medical groups also has dipped. Between 1996 and 1999, 113 medical groups in California closed or filed for bankruptcy, according to the medical association.
Some 90 percent of groups currently seeing patients are on the brink of bankruptcy or closure, the survey found.
Pickett said his physician association in Napa, which cares for about 25,000 patients, has a “terrible time” negotiating with health insurance “giants.”
The bill would relax existing antitrust laws to allow individual doctors or medical groups of multiple doctors to select the California Medical Association or certain other nonprofit entities to negotiate with insurers on their behalf.
Under the proposed system, the office of the state attorney general would oversee the process to ensure that all parties are acting in good faith and in the best interest of the public, Speier said.
If the bargaining agent and the health plan could not come to an agreement, the attorney general would appoint a third-party arbitrator to set a binding rate.
The medical association, which represents about 34,000 doctors in the state, pitched the bill as an escape hatch doctors could turn to when they fail to reach a satisfactory agreement with insurers in private negotiations.
The Speier bill is based on a Texas law that took effect in September. At least five other states and the District of Columbia are exploring similar legislation.
But even those who sympathize with the physicians’ plight are not convinced that exempting doctors from antitrust laws is the best way to improve the situation.
Jamie Court, an anti-HMO consumer activist, said it might be better to seek government regulation of capitation rates. That could ensure that the rates health insurers pay to all health care providers are fair and reasonable while preserving antitrust protections.