New Texas law gives physicians a foot in the door to negotiate fees
August 1, 1999 5 minutes read
New Texas law gives physicians a foot in the door to negotiate fees, other plan provisions with MCOs
Managed care companies can walk away from the table
Landmark Texas legislation signed in late June allows physicians to get together to negotiate managed care contracts, but falls short of a true unionization law and won’t touch the Medicaid program that spends $10 billion annually to care for 2.5 million state residents.
Also in late June, federal regulators moved to ease the concentration of health plan power in the only two Texas markets where such concentration was likely to trigger physicians’ rights under the new law to negotiate managed care fees.
Still, physician groups are pleased to get a foot in the door.
"It’s an awareness that the current system is a failure," says Jack Seddon, executive director of the Tallahassee, FL-based Federation of Physicians and Dentists, which has supported collective bargaining efforts nationally and throughout the states.
Perhaps to soften the law’s blow to the state’s health plans, the joint-negotiation law also prohibits physicians from getting together to talk about much-despised contract provisions requiring them to take all of a health plans’ products if they want the commercial business.
The bill Texas Gov. George W. Bush signed, SB 1468, gives physicians the right to negotiate jointly on a variety of quality of care issues, ranging from patient education to reimbursement methodology. If and only if the health plan has "substantial market power," and those terms and conditions have already affected or threaten to adversely affect the quality and availability of patient care, can physicians negotiate fees, capitation rates, and specific fee considerations. The new law says the attorney general shall make the determination of what constitutes substantial market power.
Federal and Texas regulators in June moved to slow the growth of Texas’ dominant health plan, Aetna U.S. Healthcare, by attaching conditions to Aetna’s controversial plan to acquire Prudential HealthCare. A proposed consent decree filed in Dallas U.S. District Court in June allows the acquisition provided Aetna gives up the covered lives of its NYLCare subsidiaries in Houston and Dallas.
The proposed divestiture will affect 260,000 Houston enrollees and 167,000 Dallas enrollees. The proposed merger, according to the regulators’ complaint in the case, would have given Aetna control of 63% of the HMO and related HMO-based point-of-service business in Houston and 42% of the market in Dallas-Fort Worth. The divestiture maintains Aetna at its premerger market share of 44% in the Houston area and 26% in Dallas-Fort Worth, says a spokeswoman for the Texas attorney general.
The House Research Organization, which conducts bipartisan bill analyses for the Texas Legislature, noted the concern of opponents that the bill doesn’t define "substantial market power" and that the definition "could change with every election cycle."
Aetna is the only Texas health plan with a so-called "all products" provision in Texas, which raises doctors’ ire almost as much low fees. Although Aetna doesn’t contract with the state’s Medicaid program, some physicians say putting the "all products" provision off limits was sold as a way to protect low-income residents.
"The fear was that if physician organizations or individual physicians are not somehow compelled to participate in HMO products serving Medicaid, or children’s health insurance, or other low-income populations, that those physicians will only participate in more lucrative contracts such as PPOs," says Helen Kent Davis, director of governmental affairs for the Texas Medical Association.
"As an association, we have seen no evidence of that, but in the interest of moving the bill, that language was included." The TMA has no problems with requiring physicians to take all HMO products, but objects to linking HMO and PPO products, Ms. Davis says.
"The other concern was, of course, that Medicaid premium rates and many of their quality-of-care provisions are set by federal and state laws. There was a concern that in coming together to negotiate for those plans, there would be untoward pressure to raise rates, in particular, and that’s not something you can do in a public program," she says.
A representative for state Sen. Chris Harris (R-Arlington), sponsor of the bill, goes even further, saying comparable reimbursement between Medicaid and commercial plans makes the all-products provision unnecessary.
"I think it was played . . . that if you have the cheaper plans, the HMO plans, physicians wouldn’t participate in that unless they were forced to. That’s not the current situation," says Darren Whitehurst. "I have looked at the numbers for all the plans and I have seen no problems," he says.
The general concern about Medi caid participation among Texas physicians seems to have merit. Survey data from the TMA itself suggest physicians are less and less likely to accept new Medic aid patients. The trend is most pronounced among ophthalmologists, psychiatrists, and pediatricians. (See chart depicting Texas physicians’ acceptance of new Medic aid patients, at right.)
An Aetna U.S. Healthcare representative says the plan has no intention of getting into the Medic aid market, but rather wants the provision to protect its ability to develop and maintain provider panels for its commercial contracts, particularly as members move between HMOs and PPOs.
"The primary reason is for continuity of care and flexibility for our members," says Bobby Peña, director of public relations for Aetna U.S. Healthcare’s western region in San Ramon, CA. Of the plan’s 2.5 million covered lives in Texas, about 1 million are in HMO plans; the rest are in other products.
Under the law, a group of physicians negotiating with a health plan generally can’t represent more than 10% of the physicians in a health benefit plan’s defined geographic service area, and physicians can’t meet to organize "any cessation, reduction, or limitation of health care services" such as strikes or slowdowns. It is possible, though, that even a small physician group could constitute a monopoly of that particular specialty without approaching the 10% threshold.
Mr. Seddon was in San Antonio during June, meeting with the 65 orthopods (of the 70 in the entire market) he says are represented by his group. He calls SB 1468 "a major step in the right direction, no matter how you look at it," but points out that simply because physicians have the right to bargain collectively for certain working conditions does not mean health plans have to entertain the request.
"What happens when the insurance company says, The hell with you, I’m not talking with you?’ That’s one of the problems now across the board. The doctors are going to have to use mechanisms within the scope of the law to force them to bargain."
The law requires the negotiating parties to notify or get approval from the state attorney general during several points in the process. The attorney general, for example, can set the parameters of the negotiation as well as reject a proposed contract.
Paul Handel, MD, chair of the Texas Medical Association’s Council on Socioeconomics, says legislators in the future might be convinced to require negotiations if managed care companies refuse to come to the table now. The current legislation, he says, is a victory more of "form than substance."
The bill takes effect Sept. 1. Physicians are working in other statehouses to expand their right to negotiate, most notably Pennsylvania, and backing federal legislation (HR 1304) that would allow physician collective bargaining.
Contact Mr. Seddon at (850) 942-6636, Mr. Handel at (713) 796-8892, Ms. Davis at (512) 370-1401, and Mr. Whitehurst at (512) 463-0110.
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