State officials knock negotiating power for doctors' groups

Posted: Tuesday, January 23, 2001

JUNEAU (AP) -- A bill that would allow physicians to band together to negotiate fees and other issues with some health insurance companies drew fire Monday from state insurance regulators and the Department of Law who argued it might raise costs for patients and run afoul of federal law.

Such group negotiation is currently illegal under state and federal antitrust laws designed to foster competition and prevent price-fixing.

Sen. Pete Kelly, who sponsored Senate Bill 37, contends the increasing size of health benefit plans has given them enough power in some areas to dictate the terms of the contracts they make with doctors.

''Big hospitals have more equal bargaining power with the health insurers than the typical Alaskan physician in a solo or small group practice,'' Kelly wrote in a sponsor statement for the bill. ''Obviously a gross inequity in bargaining power exists and there is no conceivable way any health insurer will bargain with an individual doctor regarding individual contract provisions other than on a take it or leave it basis.''

A similar bill sponsored by Kelly, R-Fairbanks, passed the Senate last year but died in the House when lawmakers adjourned.

A representative of the state Division of Insurance said Kelly's bill seemed better suited to bigger states where big health maintenance organizations often dominate health coverage. In Alaska, insurance companies typically base their payments on an average of what physicians around the state charge, said Katie Campbell, a life and health actuary for the division.

Campbell also said allowing group negotiations might benefit doctors, but could hurt patients.

''Presumably, negotiation is going to result in higher fees,'' Campbell told a meeting of the Senate Judiciary Committee.

Groups of doctors could only negotiate fees with health benefit providers that control more than 15 percent of the market in an area.

Michael Haugen, executive director of Alaska Physicians and Surgeons, told the committee that doctors are often at the mercy of insurance companies.

''How do doctors set fees?'' asked Sen. Robin Taylor, R-Wrangell, the committee chairman.

''Ultimately what you will be paid is whatever the insurance company will pay you,'' Haugen said.

The bill could also violate federal antitrust law because it doesn't provide for enough oversight by the state, said Ed Sniffen, an assistant attorney general with the Department of Law.

States are allowed to violate antitrust law if they replace competition with a well-regulated system to ensure fairness.

Kelly's bill calls for the attorney general to approve contracts between groups of doctors and health care providers, but doesn't call for much oversight during contracts that could run as long as five years.

''The level of state participation simply isn't there,'' Sniffen said.

Taylor said he would look into amendments that might deal with the antitrust problem. The bill was held in committee for another hearing.

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