Measure lets doctors negotiate as collective unit

Sponsor says bill levels playing field between physicians, big insurance firms

Posted: Sunday, May 12, 2002

The House on Saturday passed a bill that would let doctors band together to negotiate with insurance companies.

The bill's sponsor, Sen. Pete Kelly, a Fairbanks Republican, said Senate Bill 37 would help level the playing field between doctors and big insurance companies.

But state and federal regulators say the measure will at best create a needless bureaucracy and at worst could drive up prices for health care.

The bill passed the House on a 29-10 vote. Because of minor amendments the bill will go back to the Senate for concurrence.

Antitrust laws designed to foster competition and prevent price-fixing prohibit doctors from getting together to negotiate with insurance companies. States can make an exception to those laws if they set up an adequate state oversight process.

Kelly said the Legislature needs to do that for Alaska doctors, who are on uneven footing going up against "Goliath" insurance companies.

"The insurance companies come in and say take it or leave it," Kelly said. "They have such market power in your area that you pretty much have to play by their rules."

Officials with the Federal Trade Commission, the state Department of Law and the state Division of Insurance have testified against the bill.

The Trade Commission has said the review process in the bill, which calls for the Attorney General's office to approve contracts negotiated between a group of doctors and an insurer, is not adequate and would probably not pass FTC muster.

Supporters disagree. Mike Haugen, executive director for Alaska Physicians and Surgeons, said the bill is similar to Texas and New Jersey laws and is modeled after proposed American Medical Association language.

When the bill passed the Senate last year, it included provisions allowing doctors to negotiate fees.

But the House Labor and Commerce Committee removed the fee language after receiving a Federal Trade Commission opinion that the bill would allow medical price-fixing and likely would harm consumers.

Now the measure lets doctors negotiate on quality of care and other non-fee contract issues.

Bob Lohr, director of the state Division of Insurance, said the division is still not comfortable with the bill. Discussions of non-fee issues could indirectly raise health care costs and result in fewer Alaskans being able to afford insurance, Lohr said.

In its memo to the Labor and Commerce Committee, the Federal Trade Commission said doctors already can discuss "legitimate quality of care" issues legally.

Ed Sniffen of the state Department of Law said if that is all they want to do, they don't need the estimated $235,000 process the bill sets up through the Attorney General's office.

Haugen said doctors believe they do need the process, so they can comfortably talk about non-fee issues without fear of running afoul of the Federal Trade Commission.

He said there are many issues doctors would like to discuss, for instance, whether insurance companies can change their contracts unilaterally.

Haugen said the process is voluntary. Insurance companies do not have to agree to come to the table, and doctors would not be allowed to retaliate through a boycott.

The bill calls for the attorney general's office to weigh the competitive and other benefits of any agreed-upon contract against the anticompetitive effects.

The FTC argues, however, that the bill provides the attorney general's office with too little information and too little time to judge the contracts.

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