MDs See Collective Bargaining As Weapon in Managed Care Battle

Marc Rothman, M.D., president of the New Jersey Psychiatric Association (NJPA), said, “To paraphrase Benjamin Franklin, If we don’t hang together, we will surely hang separately.”

That philosophy is behind yet another effort to correct the imbalance of power between health professionals and managed care companies in contract negotiations. As part of that strategy, psychiatrists and other physicians in his state and in California are pushing legislation that would permit physicians and other health care professionals to bargain collectively with managed care companies.

California and New Jersey join Alaska, Connecticut, Florida, Illinois, Louisiana, Missouri, Montana, Pennsylvania, Rhode Island, and Tennessee, where so-called physician antitrust bills, which allow some form of collective bargaining, were introduced in the 2001 legislative session.

Negotiating problems are particularly acute in New Jersey where, according to Rothman, “Many psychiatrists are in small, individual practices. They don’t even have the minimal clout of a psychiatrist in a large, multidisciplinary practice.”

Clark Martin, the NJPA’s public affairs counsel, added, “We’ve passed a patients’ bill of rights and a prompt-payment bill, but we have to keep going back to the legislature every time we have a problem with managed care. Creating a mechanism so that doctors and managed care companies sit down together might be the answer.”

The New Jersey bill (A 2169), known as the Joint Negotiations Legislation, would permit two or more psychiatrists to negotiate with a company about non-fee-related matters such as definition of medical necessity, utilization management criteria, the use of clinical practice guidelines, and patient referral standards and procedures.

Fee Negotiation Possible

If the attorney general found that an insurance or managed care company has substantial market power in its service area and that a managed care contract term poses a threat to the quality and availability of patient care, two or more psychiatrists would be able to negotiate about fee issues such as amount of payment, procedure codes, and amount of discount on the price of a health care or dental service.

No one could negotiate on behalf of psychiatrists without prior approval of the attorney general, who would consider factors such as the number of psychiatrists a negotiator represents and the ratio of those psychiatrists to the total number of psychiatrists practicing within a given geographic area. Negotiated contracts could not be implemented without the attorney general’s approval, nor would any company be required to negotiate with representatives of health care professionals.

The bill was passed by the New Jersey Senate, reported out of the Assembly Health Committee, and will be considered in the next legislative session. Martin said, “If it passes, a veto by the governor is highly unlikely. Acting Governor Donald DiFrancesco (R) was one of the bill’s sponsors when he was in the state Senate.”

California Legislation

Similar legislation in California received a boost with the recent release of a survey commissioned by the California Medical Association (CMA) to substantiate anecdotal evidence of recruiting problems and physician flight from the state and from medical practice because of managed care’s interference and the increased costs to deliver high-quality care.

More than one-fourth of the responding physicians said they would no longer choose to practice medicine if they were starting over today.

California Assembly member Fred Keeley (D) first introduced AB 1600 in February. The bill would allow a group of health care professionals who have a contract with the same managed care company to negotiate with that company only when a contract is up for renewal or during the term of the contract if there is no provision for renewals. The bill covers physicians, nurses, psychologists, and other professionals. It includes provisions for facilitated negotiation and advisory arbitration. All negotiation would be voluntary by all potential parties.

As in New Jersey, the California government would have a strong role in determining appropriate representation. Before beginning negotiations, psychiatrists would be required to submit information about their numbers, licensure, and representation. The department could determine that the representation is not in the best interest of enrollees and recommend changes.

Any legislation that facilitates collective bargaining runs the risk of conflicting with the federal Sherman Antitrust Act, which is designed to prohibit agreements that restrict free trade and competition. Under the state-action immunity doctrine, however, activities allowed by individual states are exempt from federal antitrust prosecution if the state legislature sanctions the activities, and the state actively supervises them.

According to Fred Hellinger, Ph.D., senior economist at the Agency for Healthcare Research and Quality, and Gary J. Young, Ph.D., J.D., an associate professor at the Boston University School of Public Health, however, a change in the balance of power between health care professionals and managed care plans stands a better chance with passage of federal legislation than with state antitrust exemption legislation.

In an article titled “An Analysis of Physician Antitrust Legislation” in the July 4 JAMA, they report that the Quality Health Care Coalition Act (HR 1304), which passed the U.S. House of Representatives in 2000 and died in the Senate, “would have provided virtually all physicians an opportunity to join together to negotiate fees with managed care plans.” Most state bills, however, limit approval of negotiations to physicians who are negotiating with plans with “substantial market power” and who constitute “no more than a small proportion (usually 10%) of the physicians in the relevant market.” ▪