Doctors, insurers argue contracts

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The medical community and health care insurance providers are on opposite sides of a battle over legislation that would standardize contracts between physicians managed care organizations in Colorado.
The Colorado Medical Society and the El Paso County Medical Society support Senate Bill 198, the first legislation of its kind in the United States. Many health care insurance companies and health maintenance organizations do not.
“Doctors are in favor of this because the HMOs have the power right now,” said Dr. William Mandel, a Colorado Springs physician. “They have millions of dollars and most physicians are in groups of three doctors or less. We just have to accept the terms of a contract, with little room to negotiate.”
The Colorado Medical Society says the bill would reduce costs for doctors. According to the health care newsletter MGMA Connection, “The cost incurred by medical groups alone in negotiating these contracts is at least $700 million per year.”
“Most doctors have to hire attorneys; HMOs have them on staff,” Mandel said.
“We’re just not in a position to negotiate – this bill would be a starting point. HMOs have an unfair advantage right now.”
If contracts were the same for every doctor and every insurance plan offered, physicians could be assured of receiving reimbursements from the insurance agency. In addition, they would know when and how the reimbursement would take place, Mandel said.
For House Speaker Andrew Romanoff, a sponsor of the legislation, the measure is about saving money.
“We have to find a way to cut health care costs,” he said. “And we recognize that paperwork is driving a lot of costs in the insurance industry. It takes time and money to respond to these contracts. If we standardize the forms, then people will get a bigger bang for their buck – more of their money will be spent going to actual health care, instead of the costs to fill out forms.”
The Colorado Association of Health Plans is leading the effort against the bill, said Michael Huotari, the group’s executive director.
“We oppose the bill as it’s been introduced,” he said. “What this bill really does is give the commissioner of insurance the authority to write contracts. It’s unprecedented. It’s simply government intrusion in a private business relationship.”
The Colorado Medical Society says that the current contracts can “drive up the cost of health care, but also be detrimental to patient care.”
Contracts are obscure, said Dr. Lynn Parry, president-elect of the CMS. The society conducted a survey last year which showed that 42 percent of doctors were unsuccessful in negotiating changes to the contracts. Fifteen percent of respondents described the negotiations as “futile.”
“It’s all about transparency,” Parry said. “Currently, health care providers – not just physicians, but nurses and technicians – get contracts with the terms referenced, but not specified. For instance, they’ll say the terms are spelled out in the providers’ manual, but you don’t have a copy of the manual. Or, they will reference how they decide your fee, a certain percentage of a certain rate. But when you ask what the rate is, they say it’s proprietary. You have no way of figuring out what you’ll be paid, or of comparing contracts.”
Health care providers can have as many as 15 contracts, she said. For doctors operating small practices, hiring attorneys to sort through the legalese can be cost prohibitive.
“More than 50 percent of doctors are small businesses, just one or two doctors,” Parry said. “The time and overhead incurred trying to find out exactly what you are agreeing to is so expensive. This simply is one way of making the process transparent, of creating simple, direct language.”
The expense, Huotari said, will be the cost health insurance providers incur when they have to implement new contracts with thousands of providers. The bill requires each contract to be renegotiated, he said.
“That will be an additional cost to the health care system, without corresponding benefit,” he said. “And, we’re deeply concerned that the patient care will be interrupted as a result of this re-contracting. It’s a given that some doctors will return the contracts late, or not at all, and that will adversely affect the patient.”
Legislators who support the bill are seeing increased pressure from national insurance groups who oppose the legislation, Parry said. CMS has held two meetings with lobbyists and representatives of the health care insurance providers to determine their objections.
“We’re trying to see if there is some way we can work it out,” she said. “But the big insurers are pulling out all the stops: hiring new lobbyists and trying to prevent this. It’s not all that radical; it’s just an attempt to make it possible for providers to know what they are agreeing to, and what the rules are.”
Independent health care analyst Allan Baumgarten said he sees little benefit either way.
“It’s just not helpful,” he said. “I tend to believe in the contract process, in negotiation. You cannot standardize some part of the contracts – the fee schedule, for example. The contracts might look alike, but you are still going to have to have the time-consuming process of negotiation. Many parts of the bill aren’t practical either. If negotiations continue past the date of the contract, the bill requires an additional 30 days. It’s useful to no one, really.”
For Huotari, the problem lies in consolidating various insurance plans offered by insurance providers.
The relationship between health care providers and insurance companies is complex, he said, and cannot be boiled down to a single contract.
“It’s virtually impossible to do,” he said. “And it’s so impractical. The plans are all different – some groups offer different plans for physicians, specialty physicians and hospital-based physicians. Some offer different plans for Medicare or Medicaid. These relationships cannot be squeezed into one form or agreement. It’s going to stifle innovation – there’s no provision for new programs, such as telemedicine. It’s just not a good plan.”