As federal lawmakers debate national antitrust relief for physicians, state lawmakers aren't waiting to redraw the map of the balance of power between doctors and managed care.
Legislatures in three states have passed antitrust exemption laws giving competing physicians more bargaining clout with health insurers. Similar legislation is pending in 17 states and the District of Columbia.
"We'd prefer to address this at the national level, but while we're working for that, the states aren't going to wait," said American Medical Association President Thomas Reardon, M.D. "Local legislators are more receptive to this and feel the impact of what's happening at the local level."
The AMA has pursued federal antitrust relief for physicians for almost five years, primarily by lobbying the Federal Trade Commission and the U.S. Justice Department, Reardon said.
This year's legislative effort, sponsored by Rep. Thomas Campbell (R-Calif.), has made the most progress. On March 30, the House Judiciary Committee passed the Campbell bill, and it's expected to land on the House floor for debate in May (April 3, p. 8).
But even if the bill fails, physicians may get the federal antitrust relief they're seeking from the states under the "state action immunity doctrine."
Existing federal antitrust laws bar competing physicians from collectively negotiating prices for their services. Such behavior is considered illegal price fixing and a per se, or automatic, violation of federal law.
However, federal law doesn't apply under the state action immunity doctrine. Established by case law dating to 1943, activities that are permitted by and supervised by a state are immune from federal antitrust scrutiny.
Consequently, by passing state antitrust exemption laws, state medical societies are immunizing their physicians from federal antitrust laws.
In the mid-1990s, fearful that federal antitrust laws would inhibit hospital mergers and acquisitions, several state hospital associations lobbied for hospital antitrust exemption laws similar to the ones that state medical societies now seek. Some 22 states passed hospital exemption laws.
Not surprisingly, insurers oppose the measures. "We believe these (physician antitrust exemption) laws are anti-consumer because they are anti-competition," said Richard Coorsh, a spokesman for the Health Insurance Association of America. "They will raise insurance premiums and likely raise the number of (uninsured Americans)."
The laws in Vermont and Washington have been on the books for several years but have seen little use because, though they allow physicians to discuss a host of issues, including payment method, they do not permit doctors to talk about rates.
To date, the physician antitrust exemption law passed in Texas is the strongest in giving competing physicians bargaining clout with insurers. The AMA helped draft the bill, which is being used by medical societies as model legislation in other states. Texas Gov. George W. Bush signed the bill into law in June 1999, and regulations implementing the law are expected to be issued later this month.
In Texas, the law authorizes the state attorney general to supervise joint negotiations by physicians in various practice or group settings with managed-care companies. Physicians cannot talk about anything until they have provided the attorney general with details about what terms they are planning to negotiate and who is involved. If it is a fee-related issue, the attorney general will allow joint negotiations only after he has analyzed the market power of the health plan and determined it to be substantial.
"We're actively trying to make the regulations as user-friendly as possible," said Mark Tobey, who heads the antitrust section of the consumer protection division of the Texas attorney general's office. "At the same time, we need information to do the analysis required of us by the statute."
The various state physician antitrust bills differ most in how they define market share principles and determine which healthcare providers are covered by the protections, said Marla Rothouse, senior policy specialist for health at the Washington office of the National Conference of State Legislatures. The majority of state bills are limited to physicians, but some, like Pennsylvania's, include the whole spectrum of providers and, consequently, help to broaden support, she said.
Pending bills in Alaska, Delaware, the District of Columbia and several other states would allow negotiation on fees only when health plans control more than 15% of a geographic market. Other bills leave the determination of market share for fee negotiation to the state regulator, who is most often the state attorney general, though it can also be the state insurance or healthcare authority or other appointed state party.