Colorado Governor Vetoes Bill on Standardized Health Plan Contracts

By Leslie Champlin
5/31/2006

Citing "unnecessary intrusion by the government," Colorado Gov. Bill Owens vetoed S.B. 198, a bill that would have ensured transparency in contracts between family physicians and health insurance companies in Colorado. The May 26 veto dashed hopes that Colorado would become the first state to require health plans to disclose all the terms of contracts offered to participating physicians.

Raquel Alexander, C.A.E., executive vice president of the Colorado AFP, which strongly supported the legislation, expressed dismay that the governor vetoed the bill despite solid support for it in the Colorado legislature. "Eighty-five out of 100 legislators supported this bill, and the governor still vetoed it," she said.

But the governor's action won't stop the Colorado AFP from continuing to work for transparency in health plans, she said.

"Family physicians really needed this legislation," said Alexander. "We’ll work in any way that is needed," whether through legislation in the next Colorado session or negotiation with private plans, to implement the intent of the legislation.

If S.B. 198 had passed, health plans' physician contracts would have been required to

disclose fee schedules for physician compensation, including the method, calculation or policy affecting actual compensation;
end use of additional fee schedules, manuals or other documents used to modify the contract, unless the physician had agreed to such changes in writing at least 30 days before the modification was implemented; and
describe the system for resolving payment or other disputes and the time by which disputes would be resolved.

"In its final form, S.B. 198 creates an unnecessary intrusion by the government into the contracts between private parties," said Owens in his May 26 veto message. "The bill dictates contract terms."

During debate on the bill, supporters consistently refuted the governor's contention.
"This is not true," said the AAFP's Colorado-specific Speak Out Action Alert on the issue. "These very profitable, huge insurers have legal departments and large staffs and write contracts that are obfuscated, unfair and presented to a doctor with a 'take it or leave it' attitude. Contracts are changed without notification to the doctor. Unsuspecting physicians find themselves participating in plans that are cleverly hidden in the contract for the MCO's plan with which they did sign.

"A family physician may need to deal with 10 or more insurance companies, all with differing rules, contracts, fees and benefits. A small primary care physician cannot afford nor find the expert attorneys to review such contracts."

Alfred Gilchrist, executive director of the Colorado Medical Society, agreed. "This is purely a disclosure bill," he said at the time the bill was being debated in the Colorado legislature. "It doesn't violate the health plans' right to contract with physicians or to negotiate. It lets physicians compare apples to apples and oranges to oranges."

The Colorado AFP will work with the Colorado Medical Society on next steps on the issue, said Alexander.

S.B. 198 was seen as a potential model for contracts legislation in other states, according to Diana Ewert, AAFP senior manager for state government relations. Texas physicians have worked for three years to pass similar legislation, and several other state chapters have expressed interest in the outcome of S.B. 198.

Likewise, the Academy's state government relations staff "will be looking at whether it (S.B. 198) could be replicable in other states that have an interest in contract legislation," said Ewert.

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