AMA Pushes for Joint Contracting to Achieve Level Playing Field With Insurers

The AMA recently went before Congress to ask the federal government to update and modernize its antitrust policies to give physicians the ability to engage in joint contracting when negotiating with insurance companies, something the AAFP has been discussing with congressional leaders for more than a year.

William Hazel Jr., M.D., an orthopedic surgeon from Fairfax, Va., and secretary of the AMA Board of Trustees, said during testimony (view on YouTube) before the House Committee on Small Business on Sept. 25 that a more flexible approach to joint contracting would increase competition in the insurance market, enabling physicians to negotiate from a position of strength and, thus, benefiting both physicians and their patients.

The AMA's testimony comes on the heels of a letter from the AAFP (7-page PDF; About PDFs) to congressional leaders on Aug. 21 asking Congress to ease federal rules and regulations that govern physician contract negotiations with third-party payers. The AAFP said in the letter that current restrictions are "particularly onerous for primary care physicians."

In his testimony, Hazel described some of the benefits of joint contracting, saying, for example, that "with physician joint contracting, new payers could gain access to panels of physicians with wide geographic and specialty distribution."

"When physicians themselves undertake the task of network function, payers may substantially reduce their cost of entry and expansion," Hazel added.

Most physician practices do not have the resources to analyze payer contracts, noted Hazel. "But by pooling our resources, we can spread the costs associated with analyzing these contracts and negotiate approved contracts for our patients." At the same time, joint contracting would allow physicians to create networks to facilitate collaboration and promote information technology and programs, he said.

Hazel reminded the committee that "acquiring, implementing and sustaining health information technology requires extensive fiscal investments by physicians." However, "the Congressional Budget Office has documented that health insurers are the entities that benefit from cost savings associated with these systems," said Hazel. "Allowing physicians to negotiate jointly with payers will help us reallocate these cost savings appropriately and pay for these services."

Hazel was one of six witnesses who testified before the committee. Other witnesses included representatives from the American Antitrust Institute, the Medical Device Manufacturers Association, the Automotive Aftermarket Industry Association and various law firms.

During his testimony, Hazel said that current Federal Trade Commission, or FTC, antitrust guidelines have not kept pace with changes in the marketplace, and current policies discourage physician collaboration, "hindering our ability to participate in a full spectrum of health care initiatives."

FTC rules and regulations now in effect have perpetuated an imbalance in the markets, forcing physicians to accept contracts that do not promote optimal patient care, he said.

"Current FTC policy discourages physician clinical integration efforts," said Hazel. "The FTC guidelines and advisory opinions to date require a level of financial investment that is impractical for physicians in solo and small group practices -- about 75 percent of physicians in the market."

Hazel also decried widespread health plan consolidation, saying that it has eroded the market while severely limiting the ability of physicians to advocate for their patients. "In the last decade, there have been 400 insurer mergers," Hazel said. "Only three were challenged by the Department of Justice."

These mergers, he said, have not benefited anyone except the executives and shareholders of the companies. "The proof is that premiums across the country have increased, out-of-pocket expenses have gone up, and physician payment has declined," Hazel said.