Contracts with health insurance companies will become more understandable for Colorado family physicians under legislation passed by the Colorado General Assembly and signed into law by Gov. Bill Ritter March 30.
Governor Signs Bill
Colorado to Require Transparency in Health Insurers' Contracts
By Leslie Champlin
4/4/2007
Colorado Gov. Bill Ritter signs S.B. 79, which requires transparency in health insurance company contracts with physicians, into law.
"The bill lets doctors actually see what they're going to get paid, why they're getting paid that amount and what was used to calculate the fees," said Larry Kipe, M.D., of Craig, Colo., president of the Colorado AFP. "It resolves the problem of getting these horrendous contracts that our lawyers and malpractice carriers would tell us not to sign, so we'd have to negotiate like crazy to get those clauses out."
Raquel Alexander, C.A.E., EVP of the Colorado AFP, agreed. "It's wonderful for Colorado doctors," she said. "It will help them make informed business decisions. The disclosures that the bill mandates will give the doctors transparency and fairness" in contract negotiations.
The legislation, Colorado's S.B. 79, (PDF file: 13 pages / 64 KB. More about PDFs.) creates standardized language in contracts between physicians and health insurance companies. It also requires payers to
Raquel Alexander, C.A.E., EVP of the Colorado AFP, agreed. "It's wonderful for Colorado doctors," she said. "It will help them make informed business decisions. The disclosures that the bill mandates will give the doctors transparency and fairness" in contract negotiations.
The legislation, Colorado's S.B. 79, (PDF file: 13 pages / 64 KB. More about PDFs.) creates standardized language in contracts between physicians and health insurance companies. It also requires payers to
- disclose their payment terms in plain language, the duration of the contract, the identity of the person responsible for processing the physician's claims, and the mechanism to resolve disputes;
- define the manner of payment, such as fee-for-service, capitation or risk-sharing;
- describe the method used to calculate fees, such as relative value unit, percentage of Medicare payment or percentage of billed charges;
- provide the fee schedule for codes reasonably expected to be billed by physicians under the contract and, on request, for other codes that may be used by physicians;
- give physicians advance notice of contract changes; and
- drop demands that physicians accept "all product" clauses, which would force them to accept insurance products, such as workman's compensation business, added to the contract without their knowledge after they have signed the contract.
Kipe credited the Colorado Medical Society with taking the lead in advocating passage of the legislation. "We helped them, as did every other medical society in the state," he said. "But it was their brain child last year."
Similar legislation passed the Colorado General Assembly in 2006 but was vetoed by then-Gov. Bill Owens, much to the consternation of the Colorado AFP, Colorado Medical Society and other groups.
The Medical Group Management Association, or MGMA, which advocates simplification of the administrative burden of medical practices, hailed passage of the current bill.
"Administrative complexity is a major concern for our members -- the medical practice professionals typically charged with managing these colossal and confusing contracts," said William Jessee, M.D., MGMA president and CEO, in a March 30 news release. "The burden of administrative complexity comes from a variety of sources. However, standardizing basic contract terms to make them easier for groups to understand and making the contracting process more equitable is 'low-hanging fruit.'"
A 2004 MGMA study found the average 10-physician practice spends as much as $247,500 a year on "unnecessarily complex, wasteful, duplicative administrative tasks that add no value to a practice or its patients." The study prompted formation of the Healthcare Administrative Simplification Coalition, or HASC, in 2006. HASC advocates policies that reduce physician office paperwork and administrative waste.
Similar legislation passed the Colorado General Assembly in 2006 but was vetoed by then-Gov. Bill Owens, much to the consternation of the Colorado AFP, Colorado Medical Society and other groups.
The Medical Group Management Association, or MGMA, which advocates simplification of the administrative burden of medical practices, hailed passage of the current bill.
"Administrative complexity is a major concern for our members -- the medical practice professionals typically charged with managing these colossal and confusing contracts," said William Jessee, M.D., MGMA president and CEO, in a March 30 news release. "The burden of administrative complexity comes from a variety of sources. However, standardizing basic contract terms to make them easier for groups to understand and making the contracting process more equitable is 'low-hanging fruit.'"
A 2004 MGMA study found the average 10-physician practice spends as much as $247,500 a year on "unnecessarily complex, wasteful, duplicative administrative tasks that add no value to a practice or its patients." The study prompted formation of the Healthcare Administrative Simplification Coalition, or HASC, in 2006. HASC advocates policies that reduce physician office paperwork and administrative waste.
