New Ohio Law Levels Playing Field for Physicians, Insurers

Ohio recently became the latest state to enact legislation requiring insurance companies to spell out the exact terms and conditions of their contracts with physicians.

Ohio's Healthcare Simplification Act (2-page PDF; About PDFs) attempts to level the playing field between insurance companies and physicians by providing transparency and fairness in contracts and by creating a standardized credentialing form for use by all insurers.

The Ohio law is based, in large part, on a similar transparency law (13-page PDF; About PDFs) enacted in Colorado in March 2007 and contains the following components:

The legislation passed the Ohio House and Senate and was signed into law by Gov. Ted Strickland on March 25. It will take effect in late June.

"With regards to insurance companies, this is the best I've felt in 17 years of practice," said FP Randy Wexler, M.D., M.P.H., of New Albany, chair of the Ohio AFP's legislation and advocacy commission.

With the new law, physicians will have the ability to "negotiate with knowledge," and to combat some of the most "egregious practices" of the insurance industry, said Wexler, who refers to the measure as a "common-sense" approach.

"This law basically says that in order to negotiate a fair contract, you need to know what you are negotiating," Wexler said.

Like other Ohio physicians, he credits Colorado physicians with "leading the way" by working to get their state's transparency law passed last year.

"Colorado was the first to get something like this done," said Wexler. "They showed us it could be done."

But as Wexler pointed out, "the Ohio law has more kick to it."

The Colorado law primarily addresses transparency in contracts; the Ohio measure deals with transparency as well as with the fairness of contracts, going one step further than the Colorado provision. For example, the Ohio law requires insurance carriers to disclose whether they have rented or leased their networks to third-party payers. In many instances, insurance companies will lease their networks to other payers without a physician's knowledge, essentially forcing physicians to care for patients under the terms and conditions of the leasing payers, which often entails accepting lower payment rates.

"A patient will actually show up at a physician's office with an insurance card from an Alabama insurance company, and say, 'You are a network provider,'" said Tim Maglione, senior director for government relations for the Ohio State Medical Association, which led the lobbying effort to pass Ohio's Healthcare Simplification Act.

The Ohio legislation also seeks to reduce the administrative burden on physicians by creating a single credentialing process for all insurers that has to be completed within 90 days.

"One doctor could participate with 20 different health plans and was filling out 20 different credentialing applications," Maglione said. "We put in this bill a uniform credentialing process, one application for the physicians in Ohio."

Ann Spicer, EVP of the Ohio AFP, is convinced the law will promote the patient-centered medical home by providing a level of consistency between insurance companies and physicians. In the past, many physicians dropped insurance carriers because of the onerous terms and conditions of the provider contracts, leaving patients without a continuous source of primary care. With the new law, physicians will be more likely to keep their insurance carriers, providing continuity of care for patients, one of the tenets of the patient-centered medical home, Spicer said.

Not surprisingly, the state's insurance industry vehemently opposed the law, arguing to state lawmakers that the measure would drive up administrative costs, thereby increasing insurance premiums and other related expenses for patients. Ohio's business community also weighed in against the measure, supporting the insurance industry's claim that the law would drive up the cost of providing employee health care.

The Ohio State Medical Association, the Ohio AFP and other physician organizations in the state countered with their own compelling arguments, framing the issue as a "David versus Goliath" battle -- the multibillion dollar insurance companies "who are essentially dictating the terms of a contract to the Marcus Welbys of the world," said Maglione.

"We got some traction on that kind of a theme," Maglione said.

Like other physician advocates in Ohio, Maglione describes the law as a "great model for other states to pursue."

"The law really has components of transparency, of fairness and of administrative simplification," he said. "And those are the things that physicians genuinely need when dealing with the powerful insurance industry."