N.J. doctors get collective bargaining rights

Physicians can join together, but insurers don't have to negotiate with them. Similar provisions have hurt physician bargaining efforts in other states.

By Amy Snow Landa, amednews staff. Jan. 28, 2002.

Washington -- New Jersey has become the third state in the nation to allow independent physicians to bargain collectively with managed care plans over the terms of their contracts.

Legislation signed into law Jan. 8 exempts joint negotiating by physicians and dentists from antitrust laws as long as such activity takes place under close supervision by the state.

Physicians gaining clout

"We have been aching for some type of antitrust relief for years," said Angelo S. Agro, MD, president of the Medical Society of New Jersey. "Now it is up to physicians in our state to take advantage of the opportunities we have been fighting for and make them pay off."

Texas and Washington are the other states that give physicians the right to bargain collectively.

The New Jersey law allows doctors in that state to negotiate with health plans on such matters as the definition of medical necessity, utilization management procedures, quality assurance programs, clinical practice guidelines, dispute resolution and credentialing. Physicians also could negotiate payment issues as long as the attorney general found that the plan in question had substantial market power and that terms or conditions of the plan could pose a threat to quality and availability of care.

Doctors are not allowed to strike, nor can they negotiate to exclude nonphysicians from plans.

Plans unwilling to play

Like the laws previously enacted in Texas and Washington, the New Jersey act does not require insurers to join doctors at the negotiating table, raising questions about whether self-employed physicians will be able to exert any more leverage in contract talks with health plans than they did before. The experiences of physicians in Texas and Washington seem to provide little basis for optimism.

In June 2000, a group of 11 physicians in Henderson, Texas, applied to the state attorney general's office for permission to band together for contract negotiations with Blue Cross and Blue Shield of Texas -- the area's dominant insurer.

The Henderson group was soon granted permission by Texas Attorney General John Cornyn to bargain collectively. He determined that physicians were locked into contracts with the Blues plan and that their practices couldn't absorb the loss of income they suffered as a result.

The AMA is working on a physician collective bargaining bill it hopes to be introduced in Congress.

Cornyn also stated in his decision that the plan's "dominant position and its terms and conditions for physician compensation threaten to adversely affect the quality and availability of patient care in the Henderson area." He gave the physicians and the insurer a 60-day period to meet to negotiate.

But the Blues plan simply refused to sit down with the physicians, and that was the end of it. Since then, no other group of physicians has decided to pursue an application, said Michael Cushman, director of the Texas Medical Assn.'s health care delivery department.

Like Texas, Washington also did not require insurer cooperation when it enacted its joint negotiation law in 1993.

Physicians' interest in pursuing negotiations with plans appears to have been dampened as a result.

"We can't even get to first base," said Len Edinger, director of public policy and planning for the Washington State Medical Assn.

The WSMA supports a measure that was expected to be introduced in the state Legislature in mid-January that would amend the 1993 law to explicitly allow negotiations about reimbursement and require insurers to negotiate in good faith with physicians.

Although the New Jersey law does not require insurers to negotiate in good faith, Dr Agro said he hopes the state's doctors will be able to exert enough pressure to bring them to the table anyway.

If one or more groups of physicians apply for and receive permission to engage in joint negotiations with an insurer, and that insurer refuses, it could become a public relations problem for the HMO, he said.

"We think it would be an untenable [position] for the HMOs to stonewall if the state attorney general sees fit to allow negotiations with various groups around the state," he said. "I'm sure it won't help sell policies if it becomes known they're unwilling to negotiate on patient care issues even when the government and physicians say they should."

The New Jersey law also has an advantage over the Texas statute, according to MSNJ. It doesn't cap the percentage of physicians in a market who can negotiate, while the Texas law sets that limit at 10%, society officials said.

The AMA applauds the MSNJ for its success, said Donald J. Palmisano, MD, the Association's secretary-treasurer and a lawyer.

"Too long have insurers used their market concentration and market share to unfairly disadvantage patients and physicians," he said. "If insurers refuse to negotiate, then this will expose the insurers as entities that do not want to listen to reason, but instead want to exercise their monopsony power."

The AMA is working on a new collective bargaining bill that it hopes will be introduced in Congress. An earlier collective bargaining measure passed in the House but died in the Senate in 2000.

Joint negotiation bills have foundered in more than a dozen state legislatures due to concern that physicians would gain too much leverage and that such measures would lead to higher health insurance costs.

That was a complaint the insurance community used in its opposition to the New Jersey law.

"The virtually certain result would be higher costs for patients and for the health plans that pay for the health care they receive," said the New Jersey Assn. of Health Plans.

ADDITIONAL INFORMATION:

Physicians gaining clout

The New Jersey collective bargaining law:

Gives physicians the right to bargain collectively, through a representative they select, with insurers on many nonpayment-related subjects, including patient referral standards, drug formularies and clinical practice guidelines.
Allows doctors to bargain with plans on payment issues as long as the state attorney general has ruled that the carrier has substantial market power and its contract terms and conditions could hurt patient care.
Requires that physicians submit a collective bargaining petition to the attorney general and pay a filing fee. The results of any collective bargaining agreements are also subject to the attorney general's approval.
Bars physicians from striking.
Does not require health plans to join physicians at the bargaining table.