Ohio lifts the veil on insurer contracts

The state's new, sweeping law on health plan contracts sends a message that "take it or leave it" approaches by health insurers are not acceptable in physician negotiations.

Editorial. May 5, 2008.

For years, the AMA and other physician organizations have asked legislators and regulators to do what they can to make sure that physician negotiations with health plans are fair and balanced.

Legislators in Ohio recently took a major step toward that goal with their overwhelming passage of the aptly titled Healthcare Simplification Act.

The law, originally drafted by the Ohio State Medical Assn., mandates greater clarity in contracts, including on issues of reimbursement. It puts restrictions on egregious practices such as rental networks (better known as silent PPOs) and clauses requiring a physician to offer the lowest rate to a specific plan.

The simplification comes from the idea that physicians will have to do less guessing as to what's in their contract and will now use a standard credentialing form for all plans.

Some states have passed, and others are considering, individual elements of this legislation. But Ohio is rare in the sweeping nature of its new law, which starts taking effect June 25. Its legislation, supported by the AMA, puts the state in the forefront of providing more balance, transparency and fairness in the health care system.

The situation in Ohio is much as it is in the rest of the country, with a few dominant insurers exerting their market power to ride herd over physicians. The AMA's most recent study of health plan market power, covering 2006-07, found that two plans -- WellPoint and Medical Mutual -- control nearly 60% of the statewide market.