LEXIS-NEXIS® Congressional Universe-Document

LEXIS-NEXIS® Congressional

JUNE 22, 1999, TUESDAY

SECTION: IN THE NEWS

LENGTH: 1605 words

HEADLINE: PREPARED TESTIMONY OF
REP. JOSEPH M. HOEFFEL
BEFORE THE HOUSE COMMITTEE ON JUDICIARY
SUBJECT - H.R. 1304, THE QUALITY HEALTH-CARE
COALITION ACT OF 1999

BODY:

Introduction:
Mr. Chairman, Congressman Conyers, and members of the Committee, I would like thank you for providing me and my colleagues the opportunity to testify today. The topic we address is very important to the constituents in my district.
Mr. Chairman, I am proud to testify in support of H.R. 1304, the Quality Health-Care Coalition Act of 1999, a bill to amend anti-trust laws to permit health care professionals to collectively bargain when engaged in negotiations with a managed care plan or health insurance company.
Enactment of this legislation is an important step for Congress to take in its efforts to restore some balance to the negotiations between health care providers and HMOs. This legislation is supported by doctors and health care providers in my district and across America. Literally scores of physicians in Montgomery County, Pennsylvania have contacted me about this issue. They face an uneven playing field during negotiations with HMOs and need relief if they are to get fair treatment at the bargaining table.
The Problem:
Consolidation in the managed care industry has gone too far. In regions of the country where a handful of health insurance companies dominate the market and face no competition, reimbursement rates are driven so low that they threaten the ability of physicians and hospitals to maintain quality patient care.
Nowhere is this problem clearer than in my District, the 13th Congressional District of Pennsylvania. A report published in December 1998 by Interstudy, a nationally-recognized market share collections group, showed that two managed care companies dominate the health insurance product market in the Philadelphia region. Excluding traditional Medicare and Medicaid patients, these two companies control 76 percent of the market. 76 percent. This represents 3,800,000 patients out of a total population of 4.3 million.
Equally problematic is the lack of health care industry competition in the Philadelphia metropolitan area. The leading HMO controls 57 percent of the market, while the second largest company controls 19 percent and is seeking a merger to further increase its market share. Every other health insurance company in the service region controls less than 3.5 percent of the market. There is no real competition to keep the market leaders in check; they are the only game in town.
For individual physicians' practices in my district, this problem of market concentration can be even more severe: for some, 80 percent of patients hold policies from these two companies. For many practices, between 30 and 40 percent of revenue is generated by these two payers. With such dominant control and no competition to keep them in check, large HMOs can bankrupt a practice and dictate terms of patient care, giving physicians little recourse.
When individual health care providers sit down at the negotiating table, and one insurance company controls 57 percent of all managed care policies in the area, and another insurance company controls 19 percent of all patients covered by managed care, doctors cannot negotiate a fair contract. With such a huge, unchecked advantage, HMOs can refuse contract changes proposed by doctors and simply threaten to lock out any individual provider from a huge number of patients. In the words of one health care provider in my district, the choice which HMOs offer doctors is "Take my business, or go out of business."
Under these conditions, HMOs force doctors into contracts with two types of problems: unfair reimbursement rates, and reduced physician control over medical decision-making.
Unfair reimbursement rates unjustly harm doctors in the short term, but they also harm patients in the long-term by reducing access to quality health care. Over time, unfair rates drive talented doctors out of a service area and drive experienced doctors into retirement.
Reduced control over medical decision-making is forced upon doctors alongside reimbursements cuts. Viewing all facets of medicine through the lense of cost, HMOs erect walls of procedure and mazes of referrals and denied claims to further reduce expenses. What they truly accomplish are poor working conditions for doctors and eroded quality of care for patients.
Unfair rates drive doctors away from the area and reduce access; poor working conditions erode quality of care. In each case, the patients lose along with health care providers under unfair contracts.
The Problem Manifested in Pennsylvania's 13th Congressional District:
Mr. Chairman, I am seeing evidence of all these problems in my district.
One year ago, the HMO that controlled 57 percent of the market in my district announced it was cutting reimbursement rates to orthopedic surgeons by 40 percent within the month. The HMO did not consult doctors before doing this. It simply acted on its own, saying "take it or leave it." In addition, if doctors refused to accept the reduced rates of the HMO product, the company would lock them out of its traditional insurance policy as well.
The new rates were to drop reimbursement for private patients to the equivalent of 80 percent of Medicare rates. This is particularly ironic because historically, Medicare reimbursement rates were the lowest reimbursements that physicians accepted, and they did so in significant part due to social responsibility for treating the elderly. In the era of huge HMOs, is Medicare to become the highest level of reimbursement? If that happens, doctors in my district warn they will be forced to reduce the amount of charity care they provide because they cannot afford it under those conditions.
Under these bleak financial circumstances, physicians in my district have seriously considered moving out of the region. One of my constituents already reports that his practice cannot sign up a new associates. He told me, "The reaction I get from the young doctors is, why should I put up with unfair treatment and dropping reimbursement rates when I can move across the Delaware River to New Jersey, and set up a healthy practice?" By moving to Delaware or New Jersey and providing the same services, doctors in my home district could make 30-50 percent more.
Countless more physicians have cited to me frustrations with delivering quality care to their patients. They struggle each day with excessive requirements for referrals and paperwork, and must routinely contest denials of service. Many are forced to hire extra administrative staff to cope with an ever-expanding administrative burden.
In fact, the HMO business paradigm is to make up for lower reimbursement rates by directing higher volumes of patients to their doctors. This business model intrinsically sacrifices personal attention to patients and puts quality of care in jeopardy.

The Problem Across the Country:
This sequence of problems originates with the excessive consolidation of the managed care industry, which leads to market dominance by a few companies without competition to check them. This trend is particularly acute in southeastern Pennsylvania but is on the rise in other areas of the country: Pittsburgh, Houston, Dallas-Fort Worth, and Atlanta all display these features; other areas trending in this direction are New York City, Boston, Los Angeles, Chicago, and other top-ten major metropolitan areas.
Consolidation on one side of the bargaining table distorts negotiations and produces unfair results unless it can be met by similar consolidation on the other side. But nowhere in the country can doctors match HMO negotiating power because they are precluded by current law from doing so.
The Solution:
These problems started at the negotiating table and can be solved at the negotiating table. Congress need only ensure that the field is level and the rules of the game are fair.
H.R. 1304 would intervene precisely at this point. The bill would accomplish something only Congress can do: change current anti-trust laws to allow health care providers to engage in collective bargaining. In the era of giant managed care companies, I believe it is necessary to give health care providers some relief.
H.R. 1304 will allow health care professionals, including physicians, dentists, and pharmacists, to form coalitions to jointly negotiate with an HMO at the time they are negotiating a contract. The bill provides a temporary allowance and does not create a permanent coalition. In addition, the bill specifically prohibits work stoppages and strikes: no one is advocating picketing by physicians. The point is to improve the quality of medicine delivered to patients.
I believe that health care providers make better patient advocates than HMOs. While managed care companies may be effective at keeping down expenses, cost control must be balanced with quality. H.R. 1304 would empower doctors to fight for quality during contract negotiations, and resist "gag clauses" and other quality-eroding policies.
Today's consideration of H.R. 1304 marks an important beginning. By discussing the Quality Health-Care Coalition Act, we are signaling our intention to reverse the anti-doctor, anti-patient trend in managed care. I do not intend to let matters in Pennsylvania's 13th Congressional District reach the point where conditions are so bad for doctors that my constituents will face problems with access and ever- declining quality of care. I will work hard to solve this problem, and look forward to collaborating with Members of this Committee on this effort.
Mr. Chairman, thank you for listening to my testimony, and thank you for making this issue a priority.
END

LOAD-DATE: June 23, 1999