AMA in
Washington 
The Congress
The White House
and Federal Agencies AMA GrassrootsAction Center AMA PoliticalEducation Programs
Questions and Answers on HR 1304
Frequently asked questions (with answers) about the Campbell bill
What does HR 1304 do?
HR 1304 would modify the antitrust laws to foster quality health care for patients by allowing health care professionals to jointly negotiate the terms of their contracts with health care plans.
Why do patients and health care professionals need this bill?
In the last few years, an unprecedented number of health insurance companies have merged. A few large insurers now dominate the marketplace and nearly 80% of Americans receive their health care coverage from a managed care plan. Serious questions have been raised about the ability of patients to receive medically necessary care from these plans. Furthermore, the ability of health care professionals to make decisions for their patients has been compromised to the detriment of the doctor-patient relationship. HR 1304 would ensure that physicians are able to act as effective patient advocates.
Would this bill repeal the antitrust laws that apply to health care professionals?
No. HR 1304 would modify the antitrust laws and would only apply to conduct in conjunction with good faith negotiations with a health plan. All other conduct would continue to be subject to antitrust enforcement.
Would this bill allow price fixing by health care professionals?
No. Price fixing will still be illegal. Price fixing is an antitrust term that refers to the ability of competitors in a market to get together and agree to charge the same price for their products or services. HR 1304 would not allow health care professionals to get together outside of contract negotiations and set prices. They would only be able to negotiate in good faith over contract terms such as referrals to specialists, gag clauses and reimbursement issues. Fees would be determined through these negotiations between health care professionals and health plans - not by agreement among the health care professionals. Under HR 1304, price fixing would remain illegal and would be subject to enforcement measures by the Department of Justice and the Federal Trade Commission.
How many co-sponsors are there? What’s the breakdown of Republicans and Democrats?
There are currently 211 co-sponsors, 122 Democrats and 89 Republicans. 19 (8 Republicans and 11 Democrats) of the co-sponsors are members of the Judiciary Committee which has jurisdiction over the bill. It's a truly bipartisan effort. This bill has been gaining incredible momentum, as Congress has become aware of the urgent need to level the playing field with dominant health insurers.
Do we really need HR 1304 if we get a strong Patients’ Bill of Rights passed into law at the Federal level?
Yes. The Patients’ Bill of Rights is one of AMA’s top priorities, but it is not yet the law. In addition, a Patients’ Bill of Rights would provide essential protections for all Americans, but it would not cover everything - and there’s no way to predict what kind of quality issues will arise in the future. HR 1304 would enable physicians to address managed care abuses and other patient care issues as they arise through contract negotiations.
What does the National Labor Relations Act (NLRA) do?
The NLRA modified the antitrust laws to allow employees to negotiate with their employers.
Does HR 1304 come under the National Labor Relations Act?
No. HR 1304 modifies the antitrust laws (the Sherman Act, the Clayton Act and the Federal Trade Commission Act). The National Labor Relations Act (NLRA) is a labor law that only applies to labor (employer-employee) relations.
Would the National Labor Relations Board supervise negotiations under HR 1304?
No. The National Labor Relations Board was created as part of the NLRA which only governs employer-employee relations.
Would there be any supervision over negotiations under HR 1304?
Yes. The oversight currently exercised by the Department of Justice and the Federal Trade Commission will remain intact. HR 1304 does not repeal the jurisdiction those agencies have over activities of health care professionals. It would not decrease their authority to prosecute health care professionals for activities that are not allowed under HR 1304, such as price-fixing or exclusive dealing (e.g., insisting upon agreements that prevent the health plan from doing business with other classes of health care professionals).
Would health care professionals need to join unions under HR 1304?
No. The legislation simply allows health care professionals to join together in order to negotiate with health plans, whether it be on their own, through the local medical society, an association or organization that represents physicians, an attorney, an established medical group or IPA.
Would health care professionals be allowed to strike?
No. The bill specifically prohibits any collective cessation of patient care services. Physicians currently have ethical and legal duties that require them to provide medically necessary care to their patients once the doctor-patient relationship has commenced. In addition, the AMA has policy against the use of strikes as a negotiation tactic.
What kinds of issues can be negotiated under HR 1304?
Under HR 1304, physicians can negotiate in good faith on most any contract issue - gag clauses, patient privacy issues, referral to specialists, drug formularies, payment, patient convenience issues, etc.
For example, as a convenience to her patients, a Texas pediatrician recently agreed to draw blood for blood tests in her office. Her patients had requested this service because they did not want to make separate trips to the lab the health-plan required that was across town. The pediatrician charged a nominal fee to cover the cost of the needles. She was later reprimanded by the health plan and told to stop drawing blood in her office. These kinds of issues could be negotiated under HR 1304.
Isn’t this all about dollars?
HR 1304 is about quality care. Physicians and other health care professionals are concerned about egregious contract provisions that impede their ability to provide high quality care to patients.
The reality is that payment issues can very clearly be patient care issues as well. It is not always possible to separate cost from quality.
In Texas, for example, physicians were being forced to pay out of pocket for the cost of prescription drugs their patients required if the cost exceeded $9000 per patient. This means caring for any patient with AIDS is a money-losing prospect. Unfortunately, these are very sick patients who need care.
The California Medical Association gathered data showing that some pediatricians receive as little as $10 per month for each patient, while the average cost of child care in the state is $24.10 per month. The national average is calculated to be $47 a month. (Towers Perrin) So California physicians are losing anywhere from $444 to $271 per year for each child in their care. How can a physician take the time to provide quality care for a child when he or she is losing money?
If physicians are not able to negotiate for adequate contract terms, including appropriate payments, quality care will continue to suffer. As a matter of fact, a 1999 Price Waterhouse Coopers study revealed that physician practices in California are filing for bankruptcy at an alarming rate. The California Medical Association predicts that 10 million patients risk delayed or interrupted care as a result. If history proves accurate, California will set a trend for the nation.
Isn’t it true that physicians can negotiate on patient care issues now?
Physicians as individuals can try to negotiate with a health plan over any terms. But an individual physician has little chance for true negotiations with a health plan like Aetna, for example, that has 24 million lives under contract. The individual patient and the individual physician are essentially irrelevant to a massive health plan. Independent physicians can only jointly present information to health plans regarding patient care issues now. They have no ability to jointly negotiate over these terms. Health plans are not required to act upon the information presented. If physicians jointly refuse to contract with the health plan because the health plan won’t listen, they risk allegations of an antitrust violation and stiff penalties. Even if physicians independently refuse the contract, they risk allegations of illegal joint activity under the antitrust laws and the same stiff penalties.
For example, in Florida, the medical association sent a letter to a health plan outlining issues to discuss regarding numerous contract terms physicians deemed to be unfair. The health plan responded in a letter that they would not discuss the issues with the association and stated that the association’s letter violated antitrust laws. In Texas, a physician IPA had a dispute with a health plan over several issues related to both quality care and fees. The IPA ultimately decided to terminate the plan’s HMO contract. After a majority of the physicians refused to re-contract independently with the health plan, the IPA received a threatening letter from the plan’s attorney alleging an antitrust violation.
Aren’t the FTC and the DOJ against HR 1304?
The FTC and DOJ oppose any attempts to modify the antitrust laws. Their opposition to HR 1304 is based on academic theory, not the real world. The agencies are afraid the bill would give health care professionals too much power. In the current health care marketplace, health plans have all the power. Even though the antitrust laws were designed to protect the little guys from the big guys, nothing currently protects the individual patient or the individual physician from the big insurers. The DOJ did not challenge a single merger in the last decade - while the 18 largest health plans merged into just 6 - until the AMA intervened. The DOJ looked into the Aetna/Prudential merger and ultimately approved it with only minor modifications.
Has Congress previously enacted modifications to the antitrust laws for other industries?
Yes. Some examples include: insurance, labor unions, baseball, sports broadcasting networks, newspapers, motor rail carriers, interstate water carriers, research and development joint ventures, banks, agriculture cooperatives, securities, air carriers and export trade associations. Throughout the history of the antitrust laws, both the courts and Congress have responded to ensure that the marketplace remains competitive, including creating or eliminating exemptions to the antitrust laws. The anticompetitive nature of the current health care market place demands that Congress address this problem now.
Won’t this drive up the cost of healthcare and increase the number of uninsured?
This argument is a smokescreen. Every time the physicians try to do something to protect patients the response from the insurers is the same: protections will drive up costs and increase the number of uninsured. For insurers, when it means more dollars for profits - it’s ok to raise premiums and risk increasing the number of uninsured - but when it comes to patient protections - suddenly they are worried about the cost and the uninsured. It is especially disingenuous to make this claim when health plans’ share of premiums for “overhead” are often as much as 20 to 25 percent despite the fact that they pass on some or all of the risk to physicians. This bill is about improving the quality of care for patients.
Many say physicians can already negotiate collectively using the messenger model. Isn’t that true?
No. The messenger model does not allow joint negotiations with health plans. Instead, it is a process whereby each physician arrives at an individual agreement with a health plan through a common messenger. The messenger communicates with each physician individually about what terms the physician is willing to accept and then communicates this information to the health plan so it can offer a contract to all of the physicians at once. However, the messenger may not share information with the physicians. The process actually gives more information to the health plan while the physicians remain in the dark.
It is costly, cumbersome, time consuming, ineffective and it does not guarantee protection from antitrust enforcement actions by the FTC. As a matter of fact, use of this process is too risky because it can actually trigger an antitrust challenge. If enough physicians using the process end up rejecting the contract the health plan offers it can appear as if the messenger or the physicians illegally shared information.
Aren't the DOJ and FTC's current antitrust enforcement policies adequate?
No. Most physicians are independent contractors. Under the current FTC/DOJ guidelines these physicians must be in business together in order to negotiate jointly with a health plan. This requires either sharing “substantial financial risk” or integrating business operations, which is not always feasible. Forming, managing and operating networks or group practices is a very expensive and time consuming undertaking. Physicians are understandably reluctant to do this because it requires substantial capital, forces them to practice in a setting they may not prefer, and may not even provide antitrust protection because the guidelines are not entirely clear as to what constitutes an appropriate level of integration.
Even if physicians receive a letter from the FTC approving an arrangement, they cannot rely on it as a guarantee against an antitrust challenge. Each determination under the antitrust laws is dependent on specific facts of the situation. If any facts or circumstances change, such as one new physician entering the market, the agencies may investigate and prosecute. In addition, nothing prevents a health plan from filing a private antitrust action. The DOJ and FTC have broad discretion to simply decide that a particular integration or risk sharing arrangement is insufficient (for example, FTC Letter to Paul W. McVay (1994), Mesa County IPA, Colorado (1999)) and challenge physicians at any time. With the prospects of prison and/or stiff monetary penalties, there is a strong deterrent for physicians to integrate absent a clear understanding of the rules.
Isn't this really a bill to protect health care professionals' fees?
No. This bill is about giving health care professionals the power to negotiate all contract terms and conditions to promote quality health care for their patients. Many physicians are currently presented with contracts that contain provisions that may be detrimental to patient care. Examples include:
- Prohibiting physicians from discussing all treatment options (i.e. "gag clauses") with their patients
- Restrictions on access to specialty care
- Payment schemes which encourage the limitation of medically necessary care
- Restrictive definitions of what constitutes medically necessary care
- De-selection of physicians who provide “too much care”
- Unreasonable administrative burdens
- Requirements that physicians must participate in all of the insurer's plans or none of them
- Requiring physicians who decide to stop taking new patients from the health plan to also stop taking patients from any other health plan
How would the bill affect health care competition?
This bill would promote competition by correcting the imbalance that currently exists in the marketplace between health care professionals and health plans due to the increasing power of consolidated health plans. Because the insurance industry has a special exemption under the antitrust laws (the McCarran-Ferguson Act), health plans are able to share actuarial and price information with their competitors (something physicians cannot do). In addition, health plans have the ability to exert significant market power over physicians and patients. Health plans can use their leverage to impose supra-competitive prices to patients and require physicians to accept "take it or leave it" contracts that are detrimental to patient care. HR 1304 would level the playing field so physicians can negotiate contracts that ensure that patients continue to receive high quality care.
How does the law that recently passed in Texas differ from HR 1304?
HR 1304 would allow all independently practicing health care professionals to jointly negotiate with health plans by amending the federal antitrust laws that prohibit this type of activity. It is one way of addressing the imbalance of power created by large health plans. Another way is for a state to enact its own antitrust exemption under the State Action Doctrine. The Texas bill falls under the State Action Doctrine. This is a judicially created doctrine that allows States to pass legislation allowing an activity that is prohibited by federal antitrust laws in the State only if the State regulates and actively supervises the particular activity.
However, the State Action Doctrine is limited in two ways. The amount of government bureaucracy in health care would increase because negotiations must be regulated and actively supervised by the State. In addition, only physicians in the State where the law is passed would be able to jointly negotiate. Because so many health plans are national or regional in scope, and the antitrust laws are federal laws, the imbalance in the health care industry must be corrected at the federal level to adequately address the problem. Under the State Action Doctrine, all fifty States would need to pass their own laws which would not be uniform across states.
Printer-friendly version
Published Feb 3 2000
Updated Mar 29 2000 5:12PM
Return to Antitrust Relief
