Standardized Physician Contracts

1
Standardized Physician Contracts

2
Todays Situation

• AMA produced Model Managed Care Contract.
• SB 1571 (J. Nelson) Proposed development of
  standard managed care contracts for physicians.
• Requirements
• Conform to state laws
• Consistency in format
• Limit and standardize addenda

3
How Did We Get Here?
Given these statistics it is little wonder that
when attempting to negotiate contract provisions
physicians rarely have success. Additionally,
contracts often contain provisions that nullify
statutory protections provided to physicians by
this Legislature Texpac Bulletin supporting
SB1571

• Physicians continued discontent and struggling
  for control.
• TMA remains very active, feeding off of previous
  wins.
• 77 of physicians in solo practice or
  partnerships.

4
Project Goals

• Provide a coherent response to the issue.
• Investigate the major issues and costs associated
  with a standard physician contract.
• Provide legislative analysis in advance of the
  2005 session.

5
Related statistics

• 45,000 physicians in Texas
• 30 health plans operate in the state.
• Chicago Law Review does not support legislated
  contracts.
• Harvard Law Review-99 of contracts are form
  contracts

6
Summary Response

• Cost of implementation too high.
• Exiting laws or regulations already cover the
  most salient terms of the contract.
• No precedent in the industry could be found.
• Specific points of opposition outlined.

7
Cost of Implementation
During the first five years of implementation,
the industry estimates as much as 30 million in
administrative costs alone with no discernable
benefits for Texas consumers.

• 17M-20M first two years
• Mature Market drives expense up.
• 10M in ongoing compliance annually.

Medical costs could soar up to 15 over and above
medical inflation if contracts are re-opened for
negotiation.
8
Existing Regulation

• 60 or more of important terms are covered by
  existing regulation.
• SB418 requires disclosure of contractual terms,
  obligations and fee schedules.

9
Precedent

• No mandated contracts are found.
• AMA already provides contract guidance.
• Texas represents mature market with well
  developed form contracts.
• Legislative precedent could affect other
  industries.

10
Specific Points of Opposition

• Reversion to billed charges for late payment.
• Guarantee of payment provision.
• Incorporation of burdensome administrative
  requirements.
• Requirement for consent to amend or assign
  contracts.
• Prohibition on mediation.

11
Recommendation

• Support contract change via conventional market
  forces.
• Demand justification of need for standard
  contracts.
• Require meaningful cost reductions for support of
  standardized contracts.
• Obtain guarantees on minimal impact on access to
  care.