Health plans, hospitals and coercive contracting

Regarding the Jan. 14 cover story “Hospitals’ solution to surprise outof-network bills: Make physicians go in-network,” hospitals have been putting the arm on hospital-based physicians for years to require them to accept deeply discounted contract rates from health plans. The only thing that restrains these hospitals is the fact that pitiful in-network rates make it difficult or impossible to recruit and retain qualified physicians to staff the emergency department and other departments in the hospital. This in turn would require the hospital to subsidize the revenue these physicians receive to ensure that qualified physicians staff the hospital, something that many hospitals can ill afford.

The pressure tactic is called coercive contracting and it is illegal in some states, but it’s nearly impossible to enforce such laws. Ideally, if the hospital is going to demand that their ED physicians, anesthesiologists, radiologists and the like participate in every health plan’s network, these physicians should be at the table so their interests can be directly represented when the hospital negotiates with the plan. But this will never happen.

The solution to the distortion of leverage in these relationships is to require plans to pay reasonable rates for hospital-based physician services if the physicians are “out of network,” in exchange for an end to balance-billing; but the question of what constitutes reasonable rates is tricky. Since “in-network rates” are confidential and strictly protected by plans, Sen. Maggie Hassan’s bill, the No More Surprise Medical Bills Act of 2018 mentioned in the article, would be impossible to enforce.

Why would plans even bother to negotiate with these physicians if they could pay an arbitrary and unpublished “average in-network rate” for out-of-network services? Ultimately, all physician-contracting rates would plummet, an unwarranted legislative gift to health plans.

If hospital-based physicians lose the limited leverage they have in these negotiations and can’t get a fair payment standard from legislators in exchange for an end to surprise balance bills, the only option left would be to unionize. Your doctor will see you now, if not on the picket line.

Dr. R. Myles Riner Incline Village, Nev.