Ohio lifts the veil on insurer contracts

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.

In Ohio and elsewhere, a single health plan might hold anywhere from 60% to 90% of a single metropolitan area.

The Ohio law, or any other like it, can't do anything about undoing the circumstances that allowed health plans to become so large and controlling. Nor does it guarantee that physicians will now be sufficiently compensated for the care they give.

But it does ensure, by making contracting terms much more transparent, that physicians are less vulnerable to signing on to a bad deal. As crazy as it seems, in this case it takes legislation to ensure that physicians know what an insurer will pay them, or for physicians to get a straight answer when they ask what they will be paid.

Or for physicians to know before they sign a contract whether they are going to be paid only by the PPO they are signing with, or whether that PPO wants to have the right to rent their names out to another plan for a lower reimbursement rate in a silent PPO arrangement.

Or for physicians to get notice when their contracts will be changed. Or what will be covered under them.

Many of the other protections and clauses are the same as those in settlements of class-action lawsuits against insurers. Yet some of those same insurers lobbied against the bill's passage.

Then again, the terms of those settlements are either expiring, in the case of Cigna, or will expire over the next few years.

Ohio's law, for that state, codifies many of the terms of those physician-negotiated settlements, thus ensuring that plans are held to a higher standard.

With the new law, physicians in Ohio can be assured that they can get straighter answers when they question a health plan and actual, useful information up front that can help establish a fairer and more balanced business relationship.