Trendspotter: Physicians Forced to Compete with Payer Power

February 10, 2011
Keith L. Martin

The latest study results from the AMA when it comes to payers and their power in local markets may not be good news to all.

The other day, I received an e-mail from a frustrated physician, indicating little room to negotiate rates with the state's largest insurer, rates that were at or below Medicare and Medicaid. I hope she does not see the latest study results from the AMA when it comes to payers and their power in local markets.

The association's 2010 "Competition in Health Insurance" study shows little, if any real competition in some U.S. markets, according to the data.

Case in point: In 60 percent of the metro statistical areas, the two largest insurers had a combined 70 percent of greater market share; in 48 percent of these same areas, at least one insurer had a market share of 50 percent or greater. The AMA also notes that 99 percent of health insurance markets are "highly concentrated," indicating a "significant absence of competition" among insurance companies.

Over the past few years, we've seen major health insurers gobble up the little guys around them and expand their territory. We've seen double-digit hikes in premiums, but no real pay hikes in payments to physicians. We've seen insurance commissioners in various states have to adjudicate whether mega-insurer A and mega-insurer B can form super-mega-insurer C.

For their parts, these insurers have claimed that combining forces will often lower healthcare costs by providing better, more streamlined delivery of coverage to policyholders and better services to physicians. Look no further than the proposed merger between Massachusetts non-profits Harvard Pilgrim and Tufts Health Plan which are making that case to state legislators.

The AMA, however, doesn't see things that way. In a statement, AMA President Cecil B. Wilson noted that "the market power of health insurers places physicians and patients at a significant disadvantage," he said in a statement. Wilson added with insurer domination of a market comes higher premiums for patients and "unfair contract terms and corporate policies" for physicians, which in turn, "undermines the physician role as patient advocate."

The AMA is asking federal and state regulators to prohibit "harmful" mergers and incorporate policies that "level the playing field" between smaller practices and large insurance companies.

Heck, in Maryland, physicians are worried that insurance and pharma companies will hack into EHRs, and alter data to skew patient treatments that benefit their own interests over the patient's best interests.

Perhaps more physicians will head to Vermont, where that state's governor recently unveiled his single-payer plan for residents, all of whom would be covered under a publicly funded insurance pool. Bye, bye private insurers.

Outside of simply "going rogue" and dropping insurance altogether for a cash-only practice - which has been done - there are ways to work with your payers, big or small. Davey once in a while gets Goliath to step around - not on - him.

But Goliath is still there, looming in the background, as are large payers, casting their shadows over physicians treating patients and depending on those reimbursements for their personal and professional future. It's what Wilson says undermines the physician as a patient advocate.

It's no surprise that state insurance regulators often are compared to consumer advocates, looking out for the "little guy," whether it is a premium hike by a health insurer or a tough time getting repaid for water damage from a property-casualty insurer. They look out for the residents of the state they have jurisdiction over.

But the AMA, and other associations, are looking out for physicians and the impact of growing insurer influence in states across the nation. Perhaps Vermont's idea is not so crazy after all.