SACRAMENTO – A group of physicians oppose a bill signed into law by Gov. Jerry Brown that they say allows insurance companies to set price controls that spill over network boundaries.

Brown approved Assembly Bill 72 on Sept. 23 — two weeks after the Association of American Physicians and Surgeons sent a second letter urging him to reject the bill.

“This legislation is unprecedented in allowing insurance companies to engage in price-fixing of reimbursement rates for all physicians, even those who are have no contractual relationship with the insurance companies,” the letter states. "Private entities are not properly authorized to regulate other private entities."

AAPS is disappointed in the governor’s decision, Andrew Schlafly, the organization’s general counsel, told the Northern California Record. In the letter dated Sept. 5, AAPS asserts that the law has legal flaws, including that it is invalid under federal and state due process laws.

“AAPS is seriously considering filing a lawsuit to challenge this law, probably in federal court based on violations of the U.S. Constitution and perhaps antitrust law,” Schlafly said.

The law affects out-of-network health care coverage.

Designed to protect consumers from surprise medical costs, consumers would only pay the in-network rate for services if a visit to the hospital or a procedure that’s covered by insurance includes an out-of-network physician.

According to a Kaiser Family Foundation survey, charges by out-of-network providers contribute to many insured, non-elderly adults’ struggle to pay their medical bills. The survey states 70 percent of those individuals didn’t know the provider wasn’t included in their insurance network.

But AAPS says the law has consequences for physicians that could cause some to leave the state.

“This law will allow insurance companies to enrich themselves by imposing price controls on physicians who are not even in their network,” Schafly said. “The result will be shortages in the form of reduced access to physicians by patients, because many out-of-network physicians will feel compelled to stop practicing or move to other states.  There will also be reduced charity care by out-of-network physicians, as they will no longer be able to afford it.”

If a physician decides to stay out-of-network, it’s possible they would refuse to see patients with certain insurance, reducing a person’s choices and preventing people from paying for care that’s not available under their own insurance, Dr. Jane Orient, AAPS executive director, told the Northern California Record.

“If the self-paying patient population is too small – now that everybody is forced into managed care – doctors will be forced out of the field or out of the state,” she said. “Very few doctors are able or willing to pay to work, i.e. to take a loss from their practice. And capable students will ask themselves why should they take on crushing debt to go to medical school if insurance companies and government can keep them from making a good living?”

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