Association of American Physicians and Surgeons (AAPS) Challenges Price Controls in California

TUCSON, Ariz., Dec. 14, 2017 -- California Governor Jerry Brown signed into law the strictest wage and price control in history against physicians in our nation: AB 72, writes AAPS general counsel Andrew Schlafly in the winter issue of the Journal of American Physicians and Surgeons. “Insurance companies are now trying to emulate it by enacting similar legislation in other states,” he adds.

AB 72 authorizes private health plans to set fees for physicians who are not under any contract with them, he explains. And unlike when government sets rates, there is no political accountability for the officials or for the decision-making process.

Although the law was justified under the pretext of controlling “surprise medical bills,” this has not been a genuine public concern. Insurers are generally supposed to pay out-of-network bills, Schlafly notes.

Instead, he writes, the law came about because a California agency rejected an attempt by the insurance industry to impose wage and price controls on out-of-network physicians by regulation. What the insurance companies failed to obtain from the administrative state, they then sought directly from the legislature.

AAPS contends that the law is unconstitutional under the Takings and Due Process clauses of the U.S. Constitution. It deprives physicians of just compensation for their work, and provides no meaningful recourse. Physicians are obliged to submit disputes to a binding arbitration process that is influenced by the insurance industry.

The law is also bad public policy, Schlafly states, because it will lead to rationing of care to underserved populations, as physicians will no longer be able to afford to provide charitable care.

The law has an impact on all medical services, Schlafly adds: “The only meaningful leverage that a physician or hospital has in negotiating a contract with an insurance company is the option of the physician or hospital to go out-of-network and not accept the insurance company rates.”

A hearing was held in federal court on Oct. 19, and the judge reserved a decision pending review of additional briefs submitted in November.

The Journal of American Physicians and Surgeons is published by the Association of American Physicians and Surgeons (AAPS), a national organization representing physicians in all specialties since 1943.

Contact: Andrew Schlafly, [email protected], or Jane M. Orient, M.D., (520) 323-3110, [email protected]

Association of American Physicians and Surgeons
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Tucson, AZ 85716
(800) 635-1196
www.aapsonline.org