Office of the Attorney General News Release Archive

Thursday, August 30, 2001


Doctors' Group Permitted to Bargain with Blue Cross/Blue Shield

AUSTIN - Texas Attorney General John Cornyn gave final approval to 11 Rusk County physicians today, allowing their representative, Linda Davis, managed care director of Henderson Memorial Hospital, to attempt to negotiate better fees and contract terms with Blue Cross/Blue Shield of Texas.

The approval is the first ever under a unique Texas law that allows competing physicians who do not practice together to form a group to negotiate better terms with commercial health benefit plans. Under this law, the physician group has to first receive approval from the Attorney General. Such joint negotiation would ordinarily be prohibited by state and federal price-fixing laws.

"We are walking in new territory in terms of innovations in the health care industry," said Attorney General Cornyn. "It is our utmost concern that quality patient care continues in this part of Texas, and indeed all across our state, and that the health care marketplace in Texas remains competitive and fair. The new law, which my office enforces, may help to ensure that the balance of power is not always in favor of the managed health care plan."

In an approval letter sent to Davis, the physicians' representative, today, Cornyn determined that Blue Cross/Blue Shield has substantial market power and that the terms and conditions of its contract threaten to adversely affect patient care in the Henderson area. Faced with a potential reduction in reimbursement rates or a continuation of current rates that have not been increased for more than five years, some physicians could be forced to cut back on office staff and some services. This could lead to a general decline in the quality and availability of care. In addition, recruitment of skilled physicians to the Henderson area could be hampered in this market climate.

The analysis from the Attorney General's Office indicates that benefits derived from the joint negotiation approved today would outweigh the disadvantages resulting from any minor reduction in competition. The physician group represents only a small portion of the market in Smith, Gregg and Rusk counties for each physician specialty, so the group is not expected to wield undue leverage in its negotiations with Blue Cross/Blue Shield.

In an earlier letter to the Attorney General's Office, Blue Cross/Blue Shield officials said the company will not negotiate with the Henderson group even if the Attorney General gives his approval.

Some benefits sought by the Henderson physician group include:

  • improved access to local physicians;
  • continuity of care to local residents;
  • prompt treatment, resulting in improved health;
  • improved administrative procedures, such as quickly resolving prompt payment issues;
  • better communication to patients about their benefits.

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