MGMA Press Room 

MGMA applauds passage of S.B. 79 for lightening practices’ administrative load

Landmark Colo. legislation creates more streamlined, equitable contracts for physician practices

ENGLEWOOD, Colo., March 30, 2007 –The Medical Group Management Association (MGMA) applauds today’s passage of Colorado’s S.B. 79, the nation’s first fairness-and-transparency-in-managed care-contracting legislation. The bill:

• Will create standardized contract language between health insurers and physicians, lessening the crushing administrative burden on physician practices;
• Requires payers to disclose payment terms in plain language;
• Requires payers to give physician groups advance notice of proposed contract changes; and
• Prohibits payers from requiring physician groups to accept “all products” clauses in contracts, which obligates them to accept any payment rate or insurance product that the insurer may later create, without practices’ consent.

MGMA applauds the leadership of the Colorado Medical Society, which spearheaded efforts to enact S.B. 79.

“Administrative complexity is a major concern for our members – the medical practice professionals typically charged with managing these colossal and confusing contracts,” says William F. Jessee, MD, FACMPE, MGMA president and CEO. “The burden of administrative complexity comes from a variety of sources. However, standardizing basic contract terms to make them easier for groups to understand, and making the contracting process more equitable is ‘low-hanging fruit.’”

MGMA recently found that an average 10-physician practice spends as much as $247,500 a year on unnecessarily complex, wasteful, duplicative administrative tasks that add no value to a practice or its patients. The same study also found that such a practice spends as much as $33,800 per year negotiating insurance contracts with an average of 15 health plans, renewing six. Practice administrators spend an average of four and a half hours negotiating each insurance contract.

In 2004, MGMA launched a nationwide effort to help reduce the waste caused by administrative complexity. The Association has focused on physician credentialing, electronic claims attachments, patient ID card standardization and working with public and private entities to reach cooperative solutions.

“We congratulate the health care community in Colorado for its hard work and urge other local governments to consider similar legislation,” says Jessee.

About MGMA

MGMA, founded in 1926, is the nation’s principal voice for medical group practice. MGMA’s nearly 21,000 members manage and lead 12,500 organizations, in which almost 270,000 physicians practice. MGMA’s core purpose is to improve the effectiveness of medical group practices and the knowledge and skills of the individuals who manage and lead them. MGMA headquarters are in Englewood, Colo.