No Fast Changes Seen in High Court Ruling on HMOs

Allowing states to regulate won't mean a stampede of laws, experts say

FRIDAY, April 4, 2003 (HealthDayNews) -- This week's Supreme Court decision upholding the rights of states to require health maintenance organizations (HMOs) to open their networks to "any willing doctors" is unlikely to translate into concrete changes anytime soon.

"What the Supreme Court did was say what states could regulate. It just makes it easier for states to consider passage of 'any willing provider' laws," says Keith Bateman, vice president of workers compensation at the Alliance of American Insurers in Downers Grove, Ill.

"There was a time five years ago when people thought that willing provider statutes would gut managed care as we knew it then or as we thought it was becoming," says Mark Hall, a professor of law and public policy at Wake Forest University School of Medicine. "The ruling is significant because it removes a legal uncertainty about whether statutes can be enforced. What's more significant is if the states will want to enact, but so far they haven't."

At issue was a 1994 Kentucky law, which prohibited any health insurer from discriminating "against any provider who is ... willing to meet the terms and conditions for participation" established by the insurer.

The Kentucky Association of Health Plans filed suit against the commissioner of Kentucky's Department of Insurance, stating the law was pre-empted by ERISA, the Employee Retirement Income Security Act, a federal statute dating from 1974. The Supreme Court's unanimous decision, handed down Wednesday, sided with the state.

According to The New York Times, about half of states have such willing-provider laws on the books, but most apply only to pharmacies.

The high court's decision prompted an outcry from industry groups, which argue that it will contribute to increased medical costs.

"We're extremely disappointed by the Supreme Court's ruling," Dr. Donald Young, president of the Health Insurance Association of America (HIAA), said in a statement. "These laws are one more instance of government unnecessarily interfering in private relationships between doctors and health plans. The requirement for health plans to open their provider networks will result in higher health insurance premiums and the real possibility of diminished quality of care. It is another step for those who believe the government can best determine how health care should be financed and delivered, further limiting choices for health-care consumers. Ultimately, it is the American worker who will bear the brunt of this decision."

The Alliance of American Insurers was similarly disappointed, although this group, which represents property and casualty insurers, will be less directly affected.

"We're concerned about the impact on workers' compensation costs," Bateman says. Bringing in additional physicians who may not have expertise in occupational medicine will not only run up costs, but compromise quality, he predicts.

"The cost discounts that can be negotiated by networks with physicians turn on the ability of the networks to deliver volumes of patients to these doctors. And to the extent that they lose the ability to direct volume of care to any given physician, discounts will be less -- which means we'll be paying more for workers' compensation medical care," Bateman explains.

The other concern is that such laws will make it more difficult to screen out physicians who don't have the expertise and commitment to the service in question.

"All of these factors have potential to up medical cost of workers' compensation but also indemnity costs," Bateman says.

For now, these concerns are still theoretical -- but perhaps justified.

"The ruling is not inconsequential," Hall says. "Plans do like to control networks. They don't like to have to answer to regulators, and even if they want as many primary care physicians as possible, oftentimes they like to limit the number of specialists because they see cost and quality advantages in concentrating more specialized cases in fewer hands. There are reasons to want to restrict portions of the network and these statutes would definitely preclude that or make it more difficult."

Hall, however, is not convinced that states will start enacting legislation just because the Supreme Court said they could.

On the other hand, the ruling may make it easier for states to regulate managed care in other ways. "Even though this particular law isn't very common and isn't likely to be very common, the fact that the court said this law is OK will be a blessing to other regulations out there," Hall says. "It does seem to be more broadly reasoned and sets a broader precedent."

More information

For more on the industry viewpoint, visit the Health Industry Association of America or the Alliance of American Insurers.

To find out more about health plan quality, go to the National Committee for Quality Assurance or the Institute for Healthcare Improvement.

SOURCES: Keith Bateman, vice president, workers compensation, Alliance of American Insurers, Downers Grove, Ill.; Mark Hall, J.D., professor, law and public health, Wake Forest University School of Medicine, Winston-Salem, N.C.; Health Insurance Association of America press release; April 3, 2003, The New York Times; April 2, 2003, Supreme Court decision, Kentucky Association of Health Plans Inc. v. Miller
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