Supreme Court Rules in Favor of Kentucky’s ‘Any-Willing-Provider’ Law
The Supreme Court yesterday unanimously ruled that states may require HMOs and other insurers to accept into their networks all doctors, hospitals and other providers that agree to the insurer's terms of service, the Washington Post reports (Walsh, Washington Post, 4/3). The case, Kentucky Association of Health Plans v. Miller, affirms the legality of Kentucky's "any-willing-provider" law, which requires managed care plans to reimburse health care providers willing to provide services to the plans' members and meet plans' conditions for participation (California Healthline, 1/15). About half of states have similar laws, but most apply only to pharmacies instead of to all providers (Greenhouse, New York Times, 4/3). The managed care industry, represented in court by the Kentucky Association of Health Plans, contended that the law violates the 1973 Employee Retirement Income Security Act, which forbids states from regulating employee benefits (California Healthline, 1/15). However, ERISA includes an exception for state laws regulating "insurance, banking or securities"; lawyers for the state of Kentucky argued that the AWP law applies to insurance and therefore is allowable under ERISA. The justices concluded that AWP laws do regulate insurance "by imposing conditions on the right to engage in the business of insurance," according to the court's opinion, written by Justice Antonin Scalia. Scalia noted that previous lower court rulings have not been completely clear on the boundaries of state versus federal law under ERISA and wrote that from now on, a state law will be considered a regulation of insurance if it is "specifically directed toward entities engaged in insurance" and if it affects the "risk pooling arrangement between the insurer and the insured" (New York Times, 4/3).
The effect that yesterday's decision will have on the health care industry is unclear, the Post reports (Washington Post, 4/3). According to industry officials, the court's ruling will not affect rules that allow insurers to "steer" patients toward network doctors by offering lower out-of-pocket costs (Freudenheim, New York Times, 4/3). USA Today reports that the effect on premiums may be minimal because under the ruling, providers must abide by all terms of insurers' contracts, which include reimbursement levels. In addition, cost-cutting tactics that limit consumer choice have lost favor in recent years as HMOs have responded to customer complaints by broadening options, according to USA Today. Paul Ginsberg, an economist at the Center for Studying Health System Change, said, "In a sense, the issue went away" (Appleby, USA Today, 4/3). Rachel Morgan, a senior policy analyst for the National Conference of State Legislatures, said that HMO networks recently have been seeking out more doctors, adding, "The situation has been that if a provider wants to participate in a plan and meets the criteria, they can participate." However, Joy Johnson Wilson, health policy director for the NCSL, noted that some state legislatures may have been waiting to address AWP laws until after the Supreme Court's ruling (Washington Post, 4/3). In addition, according to the Chicago Tribune, some health care and employee benefits lawyers say the ruling could "pav[e] the way" for states to pass other legislation affecting managed care (Crawford Greenburg, Chicago Tribune, 4/3).
Health insurers have opposed AWP laws because they say such laws limit their ability to contain costs, noting that HMOs bargain for lower reimbursement rates by promising network providers a large volume of patients. If HMOs cannot promise high patient volumes, insurers' attorneys told the Supreme Court, they will be forced to raise payment rates and "drive up the costs of health care services" (Savage, Los Angeles Times, 4/3). Donald Young, president of the Health Insurance Association of America, predicted the ruling would lead to higher health insurance premiums and reduced quality (Washington Post, 4/3). Daly Temchine, a lawyer for the American Association of Health Plans, said the decision goes against a recent trend of curbing health costs. "If the entity can no longer give exclusive access to a pool of patients, and providers have to share that pool, volume discounting is affected," Temchine said (Murray, Washington Times, 4/3). Some health industry analysts predicted the ruling would "transform" the health insurance market over the next few years. Jack Reichman, an insurance analyst for Standard & Poor's, said, "The kind of special privileges that ERISA gives health plans are being whittled away." Anthony Knettel, a health policy expert for the ERISA Industry Committee, said that by reducing the power of ERISA and giving states more authority, health care will become "more costly and less efficient" (Freudenheim, New York Times, 4/3).
The following broadcast programs yesterday reported on the Supreme Court ruling:
- CBSNews.com: Legal analyst Andrew Cohen reports on the ruling (Cohen, CBSNews.com, 4/2). A transcript of the story is available online.
- NPR's "All Things Considered": The segment includes comments from Supreme Court advocate Tom Goldstein, who filed a brief in the case siding with the HMOs, and Boston University School of Public Health Professor Wendy Mariner (Totenberg, "All Things Considered," NPR, 4/2). The full segment is available in RealPlayer online.
- MPR's "Marketplace": The segment includes comments from Georgetown University physician and law professor Fred Block and AAHP President Karen Ignagni (Palmer "Marketplace," MPR, 4/2). The full newscast is available in RealPlayer online.