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January 15, 2003 WASHINGTON,
Jan. 14 — Kentucky told the Supreme Court today that it should be
allowed to guarantee patients a broader choice of doctors through a state
law regulating managed care companies. Several justices indicated that they were inclined to uphold the 1994 law, which requires health maintenance organizations and other insurers to sign contracts with any provider willing to accept their payment rates and rules. But the
Kentucky Association of Health Plans argued that the state law usurped the
power of the federal government to regulate employee benefit plans and
violated a central tenet of managed care. H.M.O.'s contend that they cannot effectively control costs or the quality of care unless they limit the number of doctors and hospitals that participate in their provider networks. Such limits are all the more important now because health costs are soaring again, the industry says. Doctors and hospitals offer discounts to H.M.O.'s in return for a guaranteed stream of patients. "The fewer the providers, the greater the patient volume for each provider," the Kentucky association told the court in its legal brief. The case could determine whether health insurance companies can choose which health care providers to include in their networks. More than 20 states have "any willing provider" laws, many of which guarantee access to pharmacies. The Kentucky law is one of the most comprehensive in the nation. Justice David H. Souter, a former hospital trustee who has written several of the court's recent decisions on health care, appeared willing to uphold the Kentucky law as a legitimate state regulation of insurance. Under the Kentucky law, Justice Souter said, a person who enrolls in an H.M.O. will have "a far greater choice" of providers, "a breadth of choice that would otherwise not be available." A federal law, the Employee Retirement Income Security Act of 1974, gives the federal government sole authority to regulate employee benefit plans, superseding "any and all state laws" that relate to such plans. But the federal law explicitly preserves the states' power to regulate insurance, a field in which the states have set standards for more than 130 years. The main question before the court today was whether the Kentucky law regulates insurance, as the state contends. The Bush administration supports the state's position in the case, Kentucky Association of Health Plans v. Miller, No. 00-1471, which came to the Supreme Court when the health plans appealed a decision by the United States Court of Appeals for the Sixth Circuit, in Cincinnati. Robert N. Eccles, representing the Kentucky Association of Health Plans, insisted that the state's "any willing provider" law did not regulate insurance or insurance practices. The law, Mr. Eccles said, regulates the relationship between insurance companies and providers, not the relationship between insurers and their subscribers. Moreover, Mr. Eccles said, such laws are bad public policy because studies suggest that they raise the cost of managed care by 15 percent. In several recent cases, the court has upheld state laws regulating insurance and managed care. By a 5-to-4 vote in June, it ruled that states could require H.M.O.'s to provide an independent outside review of decisions denying coverage for treatments recommended by a patient's doctor. Sara Rosenbaum, a professor of health law and policy at George Washington University, whose casebook was cited by the Supreme Court in the H.M.O. case last year, said she believed that the Kentucky law would survive. "There is a general desire by the Supreme Court to make sure it does not get in the way of states on a regulatory matter like this," Ms. Rosenbaum said. "The court may conclude that in the modern world, designing your provider network is part of designing your insurance product. So if a state regulates the provider network, it's regulating the business of insurance." H.M.O.'s contend that the Kentucky law would, in effect, force them to contract with more doctors than they need. Patients will suffer, Mr. Eccles said, because "it's more difficult to monitor the quality of care in a larger network." Justice Sandra Day O'Connor told Mr. Eccles: "You complain about the increase in the number of providers in the network. But it's that increase that might be desirable from the patient's standpoint." Copyright
© 2002 Global Action on Aging
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