Supreme Court Says States Can Force HMOs to Open Doctor Netw

Supreme Court Says States Can Force HMOs to Open Doctor Networks
By Gina Holland Associated Press Writer
Published: Apr 2, 2003

WASHINGTON (AP) - The Supreme Court ruled unanimously Wednesday that states can force HMOs to open up their doctor networks, upholding a
practice used in about half the states to give patients broader health care choices. The ruling is a blow to the managed care industry, which argued networks are more cost-effective because doctors and hospitals agree to accept lower fees in return for a guaranteed stream of patients.

Two 1994 Kentucky laws were challenged by a group of HMOs and an
industry trade association. Kentucky's statutes are known as "any willing provider" laws. Some states have laws that only affect hospitals or pharmacies, and some have such laws that apply to all health care rofessionals.

Under such rules or laws, managed care or insurance companies must
accept health care providers - physicians, pharmacists or specialists like nurse practitioners. Providers have to agree to the insurer's reimbursement rates and contract terms.

Industry lawyers had argued that such laws increase administrative costs, make it harder for HMOs to monitor quality, and jeopardize deals that health plans have made with providers.

The case turned on whether the Kentucky HMO laws regulate insurance, as states are allowed to, or regulating employee benefits, which is an area reserved for Congress. Justice Antonin Scalia said such regulation was permissible under the law.

"By expanding the number of providers from whom an insured may receive health services, AWP (any willing provider) laws alter the scope of permissible bargains between insurers and insureds in a manner similar to the mandated-benefit laws we upheld" before, Scalia wrote.

He said "no longer may Kentucky insureds seek insurance from a closed
network of health-care providers in exchange for a lower premium."

The Bush administration had asked the court to uphold the Kentucky laws.

The case brought up a common complaint about managed care plans:
People want to be able to see their favorite physicians even if they are not in their network.

During the argument in the case in January, justices talked about pregnant women forced to see a different in-network physician because of a health plan change and the limited choices of people who want to see a chiropractor rather than a doctor.

The case is Kentucky Association of Health Plans v. Miller, 00-1471.