Court Hands HMOs Defeat in ‘Any Willing Provider’ Ruling

Health plans must open their panels to any and all qualified clinicians when mandated to do so by state “any willing provider” laws, according to the U.S. Supreme Court.

The unanimous ruling, issued last month in the case Kentucky Association of Health Plans v. Miller, would appear to strike at a central cost-containment strategy of health maintenance organizations: By limiting the number of enrolled clinicians, the plans can ensure those clinicians who are enrolled will have a sufficient patient load to compensate for discounted fees.

Approximately half the states have laws that inhibit that strategy by requiring plans to hire “any willing provider (AWP).”

The Supreme Court’s ruling revolved around whether AWP laws are preempted by the Employee Retirement Income Security Act of 1974 (ERISA), which preempts all state laws regarding employer-provided health plans.

ERISA’s preemption provision, however, also contains an exception for state laws that “regulate insurance, banking, or securities.” So the legal question in the case was whether an AWP law constitutes a regulation of insurance.

The Kentucky Association of Health Plans argued that Kentucky’s law did not regulate insurance—and was therefore preempted by ERISA—because it did not regulate the terms of insurance contracts themselves.

The Court disagreed. “We have never held that state laws must alter or control the actual terms of insurance policies to be deemed laws which regulate insurance; it suffices that they substantially affect the risk-pooling arrangement between insurer and insured,” wrote Justice Anthony Scalia for the Court. “By expanding the number of providers from whom an insured may receive health services, AWP laws alter the scope of permissible bargains between insurers and insured. . . . No longer may Kentucky insureds seek insurance from a closed network of health care providers in exchange for a lower premium. The AWP prohibition substantially affects the type of risk-pooling arrangements that insurers may offer.”

The decision was applauded by the AMA, which along with APA and three other medical groups, filed a friend-of-the-court brief in support of the state’s right to regulate health plans through any willing provider laws. The other groups were the Kentucky Medical Association, National Medical Association, and American College of Obstetricians and Gynecologists.

“The American Medical Association believes that the U.S. Supreme Court today provided patients and physicians with a major victory when they issued a rare unanimous decision in Kentucky Association of Health Plans v. Miller,” said AMA President-elect Donald Palmisano, M.D. “The AMA believes this victory adds clarity to patient protections established by state lawmakers against the abuses of managed care.”

Palmisano noted that the brief filed by the AMA, APA, and the other organizations “also emphasized the need to take a fresh look at a more useful method for analyzing the relationship between state law and federal law.”

He added, “The AMA has repeatedly maintained that health insurance companies cannot avoid accountability to state laws regulating insurance by hiding behind a federal law known as [ERISA]. We applaud the Supreme Court for making a clean break from the confusing interpretations previously used by the court to determine appropriate occasions when state law may be preempted by ERISA.”

Two-Edged Sword

APA Vice President Steven Sharfstein, M.D., took a slightly more cautious view of the ruling, while acknowledging that it could help increase access to psychiatrists on health plan panels.

“A unanimous opinion of the Court recognizing ‘any willing provider’ laws should allow psychiatrists to join any carveout networks,” he told Psychiatric News. “That might be beneficial in some parts of the country. If this leads to more people joining networks, that would be positive. The rub is that in order to become a part of a network, the clinician must still agree to their terms related to care and fees.”

He added, “It could be helpful, but it’s hard to say. It has happened many years after the involvement of managed care in the lives of patients.”

Coming from an entirely different perspective, at least one insurance industry spokesperson agreed as much.

“Today’s ruling by the U.S. Supreme Court changes little in the current health care delivery system,” said Karen Ignagni, president and CEO of the American Association of Health Plans. “In the nine years since Kentucky’s ‘any willing provider’ legislation was passed, insurers responded to consumer demands, offered more product choices, and built a higher quality health care system. Innovation is the hallmark of this industry, and we will continue to adapt to the interests of consumers and the demands of regulators.

“In a time of rising health care costs, today’s ruling underscores the critical need for state legislators to carefully evaluate the consequences of legislation on affordability and quality,” Ignagni said. “Polls consistently show that consumers’ top health care priorities are enhanced access to affordable coverage and quality.”

Choices Limited

Other industry experts, however, had a more negative reaction to the ruling.

“We’re extremely disappointed by the Supreme Court’s ruling in favor of so-called ‘any willing provider’ laws,” said Donald Young, M.D., president of the Health Insurance Association of America. “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,” Young continued. “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.” ▪