A new act passed in Georgia aims to prevent health insurers from discriminating against rural healthcare providers but offers exemptions for HMOs.
The Essential Rural Health Provider Access Act, signed into law April 14 by Gov. Zell Miller, allows rural providers to apply for participation with health plans and requires the insurers to enter good-faith negotiations with the rural facilities.
The act protects hospitals and clinics that operate fewer than 100 beds in a county with a population of less than 35,000. To meet the requirements for the act, the rural hospitals also must provide 24-hour emergency care and derive a significant portion of their patient revenues from a combination of Medicare and Medicaid.
The GHA: An Association of Hospitals and Health Systems backed the bill, which was introduced in the state Legislature in January. The GHA, based in Marietta, represents more than 190 hospitals and health systems, of which about 70 would qualify under the act.
"We wanted to take whatever steps necessary to make sure our rural hospitals would be able to serve their communities," said Joseph Parker, GHA president and chief executive officer.
Many rural hospitals are struggling to survive because managed-care contracts are forcing residents to travel out of the communities for healthcare, Parker said.
The act states that "rural healthcare providers are being arbitrarily excluded from participating in certain benefit plans and that, should such practice continue, these providers will be harmed."
Under the law, health plans still can disqualify rural hospitals if the providers fail to meet specified plan standards. However, if rural hospitals are denied contracts, insurers must explain why the providers were denied in writing and allow the hospitals a chance to correct deficiencies. The hospitals also can appeal the plans' decisions to the insurance commissioner.
"(The act) will be a tool that providers can use to force insurance companies to sit down and negotiate with them," said Holly Bates Snow, director of government relations for GHA. "They cannot simply be dismissed."
Surprisingly, the Georgia Association of HMOs, a trade group representing 12 HMOs with about 95% of the state's HMO enrollment, also backed the bill.
"While we generally wouldn't support such a piece of legislation, this is a unique circumstance," said Kevin Curtin, executive director of the association. "This is an exception because of the exclusives previously in the state and the financial difficulties of rural hospitals."
Previously, some hospitals demanded exclusive contracts within a specific geographic area outside the hospital, Curtin said. "(The act) will help spread managed care," he said. "It will break some of the stranglehold by regional hospitals in the state of Georgia. They either have not allowed managed care in or locked other hospitals within 50 miles out."
However, the bill won't necessarily help rural hospitals gain contracts with HMOs, which are virtually exempt from complying with the act. Because HMOs are licensed by both the insurance commissioner and the department of human resources on a county-by-county basis, they can choose to stay out of rural counties. Currently, HMOs have penetrated only two of the 190 counties in Georgia. Even when a particular plan opts to expand services into rural communities, the act exempts HMO compliance.
"A health maintenance organization shall not be required to comply with this Code section within such health maintenance organization's service area if such area was approved by the commissioner of human resources . . . . The commissioner of human resources shall consider whether the health maintenance organization has demonstrated its willingness to grant reasonable consideration to essential rural healthcare providers in the negotiating and contracting process," according to the act.
This means that HMOs still have the option of excluding specific rural hospitals as long as they show a general intention of allowing rural hospitals into their network.
The act will have a greater impact on the more than 30 PPOs in the state. They must comply to all the terms of the act because they are licensed solely by the state and are considered to have a statewide service area.
Still, even PPOs seem undaunted by the act, which can be construed to limit their choice of providers. Instead, PPOs see the bill in a positive light. "(The bill) will serve as a way to open new doors to the Georgia hospitals that service smaller hospitals, " said Larry Madlem, chairman of the PPO Council for the Fort Lee, N.J.-based Association of Managed Healthcare Organizations.