The Arkansas any-willing-provider law that was thrown out by the 8th Circuit U.S. Court of Appeals has been abandoned by the state and its provider backers after three years of litigation.
"None of the losing parties, including the state, have any intention of asking for a rehearing or (an appeal) to the Supreme Court," said Tim Gauger, an assistant attorney general. "We feel it would be better to take another run at legislation than continue to litigate it in the 8th Circuit."
Those losing parties were listed on the appeal brief as National Park Medical Center, of Hot Springs, Ark., and four physicians. One of the four, Y.Y. King, M.D., is a member of the Arkansas Medical Society, which spent almost $200,000 defending the law.
"We went through two courts and lost on the same basis," said Ken Lamastus, executive vice president of the medical society. "We decided we might have been right; but they said we were wrong, so we're not going to try the third time."
The reason the law was overturned, he added, "was because we mentioned ERISA, even though we said it doesn't apply to ERISA."
That was enough to activate the pre-emption clause of the Employment Retirement Income Security Act of 1974, ruled the St. Louis-based appeals court on Sept. 2, affirming a lower court ruling in February 1997 (Feb. 10, 1997, p. 6). ERISA automatically pre-empts any state law that might interfere with employers' ability to construct health plans that are consistent across state lines.
Any-willing-provider laws force health plans to accept as part of their physician group any physician who wants to participate.
The law was passed in 1995 when managed care was in its infancy in Arkansas. The vote was 33-1 in the Senate and 88-1 in the House. "We're five to eight years behind the West Coast," said one Arkansas healthcare observer who asked not to be identified. "In 1995 we were just beginning to get involved in contracting and systems and partnerships."
The Arkansas law was regarded by the American Association of Health Plans as the most pernicious of its kind, and the AAHP mobilized to overturn it. But Jerry Mabry, chief executive officer of National Park Medical Center, owned by Tenet Healthcare Corp., sounded unrepentant in a statement defending patient choice: "The ruling of the court does not change patient sentiment. Ultimately, the customer will prevail."
Of course that depends on how you define "the customer." So far the federal courts have defined it as the health plan, not the individual patient. Any-willing-provider laws have been routinely overturned in every state where they've passed.
The issue of "freedom of choice" for patients made for some curious bedfellows, especially on the opposing side. The parties who challenged the law were the Arkansas AFL-CIO, Health Advantage HMO, the Prudential Insurance Company of America and its local HMO, Tyson Foods and the United Paperworkers International Union.
Health Advantage is jointly owned by Blue Cross and Blue Shield of Arkansas and Baptist Medical Center, the largest hospital in Little Rock. So in effect Baptist and National Park hospitals were arguing against each other. As Lamastus put it, "You would guess one of them has an HMO and the other doesn't."
That juxtaposition highlights one of the oddities of any-willing-provider laws in an age when hospitals not only contract with HMOs but own them too. Any hospital with a stake in an HMO or provider-sponsored organization would be at a disadvantage operating under such a law.
The hospital could no longer restrict its HMO's enrollees to using its own facility or network or affiliated physicians. That, after all, is one of the core operating principles of an HMO, as the legal brief prepared by Health Advantage asserts.
Baptist officials did not return calls seeking comment.
The position of the Arkansas Hospital Association was similarly muddled. The association gave money to the law's defenders and supported the bill in 1995, officials told MODERN HEALTHCARE*last year. But last week Paul Cunningham, a vice president at the state association, said: "When this was going through the Legislature, we had some hospitals in favor of it and some who were not in favor of it. The field was divided, so we didn't take a position."
Lemastus said the medical society plans to take another run at the bill in the 1999 legislative session and has found some willing sponsors.