The U.S. Supreme Court issued a blow to health plans today with a unanimous ruling that allows states to require HMOs to open their provider networks to any physician, hospital or pharmacy that agrees to the contractual terms of the plan.
In Kentucky Association of Health Plans v. Miller, the association had argued that Kentucky's 1994 "any willing provider" law is pre-empted by the federal Employee Retirement Income Security Act of 1974.
About half the states have any willing provider laws, but only five are as broad as Kentucky's in the scope of providers those laws include.
During oral arguments on Jan. 14, the lawyer for the plans said that because the Kentucky law regulates relations between providers and patients, rather than providers and insurers, it is not directed specifically toward the insurance industry.
The high court disagreed. In his 12-page opinion upholding the Kentucky law, Justice Antonin Scalia said it is exempt from ERISA because it regulates insurance.
"Neither of Kentucky's AWP statutes, by its terms, imposes any prohibitions or requirements on health-care providers," Scalia wrote, affirming the judgment of the 6th U.S. Circuit Court of Appeals in Cincinnati.
"Those who wish to provide health insurance in Kentucky (any 'health insurer') may not discriminate against any willing provider," he continued. "This 'regulates' insurance by imposing conditions on the right to engage in the business of insurance."
Lawyers representing the insurance commissioner of Kentucky said the law gives patients more choice by stopping insurers from arbitrarily limiting the number of providers in their networks. The AMA and the U.S. Department of Justice support the state's position.
Health plans contend that unlimited networks will erode the ability of managed care to control costs. Without being able to ensure a large volume of patients to a small provider network, the plans say they will not be able to negotiate for discounted fees.