U.S. Supreme Court weighs any-willing-provider laws

The high court's roster of medically related concerns also includes a look at Medicaid drug rebate programs.

By Tanya Albert, amednews staff. July 29, 2002.

The U.S. Supreme Court is poised next term to take up at least two hot medical issues that will affect doctors.

When the high court starts its new session in October, it will examine whether states' efforts to ensure that qualified physicians and other health professionals don't get shut out of health plan networks are preempted by the federal Employee Retirement Income and Security Act of 1974.

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Justices also will look at how far states can go in trying to use their Medicaid programs to negotiate prescription drug rebates with pharmaceutical companies for non-Medicaid-eligible residents. The court may add other health-related cases to its docket as its new term approaches.

A larger number of physicians likely will be affected by the first of the cases, which originated in Kentucky.

Nearly two dozen states have laws -- at least seven of which affect physicians -- that require health plans to contract with health professionals who meet the terms of a health plan's contract, according to the National Conference of State Legislatures.

The laws, commonly known as "any-willing-provider laws," became popular in the 1990s as a way to stop managed care organizations from excluding physicians, pharmacists or others, thereby hurting their ability to practice.

Managed care plans say any-willing-provider laws increase health costs.

Kentucky's law is among the broadest. It covers physicians, pharmacists and other licensed health professionals. The Kentucky Medical Assn. supported the law as it moved through the Legislature.

"It helps physicians have a little bit of leverage with health plans," said Patrick T. Padgett, the KMA's staff counsel and director of socioeconomic affairs. "They can't just be excluded because a health plan wants to limit the number of doctors they have. Patients want as many choices as they can get."

KMA plans to file a friend-of-the-court brief in the case, Kentucky Assn. of Health Plans Inc. et al. v. Janie A. Miller, Commissioner, Kentucky Dept. of Insurance. At press time, the American Medical Association/State Medical Society Litigation Center was reviewing whether it would join the KMA in the brief.

Health plans have opposed any-willing-provider laws as strongly as medical associations have supported them. They say ERISA preempts Kentucky's law. Opponents also say health care costs go up when health plan panels must include everyone, defeating the purpose of a network.

And that's among the reasons the Kentucky Assn. of Health Plans sued.

The law "removed incentives for cost reduction and innovations," said Melodie Shrader, KAHP's executive director. "If all providers have an entitlement to a contract on the same terms and conditions, no reason exists to compete in developing attractive or innovative proposals that better quality or reduce costs."

University of Alabama at Birmingham professor Michael A. Morrisey, PhD, said his ongoing research also had found that the laws increase health care costs.

"It cuts the heart out of what managed care tries to do," said Dr. Morrisey, director of the Lister Hill Center for Health Policy at UAB. "Providers who would have been shut out are better off economically. But providers in the network who would have been in a narrower network are worse off because there the patient volume is less. Also, the consumer pays more."

Estimates vary on how much any-willing-provider laws increase costs, according to the NCSL. Some studies have said the statutes increase administrative costs by 34% to 52%. Others said the laws increase HMO costs by 5.8% to 18.4%.

Kentucky's more extensive law is especially prone to raising the cost of care, said Mohit Ghose of the American Assn. of Health Plans.

"In a day and age where you have increasing health care costs, it is not good policy to have laws on the books that increase costs," he said.

Challenging Maine's tactics

The Supreme Court also will settle a dispute between Maine and the pharmaceutical industry. At issue is the legality of a Maine law that lets the state put a company's prescription drug on a Medicaid prior authorization list if the company doesn't offer a discount that would help residents who have low or moderate incomes but don't qualify for Medicaid.

The Pharmaceutical Research and Manufacturers of America sued Maine over the constitutionality of the law. The group says physicians should be able to decide what medication is best for patients and that they should be able to prescribe it easily.

"Programs like Maine Rx are dependent on denial of access to Medicaid patients," said PhRMA spokesman Bruce Lott. "It would have dire consequences for patients in the Medicaid program."

Physicians haven't had to deal with the law yet. It's been on hold while the lawsuit works its way through the court system. The U.S. District Court in Portland, Maine, first declared the law unconstitutional. After that, the 1st U.S. Circuit Court of Appeals said that on the face of the law, it appeared constitutional.

Some doctors fear that if the law does go into effect, prior authorization will increase the administrative burden of trying to get patients the prescription drugs they need. Others believe that the law would interfere with the physician-patient relationship.

"We are going to watch it closely," said Andrew MacLean, Maine Medical Assn.'s general counsel. "Physicians are concerned about access to medication for their patients."

Hawaii has passed legislation similar to Maine's, but it has not been implemented. Bills also have been introduced in other states. The Supreme Court is expected to rule on the Maine and Kentucky cases in 2003.

ADDITIONAL INFORMATION:

Cases at a glance

Kentucky Assn. of Health Plans Inc. et al. v. Janie A. Miller, commissioner, Kentucky Dept. of Insurance

Venue: U.S. Supreme Court
At issue: Whether the Employee Retirement Income Security Act of 1974 preempts a Kentucky law that requires health plans to accept any physician, pharmacist or other health care professional who meets contract criteria.
Potential impact: A ruling against Kentucky's statute would put about two dozen "any-willing-provider" laws -- at least seven of which apply to physicians -- in jeopardy. Doctors say such laws stop them from getting squeezed out of markets, while health plans say they drive up costs.

Pharmaceutical Research and Manufacturers of America v. Kevin Concannon, Commissioner, Maine Dept. of Human Services, et al.

Venue: U.S. Supreme Court
At issue: Whether a Maine drug rebate law that uses the state's Medicaid program to try to leverage discounts from pharmaceutical companies for non-Medicaid-eligible residents is constitutional.
Potential impact: Some physicians and the pharmaceutical industry say the law would reduce Medicaid patients' access to prescription drugs and would hurt research. Others say the law expands health care coverage and lowers health care costs.

Weblink

1st U.S. Circuit Court of Appeals decision in Pharmaceutical Research and Manufacturers of America v. Kevin Concannon, commissioner, Maine Dept. of Human Services, and Maine attorney general (http://www.law.emory.edu/1circuit/may2001/00-2446.01a.html)

6th U.S. Circuit Court of Appeals decision in Kentucky Assn. of Health Plans, et al. v. George Nichols III (former Kentucky Dept. of Insurance commissioner)