High court punches another hole in the federal law shielding HMOs

A decision on Kentucky's "any-willing-provider" law further weakens health plans' ERISA armor.

By Tanya Albert, AMNews staff. April 21, 2003.

For the third time in four years, the U.S. Supreme Court has ruled that federal law doesn't automatically safeguard health plans from state insurance laws that might offer protection to physicians and patients -- and this time the justices said it unanimously.

The high court ruled this month that the Employee Retirement Income Security Act of 1974 does not preempt a Kentucky law that requires health plans to include doctors, pharmacists or other health professionals in networks if they meet the plans' criteria.

In addition to Kentucky's statute, commonly known as the "any-willing-provider" law, Idaho, Illinois, Indiana, Virginia and Wyoming also have laws that apply directly to physicians. Even more states have laws that apply to other health professionals.

The Supreme Court decision lets Kentucky continue its open network policy, which was designed to ensure patients' access to the physicians they wanted and to give qualified physicians a guarantee that their businesses wouldn't be jeopardized because a health plan refused to make them part of a network.

But even more significant, many say, is the fact that the U.S. Supreme Court again ruled that ERISA doesn't shield health plans from state laws. For years, the court has allowed the federal law to preempt state statutes.

"The states and physicians in the states can try to improve quality of care and public health issues and not have that lost because of ERISA," said Saul Morse, general counsel for the Illinois State Medical Society.