HMOs must open up;

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Justices rule that states can force health care plans to accept more doctors in network.

Long Beach Press-Telegram

The Supreme Court ruled unanimously Wednesday that states can force HMOs to open up their doctor networks, upholding a practice used in about half the states to give patients broader health care choices.

The ruling is a blow to health maintenance organizations, which argued networks are more cost effective because doctors and hospitals agree to accept lower fees in return for a guaranteed stream of patients.

Two 1994 Kentucky laws were challenged by a group of HMOs and a managed-care trade association. Kentucky’s statutes are known as “any willing provider’ laws.

Some states have laws that affect only hospitals or pharmacies, and some have such laws that apply to all health care professionals.

The Supreme Court’s ruling will have very little pull on managed-care companies in California as most insurers already work from a large pool of doctor networks.

“This ruling certainly sets a good precedent for the nation. But California would have to create a new law to enact the Supreme Court’s ruling. And that’s not likely right now,’ said Jamie Court, executive director with The Foundation For Taxpayer & Consumer Rights in Santa Monica.

Health Net, Inc., a Woodland Hills-based company that has approximately 49,000 medical professionals in its database, is not concerned about the ruling. David Olson, a spokesman, said changes would be minimal, if noticeable at all.

“Although one possible concern is what happens when we want to exclude a provider for quality reasons? I don’t have the answer, but overall I’d probably say this ruling is a moot issue for us,’ Olson said.

Under such rules, managed-care or insurance companies must accept health care providers physicians, pharmacists or specialists like nurse practitioners.

Providers have to agree to the insurer’s reimbursement rates and contract terms. Industry lawyers had argued that such laws increase administrative costs, make it harder for HMOs to monitor quality, and jeopardize deals that health plans have made with providers.

But Russell Korobkin, a UCLA law professor, said allowing states to have more control over HMOs is probably better for patients and doctors.

“This opens the door to states so they can intervene when there is less competition among insurers,’ Korobkin said.

In upholding two Kentucky statutes, justices said nothing about any willing provider laws’ potential benefits to patients, or whether they work as intended.

“The jury’s still out as to whether the laws are good, bad or indifferent,’ said Steven Goldblatt, a Georgetown University professor. “That will continue to play out in the states.’ The case turned on whether the Kentucky HMO laws regulate insurance, as states are allowed to, or regulating employee benefits, which is an area reserved for Congress.

Justice Antonin Scalia said such regulation was permissible under the law.

The Bush administration had asked the court to uphold the Kentucky laws. The case brought up a common complaint about managed-care plans: People want to be able to see their favorite physicians even if they are not in their network.

Several HMOs, including Aetna Inc. and Humana Inc., challenged the Kentucky law in 1997.

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