Supreme Court could nullify 'Any Willing Provider'

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Monday, March 31, 2003

WASHINGTON - The constitutionality of Any Willing Provider laws is currently undergoing the ultimate litmus test: The United States Supreme Court.

After hearing oral arguments in January, the nation’s high court is expected to rule on the AWP bellwether case Kentucky Association of Health Plans v. Miller by July. If justices rule in favor of the plaintiff, HME providers across the country could instantly be shut out of managed care contracts. It would ostensibly cancel AWP laws on the books in 25 states – an effort that state HME associations helped spearhead in the mid-1990s.

The Kentucky Association of Health Plans is challenging a 1994 Kentucky AWP law through a lawsuit that names Janie Miller, commissioner of the Kentucky Department of Insurance, as defendant. In the action, the health plan association argues that AWP violates the federal Employee Retirement Income Security Act (ERISA) by illegally “regulating insurance.”

The Supreme Court agreed to hear the case after two lower courts sided with the defendant.

HME sources have stopped short of calling a pro-plaintiff decision disastrous, but agree that some providers could be hurt - namely those who couldn’t participate in managed care plans without a legislative order.

“It won’t have a huge impact but it will cut off the market for those companies who don’t have the opportunity for exclusive contracting,” said Tom Underwood, executive director for the Kentucky Medical Equipment Suppliers.

“What I don’t understand is why managed care companies are so against [AWP],” he continued. “They get to set the rules. They can contract with any provider they want to and if those providers accept the terms, why not?”

Underwood concedes, though, that the association’s members haven’t offered much input on the case. If the majority have Alan Grogan’s attitude, their silence speaks volumes.

“It won’t affect us much because we’re not a willing provider,” said Grogan, president of Grogan’s Healthcare Supply, Lexington, Ky. “We don’t want to give 20% to 40% off our prices.”

Still, Grogan added that he’s surprised a lawsuit even exists over the issue in Kentucky - let alone a case of national consequence.

“I was under the impression that most of the managed care plans in the state are glad to have any provider as long as they offer a discount,” he said.

The gist of the plaintiff’s argument is that AWP laws prevent managed care plans from limiting the size and scope of contracted services. Keeping the provider network intentionally small is integral to health care savings, a spokeswoman for the American Association of Health Plans recently told Reuters.

But Jim Walsh, president and counsel for Waterloo, Iowa-based VGM is skeptical of that argument.

“Basically the payers are saying that they need to continue to play hardball…that without that power, they can’t do their best to keep prices down,” Walsh said. “But it’s really a ‘good old boy’ network that keeps prices up. It’s the existence of AWP laws that keep competitors in the market.” HME