High court hears case on HMO limits
Published: Wednesday, January 15, 2003 at 6:01 a.m.
Last Modified: Wednesday, January 15, 2003 at 12:40 a.m.
WASHINGTON - The Supreme Court wrangled Tuesday over whether states can push HMOs to enroll more doctors, giving patients broader choices in their health care.
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About half the states have laws requiring managed care or insurance companies to accept health care providers - physicians, pharmacists or specialists like nurse practitioners.
The HMO industry says forcing health plan expansions raises insurance costs for everyone and adds to the escalating price of health care.
The justices, some of whom have battled their own health problems, seemed energized in Tuesday's debate over doctor options. They talked about pregnant women forced to see a different in-network physician because of a health plan change and the limited choices of people who want to see a chiropractor rather than a doctor.
"It is really important to patients to choose a doctor because of the personal relationship," Justice David H. Souter said, who at 63 is the second-youngest member of the court. The oldest, Justice John Paul Stevens, is 82.
Chief Justice William H. Rehnquist seemed skeptical of some of the arguments made by the HMO lawyer. "That really does not seem to make sense to me," Rehnquist interrupted at one point.
The case turns on whether a Kentucky HMO law is regulating insurance, as states are allowed to, or regulating employee benefits, which is an area reserved for Congress.
The 1994 law was challenged by a group of HMOs and an industry trade association.
Their attorney, Robert Eccles, said the Kentucky law was among the broader of the so-called "any willing provider" laws requiring health plans to open closed networks. Some states have laws that only affect hospitals or pharmacies, and some apply to all health care professionals.
Eccles argued that the laws increase administrative costs, make it harder for HMOs to monitor quality, and jeopardize deals that health plans have made with providers. "It creates an uncertainty in the network," he told justices.
Elizabeth Johnson, the lawyer defending Kentucky's law, said the Supreme Court should let states help patients have more control over health care. She said under "common sense" analysis, the law is an insurance regulation.
"I don't trust common sense," said Justice Antonin Scalia, who appeared concerned that the law went too far.
The case brings 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.
Many managed care companies have doctors and hospitals under exclusive contracts to serve patients enrolled in one plan. The doctors and hospitals agree to accept lower fees in return for a guaranteed stream of patients.
Michael Morrisey, a health insurance expert at the University of Alabama at Birmingham, said the success of managed care depends on cost-cutting contracts that are challenged in the Kentucky case.
"In theory it really guts what managed care is all about, negotiating lower prices in exchange for volume," Morrisey said.
Justice Ruth Bader Ginsburg said during the argument that managed care companies seem worried that the laws would "spell the end of HMOs." Eccles responded that costs have gone up in states with willing provider laws, some studies show increases of 15 percent.
The Bush administration urged the Supreme Court to uphold Kentucky's law.
The Supreme Court will hear arguments in another health care case next week, this one involving whether states can control the prices of prescription drugs by pressuring drug companies to lower costs for the poor.
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