RAY SUAREZ: Today the high court heard arguments in a case challenging Kentucky's "any willing provider" law. At issue: Whether Kentucky can force Health Maintenance Organizations to accept any health care provider who wants to join. Here to take us inside the court is NewsHour regular Kan Crawford Greenburg, Supreme Court reporter for the Chicago Tribune. Well, Jan, who was taking the state of Kentucky to court?
JAN CRAWFORD GREENBURG: A group of several HMOs and an HMO trade association challenged the Kentucky law. They argued that states had no business getting involved in these kinds of issues, that this was specifically a matter of federal concern and specifically governed by a federal law that Congress passed in 1974 that was designed to cover employee benefits and employee pension plans. They lost in the federal appeals court in Cincinnati. So they took their case to the U.S. Supreme Court and their attorney made that case today.
RAY SUAREZ: Tell us a little bit more about any willing provider laws. What are they and what did they allow to happen in Kentucky?
JAN CRAWFORD GREENBURG: It's much as it sounds. Any willing provider, HMOs under these laws, are required to admit into their networks any willing provider, any doctor who agrees to abide by their rates and conditions, for example, for reimbursement. It's designed to ensure patients greater choices and to ensure continuity of care. For instance, Justice Kennedy today during the oral arguments offered an example of the kind of patient who might benefit from these kinds of laws. He referred to a pregnant woman who changes jobs and, therefore, insurance plans but she would still like to keep her same doctor. Her doctor may not be part of her new insurance plan. Under these laws she could go to the new insurance company and say, "I would like to keep my old doctor." If the doctor agrees, if he's a willing provider, willing to meet the HMOs terms, the HMO has to admit him. Before and without this law the HMO would categorically reject that doctor. The pregnant woman would have to seek a new provider.
RAY SUAREZ: Well, what were the managed care industry representatives arguing because don't states already regulate insurance quite commonly?
JAN CRAWFORD GREENBURG: They do. They say this is not about the business of insurance. This is not an insurance regulation. This has to do... which they acknowledge and the federal law does make clear that states can regulate insurance. That's quintessentially a state function and it's a heavily regulated industry. But the managed care industry says this law falls under employee benefits, that it's not an insurance regulation, that it doesn't change the terms of an insurance policy so therefore it's a matter that should be determined under federal law, specifically again under that 1974 law that is referred to as ERISA. and it sounds horrible because ERISA, but it's the Employment Retirement Income Security Act. It was designed to protect pension plans and to protect employees when Congress passed it in 1974 but over the years it has expanded to cover other types of employee benefits including health benefits.
The managed care industry has long assumed that this federal law would also cover and protect their practices. The Supreme Court though in a very important ruling just last year said, well, no, we're going to open the door to state regulation of the managed care industry because some of these laws the states are now passing particularly in the absence of congressional activity, in the absence of a patients bill of rights in Congress, these state laws that states have been passing to protect patients' rights, the Supreme Court ruled last year could be in some instances an insurance regulation. So today's case... that we had last year. So today's case the court now has the opportunity to open that door a little wider to even more regulation by states of the managed care industry.
RAY SUAREZ: Does it sound like the justices were inclined to open that door?
JAN CRAWFORD GREENBURG: It did to a point. I think several justices were very sympathetic to lawyers for the state of Kentucky and lawyers for the Bush administration that these types of laws did amount to insurance regulation and that states could step in. I told you about Justice Kennedy's point suggesting that he did see some sympathy for people who might have to change doctors. Justice Rehnquist also noted that the pregnant woman's doctor categorically would have been rejected. Justice Souter, who wrote the opinion in last term's big HMO case, also noted that this would dramatically increase the breadth of options available to patients and that the Kentucky regime would dramatically increase the number of doctors available. That said, the justices also struggled with just how to come up with the rationale for why this was insurance and why it should be regulated by the states instead of being under the federal scheme and considered more employee benefit. Justice Scalia had real problems with that and raised serious questions for the lawyers for the state of Kentucky and the Bush administration. So it may be a difficult opinion to write despite their sympathies I think for the state.
RAY SUAREZ: Almost half the states in the United States have any willing provider laws. Is this case structured in such a way that this could clear the table? If the justices find against the state of Kentucky, will this take Massachusetts' law down and other laws?
JAN CRAWFORD GREENBURG: Certainly it could. And if I could go back to another point, it could have an even more broad effect than that because certainly this will affect the any willing provider laws but if the court rules against Kentucky as the managed care industry so hopes, they argue these laws have increased their costs, then it could discourage states from trying more regulations and trying to regulate the industry -- obviously a ruling for the state, which the managed care industry fears could encourage those efforts to increase the regulation of HMOs at the state level.
RAY SUAREZ: It's interesting that Kentucky said that this raises their costs because....
JAN CRAWFORD GREENBURG: The managed care industry.
RAY SUAREZ: Excuse me, the managed care industry because part of any willing provider, as you've explained it, would be that the doctors accept the fee structure as it's stated.
JAN CRAWFORD GREENBURG: Right. And certainly the doctors would have to abide by whatever rates the HMO Set down if they're willing to participate. But they say this goes to the heart of the way they're structured, their business practices. HMOs can keep their costs low because they do an enormous volume. They have a lot of patients that they refer to their doctors in the network. So the doctors, therefore, see more patients and then they can see them at slightly reduced rates, but if they have to open up their networks to more and more doctors, then that could cut their costs and reduce their costs because it would, you know, reduce the volume that their original doctors in the network would see.
RAY SUAREZ: Jan, thanks a lot.
JAN CRAWFORD GREENBURG: You're welcome, Ray, thank you.