Feds might object to any state law forcing a insurer, hospital into contract

Pa. Legislature considers bill to force a hospital system to contract with a health insurer

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The U.S. Federal Trade Commission would likely take a dim view of a state law that would force a hospital system to enter into a contract with a health insurance company against its will, according to one health law and antitrust expert.

Such a law -- which would be the first of its kind in the nation -- is being contemplated by the state Legislature.

Last week, the state House Health Committee heard testimony on legislation from Rep. Jim Christiana, R-Beaver, and Rep. Dan Frankel, D-Squirrel Hill, that would essentially force UPMC hospitals and doctors to accept patients who carry Highmark health insurance at in-network rates.

At present, UPMC says that it does not intend to renew its contract with Highmark after the current one between the two Pittsburgh health giants expires at the end of 2014. But Mr. Frankel and Mr. Christiana envision an "any willing insurer" law, which would mean any insurer willing to do business with an integrated health system -- that is, a hospital network with its own insurance company -- would be able to.

The law would essentially turn the country's various state-level, any-willing-provider laws on their heads, said James M. Burns, a Washington, D.C., health law and antitrust attorney at Detroit-based Dickinson Wright.

"In some respects, what goes around comes around," Mr. Burns said. That's because 32 states -- Pennsylvania is not among them -- have enacted any-willing-provider laws over the past three decades. Those laws generally require a health insurer to admit willing providers into the health insurer's approved network, so long as the providers in question meet certain standards.

The laws vary in scope. Delaware's deals exclusively with the interplay between drugstores and pharmaceutical benefits managers, while others, like Georgia's and Idaho's, say insurers "must give all licensed and qualified providers within a defined service the opportunity to become a preferred provider."

But they are similar in spirit in that they try to block the insurance carrier's ability to choose favorites by including some providers, while locking others out. Medical and pharmaceutical providers have been lobbying for such protections for years.

"The providers were clearly the driving force of AWP [laws]," Mr. Burns said. Now, their "success is coming back to haunt them," at least in Pennsylvania, where Highmark is trying to turn the tables.

The Federal Trade Commission, whose mission is to enforce the rules of the competitive marketplace and vet laws and deals that have the potential to harm competition, could review Pennsylvania's any-willing-insurer law, if it were ever enacted.

"The FTC normally takes a dim view of [any willing provider laws]. I imagine that they would similarly take a dim view of a requirement that [providers] would have to contract with" any and all insurers, Mr. Burns said.

That's because the FTC takes the position that such laws are anti-consumer in that they limit the effectiveness of preferred provider networks, and limit the ability of health insurers to negotiate good prices with hospitals.

The opposite could hold true in the case of an any-willing-insurer law, in that UPMC's ability to negotiate rates and pick business partners would be hampered.

But a dim view is not the same as verboten and, notably, all of the any-willing-provider laws have been allowed to stand by both the FTC and, when challenged, in the courts. In 2003, the U.S. Supreme Court upheld Kentucky's any-willing-provider statutes.

If Pennsylvania were able to pass the nation's first any-willing-insurer law, other insurers will be watching, and other states might do the same. If the legal concept catches fire, hospitals need to watch out, Mr. Burns said.

"We could see a significant change in how health care is delivered, and by whom, and what the cost of it is," he said. It would "not [be a] favorable development for providers."

Bill Toland: btoland@post-gazette.com or 412-263-2625.

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