Yet Another Health Care Battle

Article excerpt

Managed care organizations are fighting yet another court battle against state regulation. This time the arena is Arkansas and the contenders are Prudential Insurance Company vs. Governor Jim Guy Tucker, the attorney general, the insurance commissioner and the director of the Department of Health. The fight is over Arkansas' "any-willing-provider" legislation.

The governor reluctantly signed one of the nation's broadest any-willing-provider laws, the Patient Protection Act of 1995, on March 1. Overwhelmingly passed by Arkansas legislators (33-1 in the Senate and 88-1 in the House), it says health maintenance organizations (HMOs) may not limit the participation of qualified health care providers if they are willing to accept the plan's contracts and fee schedules.

The law, which went into effect .in July, was seen as a victory for provider organizations like the Arkansas Medical Society and a loss for the managed health care industry. Managed care constitutes about 22 percent of the Arkansas market.

Prudential and its co-plaintiffs, HMO Partners Inc., Tyson Foods, the Arkansas AFL-CIO and the United Paperworkers International Union, claim that the state law is preempted by the Employee Retirement Income Security Act of 1974 [ERISA], the federal Health Maintenance Organization Act and the federal Employee Health Benefit Act. They also contend that it violates the Commerce Clause of the U.S. Constitution. The Prudential Health Care System serves more than 8,000 HMO members in Arkansas and 4.5 million nationwide.

"We believe the legislation violates a number of federal statutes and interferes with our ability to work with employers to provide people with their choice of competing health plans," said Norine Yukon, executive director of Prudential Health Care System of Arkansas.

Arkansas Blue Cross/Blue Shield also filed a lawsuit against several doctors and hospitals who demanded entrance to their managed care networks under the provisions of the Patient Protection Act. "We want the courts to confirm what the law [ERISA] really says so we can conduct business accordingly without fear of the penalties imposed under the any-willing-provider law. By getting this question resolved now, we won't be subject to lawsuits on these issues in the future," said Robert D. Cabe, an executive with Arkansas BC/BS.

The federal government enacted ERISA to help establish uniform federal standards for the protection of private employee pension plans. ERISA affects state policymaking because its "preemption clause" makes void all state laws relating to self-insured employee health plans. Arkansas legislators addressed the ERISA conflict with follow-up HB 1826, which excludes from the Patient Protection Act self-funded or other health benefit plans that are exempt from state regulation by virtue of ERISA. …