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'Any willing provider' back at capitol: 1995 legislation returns, this time without Wilson off to races.

(Editor's Note: This is the latest in a series of business history feature stories. Suggestions for future "Fifth Monday" articles are welcome. Please contact Gwen Moritz at (501) 372-1443 or by e-mail at

ARKANSAS' "ANY WILLING provider law was a product of the 1990s--which means, of course, that there's a Nick Wilson story in there somewhere.

In this case, a bill that has been occupying lawyers for a full decade might have been a mere blip in the state's long legislative history had Wilson, the powerful and ultimately disgraced state senator from Pocahontas, not been so eager to get to the horse races on one particular day in February 1995.

The Patient Protection Act of 1995 requires insurance companies to pay the same benefits to any provider willing to accept the same terms as the incumbent in-network providers. But it has never been enforced and is now in the hands of the judges at the 8th Circuit Court of Appeals in St. Louis, where a ruling could be issued at any time.

Term limits would have deposed Wilson by now if that conviction for federal tax evasion hadn't gotten him first. But in other ways, 2005 is starting to look a lot like 1995: A tweaked version of AWP that its sponsor believes to be immune from legal challenge has been introduced in the current legislative session --for the same reasons that inspired the original sponsor. And it has raised the same objections from the same opponents as the 1995 version.


By the early 1990s, "managed care" --the term applied to closed networks of health care providers that were guaranteed access to more insured patients in exchange for discounted prices--had spread rapidly across the country in an attempt to slow the rapid escalation of health care costs. Traditional indemnity plans that paid 80 percent of whatever a doctor or hospital chose to charge were becoming a dim memory for most employee groups.

Managed care had actually created "a pretty competitive market among the health care providers themselves in an attempt to come within a managed contract," said Morril Harriman, executive vice president of the Poultry Federation, who has followed AWP laws for years. In fact, he was a state senator in 1995 and voted for AWP, a vote he now considers a mistake. The Poultry Federation is opposed to AWP.

In Arkansas, the concept of managed care had been taken a step further. In 1993, market leader Arkansas Blue Cross and Blue Shield partnered with Baptist Health of Little Rock to form the health maintenance organization known as Health Advantage.

While some doctors and hospitals were eager to enter into contracts with insurance providers so they would have a steady flow of patients, "those that did not fall within some of the major managed care systems ... felt they were treated unfairly," according to Harriman.

So did many patients. Bill Gwatney, the car dealer who was then representing Jacksonville in the Senate, heard countless tales of sick constituents driving to Little Rock for treatment because going "out of network" was prohibitively expensive.

"What's the fairness of a health plan if you can't go where you want to go?" Gwatney told Arkansas Business in 1995.

Rebsamen Regional Medical Center in Jacksonville was the hometown hospital for his constituents, but "a lot of people couldn't go there for treatment because of their insurance plans," Gwatney said at the time.

His solution was to introduce the Patient Protection Act in the 80th General Assembly, which would convene in January 1995. It wasn't an original idea; AWP laws were popping up around the country as a backlash to managed care.

Insurance companies howled. Insurance costs would go up, they argued, because there was no reason for providers to discount their prices if the insurance companies couldn't then steer patients their way.

Taking on the major hospitals and insurance companies made Gwatney nervous, he said. "But I knew that the public would support this, and I knew that the bill wouldn't hurt the large hospitals and insurance companies like they thought."

Before the session, Gwatney sent a draft of the bill to all the senators. Seven signed on as co-sponsors.

"That was a very, very hard-fought bill at that point in time," said Jay Bradford, who was then a member of the Senate Public Health, Welfare and Labor Committee. Bradford has since moved into the House of Representatives and chairs its Health, Welfare and Labor Committee.

Bradford, an insurance agent by profession, said work on the bill started months before the 1995 session started.

In my district, I had a meeting with the hospitals, with the physicians, with the chiropractors, with all the providers," Bradford said last week. Unlike the insurance companies, "they thought the patients ought to have a choice."

In February 1995, on the day of the committee vote, Nick Wilson wanted to go to Oaklawn Park, according to a 1995 article in the Arkansas Democrat-Gazette. Wilson, who opposed the AWP bill, reportedly told committee chairman Jerry Bookout of Jonesboro that a vote needed to be taken by 11:30 a.m. because he was heading for Hot Springs.

But testimony ran past 11:30 and Wilson left, taking his "no" vote with him.

"I had sat through as much of that crap as I could sit through," Wilson told the Democrat-Gazette.

After Wilson left, the vote among the remaining committee members was 3-3, giving Bookout the chance to break the tie. He voted to move the bill to the full Senate, where it was approved, 32-1. The lone vote against it was Wilson's.

Gwatney's bill had similar success in the House, where the vote was 88-1. Rep. Roger Rorie of Fox voted against it.

The Lawsuits

While AWP had strong support in the General Assembly, the insurance industry wasn't going down without a battle.

In June of the same year, Arkansas Blue Cross and Blue Shield sued two hospitals, three doctors and two medical clinics that had asked to be in ABCBS' managed care networks. Then, a day before the Patient Protection Act was going to go into effect in July 1995, Prudential Health Care Plan of Arkansas sued the state of Arkansas to overturn AWP.

Enforcement was delayed as both cases merged into one and slowly ground its way through the courts.

The insurance companies finally scored a major victory in 1998, when U.S. District Court Judge James Moody in Little Rock issued a permanent injunction against AWP after finding that it violated the federal Employee Retirement Income Security Act. Both sides appealed the ruling to the 8th Circuit Court of Appeals, which agreed with Moody and let the permanent injunction stand.

Similar lawsuits in other states that adopted AWP laws continued through the appeals system. In April 2003, the U.S. Supreme Court ruled that an AWP law in Kentucky--one similar but not identical to Arkansas'--was acceptable. The ruling breathed new life into Arkansas' Patient Protection Act--and into ABCBS' determination to keep it from being enforced. The insurance company sued several hospitals and the state of Arkansas in U.S. District Court in Little Rockin hopes of preventing the Kentucky ruling from being applied to Arkansas' Patient Protection Act.

The insurance company has argued that the Arkansas law and the Kentucky law are substantially different--too different for the Supreme Court's ruling to apply to the Arkansas version. But the main difference has come down to the definition of terms, said David Wroten, assistant executive vice president of the Arkansas Medical Society.

"When they started trying to define what was different, their primary emphasis was on who was covered by the act, which gets back to the definitional issue: What's an insurance [plan], what's a health benefit plan?"

In February 2004, Moody ruled that Arkansas' AWP law could be enforced. ABCBS quickly appealed Moody's ruling to the 8th Circuit Court of Appeals, where it remains.

ABCBS' spokeswoman Max Heuer predicted health insurance premiums will rise 10 percent to 12 percent if the AWP law is upheld on appeal, a figure she based on the price difference between a "preferred provider organization" managed care policy and a traditional indemnity plan.

New Legislation

State Sen. Steve Faris, D-Malvern, however, doesn't think Arkansas needs to wait for an appeals court ruling. He has introduced a new bill that mirrors the Kentucky AWP legislation that already has the seal of approval of the highest court in the country.

Last week, Faris' bill was in the Senate Public Health, Welfare and Labor Committee.

"For a law to get passed in '95 that simply says you can choose your own physician when you're sick to be held up in the courts for this number of years, to me, it's a travesty in itself," Faris said. "But if we go ahead and get a mechanism in place now we might not have to wait a whole year for the court to decide."

Faris said he, like Gwatney, has heard too many people complain about insurance policies that make it too expensive to see the doctors they prefer

"It's too bad that we even have to be debating this right now," Faris said. "It's a matter of what's right and what's wrong."

Bradford, chairman of the House Public Health, Welfare and Labor Committee, said the 2005 version of the bill has "a tremendous amount of support, partially because the U.S. Supreme Court upheld virtually the same law that was from Kentucky."

Still, business interests are divided on the issue, said Kenneth Hall, vice president for governmental affairs for the Arkansas State Chamber of Commerce and Associated Industries of Arkansas Inc.

"Viewed solely from an employer's perspective, (Faris' bill) is considered a bill that would damage if not destroy the ability to negotiate health care rates through networks," Hall said in an e-mail statement. "If these fears are accurate, and we believe they are, then it is reasonable to expect health care costs to increase if the any willing provider law is adopted."

Some hospitals, though, are itching for AWP to get the green light.

"We believe that the state's residents should have the right to choose the health care provider they prefer," Scott Mosley, a spokesman for St. Vincent Health System, said in a statement. "We are ready to more freely compete and anxious to serve the needs of those who wish to come to St. Vincent who have, for years, been prohibited from doing so."

AWP Costs

"If people think that (AWP) will be without an increased cost, I would just suggest that there is no free lunch," said Paul Berry, a lobbyist for the Arkansas Employers Healthcare Coalition, a group representing 85-90 employers that oppose AWP.

He said AWP, if approved, will raise rates on even the cheapest health insurance plans. His prediction of the additional cost is even higher than Heuer's: 20 percent to 25 percent. And that could push Arkansas' uninsured population up from the current level of 450,000-500,000.

If AWP is enacted in Arkansas, there is a "good chance" that health insurance will rise, said Michael Morrisey, a professor and the director of the Lister Hill Center for Health Policy at the University of Alabama at Birmingham, who has studied AWP. "Obviously it depends on the particular market circumstances."

But supporters of AWP said in Kentucky the price of insurance hasn't risen as a result of AWP.

"I was unable to find conclusive evidence that AWP legislation has increased cost for Kentucky insureds," Elizabeth Johnson, an attorney for the Kentucky Insurance Department, wrote in a Jan. 10 letter to Arkansas Medical Society's Wroten.

Still, Berry said managed care is one of the few tools employers and employees have had to control health care inflation. People who want a wide-open choice of providers are free to buy an indemnity policy, he said.

The fallout from AWP also could be a flurry of MRI clinics and specialty hospitals popping up, taking away business from community hospitals, said attorney Nick Thompson, who represents the Arkansas Employers Healthcare Association.

"So if you've got a law on the books that says the HMO has to contract with every single one of those entities, anybody can go out and build them," Thompson said. "At some point you have an oversaturation of providers."
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Author:Friedman, Mark
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Jan 31, 2005
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