South Dakota Proposal on Doctor Choice Opposed by Health Insurers

By | October 9, 2014

South Dakota patients could have more choice of doctors within their health insurance networks if voters approve a ballot measure that is drawing strong opposition from the health insurance industry.

The proposal on the ballot, Initiated Measure 17, seems simple enough: doctors who agree to the conditions set forth by insurers, including payments for services provided to patients, could join the insurer’s preferred providers list.

Preferred providers, also known as in-network doctors, usually charge less for services than those outside the network. One of the complaints about President Barack Obama’s health law is that some of the insurance plans offered on state exchanges don’t offer enough doctors in-network. At least in theory, the South Dakota measure would expand that if more doctors join networks.

The measure has split the medical community with the state’s medical association — dominated by doctors — and specialty hospitals in favor of it and health insurers and large hospital networks opposed.

Big health insurers say that allowing doctors to join any plan — known in medical circles as “any-willing provider requirements” — would increase the costs of health care.

“Any-willing provider requirements directly undermine health plans’ efforts to promote quality, affordable care for consumers,” said Clare Krusing, a spokeswoman for trade association America’s Health Insurance Plans. “The research shows that consumers pay the price.”

Health insurers form networks in part to gain leverage in negotiating better rates with doctors or hospitals who want to be included in that network in order to get the insurer’s business. Preferred provider organizations, or PPOs, are a common form of coverage that involves large networks of doctors and other care providers.

As insurers attempt to corral rising health care costs, narrow networks have grown more common, especially in coverage sold on new public health insurance marketplaces created by the health care law. These networks might include only 30 percent or less of the hospitals in a geographic area, as opposed to 70 percent or more for a broader network, according to the consulting firm McKinsey & Co.

While South Dakota is a small market, the insurance industry is watching the outcome of the ballot measure closely as similar proposals have been considered over the past year in other states including Pennsylvania and New Hampshire.

Supporters commissioned a study by a University of South Dakota economist to look into the potential cost effects of the proposed law. Associate professor Michael Allgrunn found that the proposed law would not increase health expenditures, but critics point to empirical studies into any-willing provider laws that show overall costs could increase at least 3 percent.

“This is really about putting patients back in control of their health care decisions,” said Dr. Blake Curd, a state senator and an orthopedic surgeon, who supports the measure. “People need to be able to pick the physician and/or the provider that they think is in the best position to help them get better when they face a health care challenge.”

The measure got onto the ballot after supporters responded to defeat in the Legislature in March by submitting more than 30,000 signatures, almost twice the number needed.

In South Dakota, such a law for pharmacies went into effect in 1990. Twenty-six other states currently have some form of any-willing provider laws, according to the National Conference of State Legislatures. The services they encompass vary widely; most of the laws apply exclusively to pharmacies, others to chiropractors and some to a broad range of providers.

Backers of “Yes on 17” have spent over $500,000 on their campaign with the slogan “Freedom to choose your doctor.” Their billboards have been up for at least six months and their TV ads have run during primetime.

The committee behind “No on 17” will disclose its contributions and expenses for the first time in a filing with the secretary of state’s office by Oct. 24.

The measure’s foes include insurers Avera Health Plans and Sanford Health Plan, whose operators also own the largest hospital networks in the state.

“I think it’s very deceiving because they want to say ‘You can go to any doctor you want,’ and the answer is that’s not completely true,” said Dr. Preston Renshaw, chief medical officer of Avera Health Plans. “…If the doctor doesn’t meet the terms and conditions (set by the insurance company), that doctor still might not be there.”

Renshaw added that health plans offered in the state already allow patients to receive services from out-of-network doctors and do cover a portion of those visits. That share covered by the insurer is smaller than what it would pay for in-network visits.

AP business writer Tom Murphy contributed to this report from Indianapolis.