2016 Legislative Update
2016 Legislative Update

Argus Leader Story Highlights Efforts by Sanford to Gut Patient Choice

1/20/2016
From the Argus Leader:

Battle opens between physician owners, insurers

Sanford and Chamber say consumers deserve choice when it comes to health insurance plans.

Businesses and consumers would have the ability to purchase health insurance plans that exclude some health providers under a bill that lawmakers will consider.

If passed, the bill would authorize so-called "narrow network" insurance plans, which have a small universe of health providers. The plans can be less expensive because the doctors and other health providers agree to charge lower amounts in exchange for the guaranteed volume generated by those covered in the plan.

But the bill could prove controversial because it amends an initiative that voters approved in 2014 requiring health insurance plans to be open to all providers who are willing to accept an insurance network’s terms and conditions. Initiated Measure 17 – which proponents dubbed as a “patient choice” measure – passed with a solid 62 percent majority.

It also opens another front in the long war between doctor-owned hospitals and the nonprofit hospital systems.

The bill filed Friday in Pierre would leave untouched the language voters passed. It adds a new section requiring all insurers to offer at least one plan that includes any health provider who wants to be included in the plan. The new section also allows consumers to purchase narrow network plans that have a limited number of providers.

If passed, the bill would essentially legalize the way Sanford Health Plans interpreted Initiated Measure 17. Sanford began offering a plan that includes all providers who want in, but it has also continued to offer narrow network plans to consumers and employers who want them.

The practice sparked a legal battle between Sanford and the doctors who own Sioux Falls Specialty Hospital. Those doctors and others in the state who work at doctor-owned facilities were the primary financiers of Initiated Measure 17, along with the Canadian company that has ownership interests in both Sioux Falls Specialty and Black Hills Surgical Hospital.

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“When the initiated measure was passed, the public had no way of knowing that a small group of self-interested doctors would craft a law to trick them into thinking they were getting choice,” said Cindy Morrison, Sanford’s executive vice president of marketing and public policy. “The law did not give consumers choice, it gave those same self-interested doctors choice.”

Sen. Blake Curd is one of the owners and currently CEO of Sioux Falls Specialty Hospital. Curd, who represents District 12, helped lead the effort to pass Initiated Measure 17. He said Friday he wasn’t aware of the existence of a bill on narrow networks and could not offer comment for that reason.

The bill faces some unique tests. Prior to voter passage of Initiated Measure 17, lawmakers had already rejected similar legislation, known as “any willing provider” laws, in part because of fears they would drive up the cost of health care. But on the other hand, there will likely be concerns from some lawmakers about adding language to a voter approved initiative.

Shannon Carder, who was the campaign manager for Initiated Measure 17, said lawmakers should listen to their constituents, a majority of which have said they support the provision.

“I can’t imagine that it would be a wise decision to go against the will of the voters,” Carder said. “We worked really hard with the people of South Dakota who wanted this measure. People wanted, plain and simple, to be the ones to choose who their doctor is."

But backers of the bill could have a powerful argument on their side – the same argument that backers of Initiated Measure 17 used: consumer choice.

Morrison compared the issue to cable TV packages. Consumers who want a smaller package of channels – like narrow insurance networks – pay less than consumers who want full channel packages, the equivalent of insurance networks that offer access to all health providers.

“Consumers should not be forced to buy something they may not want or need and most importantly can't afford,” she said.

The bill also has the backing of the South Dakota Chamber of Commerce and Industry, which opposed Initiated Measure 17. Its president, David Owen, said the measure needs an adjustment that will make the state’s any willing provider law “workable.”

“Voters can pass laws but they don’t get to repeal the law of economics,” he said.

Without access to narrow network plans, businesses, which provide the majority of health insurance in the state, can’t hold down health care costs. That means more expensive premiums for employees and higher costs for employers, Owen said.

“The owner physicians of those facilities,” he said of the group that supported Initiated Measure 17, “haven’t demonstrated any concern for the cost of insurance.”

Cost was one of the key components of the debate in 2014 and will likely be part of this one.

“We haven’t seen anything that shows how choosing your own doctor drives up cost,” Carder said.

Reporter John Hult contributed to this story.