Bad Old Ways Beset National Health-Care Proposals : Reform: Forcing insurers to contract with certain medical facilities undermines both cost containment and quality.

A prominent feature of health-care reform proposals now in Congress would forbid the kind of efficient, economical and medically effective balancing of resources that have been developed by the best-organized health-care delivery systems in California.

Health-maintenance orgnaizations and other forms of preferred-provider organizations contract selectively with doctors and hospitals on the basis of quality and cost and arrange health services for their enrollees. They match their resources closely to the estimated health needs of the populations they serve. Through effective management, they make efficient use of hospital beds and of their generalist and specialist doctors. This sort of market-based efficiency, in which California is a pioneer, is what we should be striving toward nationally. But the national reform proposals would force health plans to contract with and include in their networks certain types of hospitals and health providers, even if this is not the most economical or highest-quality care available.

These proposals are rooted in the old “any-willing-provider” laws that forbade health plans to restrict services to certain doctors and hospitals if other doctors and hospitals would accept the same payment and service terms. The restrictions were overturned by California in 1982 and by many other states since.

About 120 million people have chosen to enroll in HMOs and PPOs for reasons of cost, access and quality, and millions more will do so if they are given the opportunity.

The new variations of any-willing-provider laws are limited but equally damaging. For instance, the Administration’s reform proposal requires health plans to contract with academic medical centers for specialty care. To ensure quality, health plans should be required only to meet appropriate quality standards; they should not be required to enter a contract with a certain type of provider on the erroneous assumption that it’s the only way to provide high-quality care. To the extent that academic medical centers provide high-quality, high-technology and highly complex care, health plans should and do selectively seek their services. But not all academic-affiliated medical care falls into this category, and non-academic centers can also provide high-quality care.

The Administration’s proposal, as well as the proposal recently adopted by the health subcommittee of the House Ways and Means Committee, also requires health plans to contract with a broad range of “essential community providers,” for example Medicare-dependent hospitals, county health departments, rural health clinics and individual doctors serving medically underserved areas. The goal is a good one--ensuring that services are accessible to all sectors. But health plans should not be restricted to certain providers if they can otherwise accomplish access goals.

The trouble with these laws is that they destroy the bargaining power of purchasers of health-care services. Why should any academic center or essential community provider offer a good deal--not to mention the lowest possible price--to a health plan, knowing the plan must include them? Academic centers do provide medical education and research and essential community providers do provide local safety nets; both deserve support in these roles, but that shouldn’t be done through mandatory inclusion in health plans.

Each of these proposals eliminates a health plan’s ability to offer high volume to doctors and hospitals in exchange for lower prices because it cannot guarantee volume. Required contracting would increase administrative costs, reduce the ability of health plans to plan for appropriate staffing and facilities, increase duplication of high-cost diagnostic testing and create a labyrinth of disconnected, uncoordinated health care, which would lead to poorer quality and higher overall costs for health plans and enrollees.

Quality of care is another issue. It depends on the ability of health plans to select high-quality professionals and to review the appropriateness of the care provided. Any-willing-provider laws remove a health plan’s ability to pick and choose among doctors and hospitals. What if, in the health plan’s judgment, a clinic does a poor job, but it’s not a matter that can be proved in court? That health plan must contract with that provider, even though the health plan will be held accountable for quality.

Even if an any-willing-provider requirement includes some quality standards, it would be impossible to adequately monitor large numbers of widely scattered doctors and hospitals.

These proposals, backed by doctors and hospitals, among others, would move the health-care industry back in time instead of toward a healthier future.