Hellinger (1995) defines any-willing-provider (AWP) and freedom-of-choice (FOC) laws. These laws have been enacted by a number of states.
“AWP laws require managed care plans to accept any qualified provider who is willing to accept the terms and conditions of a managed care plan. These laws do not require managed care plans to contract with all providers. However, they do require managed care plans to explicitly state evaluation criteria and ensure “due process” for providers wishing to contract with the plan.”
“FOC laws permit an enrollee to obtain reimbursable health care services from any qualified provider even if the provider has not signed a contract with the managed care plan. These laws often compel managed care plans to pay the same amount to a nonnetwork provider chosen by an enrollee as they pay to a network provider. Yet this does not guarantee that an enrollee will incur the same out-of-pocket costs. Enrollees who obtain all of their care from non-network providers pay the fixed copayment per service (or a fixed percentage of covered charges) their plan requires, plus any charges in excess of the plan’s overed charges.”
Michael Morrisey recommends repealing these two laws to increase competition and I tend to agree with him. Both laws limit managed care organizations’ ability to effectively negotiate on price.
- Fred J. Hellinger (1995) “Any-Willing-Provider And Freedom- Of-Choice Laws: An Economic Assessment” Health Affairs, Volume 14, Number 4