The Senate Commerce Committee on Wednesday unanimously defeated a bill that would have forced provider-owned health plans to accept other plans’ in-network payments or reasonably comparable payments.

House Bill 1058 read: “If a health care provider has an affiliate that is a health insurance company, that health care provider and its affiliates may not obstruct a patient’s choice of health care by refusing to accept a patient’s health insurance company’s in-network payment or reasonably comparable payment.” The legislation would have also allowed the South Dakota Division of insurance to revoke the license of a health care provider who obstructs a patient’s choice of health care.

Scott A Duke, president and CEO of the South Dakota Association of Healthcare Organizations (SDAHO), said the bill would result in irreparable financial harm for two highly respected health systems who provide health insurance across the Midwest, and it would jeopardize coverage for more than 100,000 people.

Duke said HB 1058 is against free market competition and rejects innovations in fee-for-value payment methodologies and population health management.

Rep. David Anderson, R-Hudson, said he sponsored the bill because he sees a conflict of interest in a significant portion of the health care marketplace, and he believes that systems with insurance plans have virtually eliminated the competition in this state.

But Melissa Klemann, the Division of Insurance’s assistant director of life and health insurance, said other health insurance carriers have left the state not because of the two insurers who continue to offer policies, but because of regulations from the Affordable Care Act. Klemann said the bill would drive up costs of insurance in South Dakota.

Randy Moses, speaking for Avera Health Plans, said networks are one of the few tools that systems have to control costs, and breaking up networks would drastically raise costs. Moses said the bill takes aim at the only two companies left in the state, and out-of-state competitors wouldn’t be subjected to the same law.

Lisa Carlson, senior director of planning and regulation for Sanford Health Plan, said HB 1058 is the antithesis of competition and consumer choice.

Carlson said the existence of the Sanford and Avera health insurance plans brings competition to the largest carrier in the state, Wellmark Blue Cross Blue Shield. Provider-owned health plans still have to compete and bid against Wellmark, she said, so they have to be competitive. But insurers also have to be solvent, so they have to work within the constraints of the Affordable Care Act.

David Owen, president and chief lobbyist for the South Dakota Chamber of Commerce and Industry, said the bill would put the state in the position of regulating the cost of health care, a role it should not be taking on.

Darla Pullman Rogers, a lobbyist for the National Association of Insurance and Financial Advisors (NAIFA), said if HB 1058 passes, its agents would have more difficulty helping South Dakotans find adequate insurance products to meet their needs.

Sen. Jeff Partridge, R-Rapid City, a bill co-sponsor, said his goal was to start a conversation about opening up the network, increase transparency and competition among insurance companies and relieve some pressures on business owners.

The committee voted unanimously to defer House Bill 1058 to the 41st legislative day, which is a procedural move to kill legislation.