Authorizes the Westchester health care corporation to enter into contracts and arrangements providing for the creation and operation of a delivery system network

Summary of provisions

Section One - amends Section 3301 of the public authorities law by adding a new subdivision 6 to state that a free-standing public public health care provider, the corporation is at a competitive disadvantage in the current and emerging health care environment, yet it cannot become part of a larger system of corporate entities while maintaining its public status. Significant investments in the public assets of the corporation and its efforts to provide high quality health care services to medically underserved populations are, jeopardized by the corpo- ration's inability to compete on its own and by potential limits on its ability to collaborate with other public and private providers, entities and individuals. The state finds that the benefits of collaboration by the corporation outweigh any adverse impact on competition. The benefits of the corporation's collaborative efforts include preserving and expanding needed health care services in its primary service area; consolidating unneeded or duplicative health care services; enhancing the quality of, and expanding access to, health care delivered to medically underserved populations; lowering costs and improving the efficiency of the health care services it delivers; and achieving improved reimbursement from non-governmental payors. Based on the find- ings contained in this section, the state hereby affirmatively expresses a policy to allow the corporation to engage in collaborative activities consistent with its health care purposes, notwithstanding that those collaborations may have the effect of displacing competition in the provision of hospital, physician or other health care-related services. With respect to the collaborative activities contemplated in this section and in subdivision eight of section thirty-three hundred six of this title, the corporation and the public or private entities and indi- viduals with which it collaborates shall be immunized from liability under the federal and state antitrust laws.

Section Two - amends Section 3306 of the public authorities law by adding a new subdivision 8 to state in carrying out its health care purposes through the exercise of the special powers exercised pursuant to this section and the general powers exercised pursuant to section thirty-three hundred five of this title, the corporation is authorized to engage in arrangements, contracts, information sharing and other collaborative activities with public or private entities and individuals irrespective of the competitive consequences of these activities and notwithstanding that these activities may have the effect of displacing

competition in the provision of hospital, physician, or other health care-related services. These collaborative activities may include with- out limitation: joint ventures; joint negotiations with physicians, hospitals and payors, whether such negotiations result in separate or combined agreements; leases; and/or agreements which involve delivery system network creation and operation, provided that, the corporation shall exercise state oversight by determining whether particular collab- orations with public or private entities and individuals further the interests of the state as set forth in this subdivision and in subdivi- sion six of section thirty-three hundred one of this title. In undertak- ing these collaborative activities, the corporation and the public or private entities and individuals with which it collaborates shall be immunized from liability under the federal and state antitrust laws. Notwithstanding the provisions of this section, the corporation and its collaborators shall remain subject to generally applicable provisions of the public health law and regulations thereunder. In addition, the corporation shall file an annual report with the state department of health, as additional state oversight, concerning the impact of the collaborations authorized under this section on the advantages an disad- vantages identified by the department of health in its request for applications for HEAL NY Phase 21, entitled "Restructuring Initiatives in Medicaid Redesign," and concerning the impact on reimbursement to the corporation's facilities by managed care organizations with respect to commercial plan members, including the extent to which rates have been negotiated that more fairly compensate the corporation's facilities for the cost of providing services to commercial enrollees, without cross- subsidy from medicaid or other governmental programs. In response to the report, the department of health shall have sixty days after the report has been filed to request, in writing, that the corporation make changes to its policies to ensure that the collaborations authorized under this section further the interests of the state.

Section Three - provides the act shall take effect immediately.

Justification

The WHCC, created under the Public Authorities Law, assumed responsibility for operation of the Westchester County Medical Center -several facilities previously operated by Westchester County. WHCC's facilities provide an extensive range of acute care and ambulato- ry services to the indigent population in Westchester County including a significant percentage of the Medicaid discharges. As a free-standing public healthcare entity, WHCC faces unique challenges as it seeks to carry out its mission as a safety-net facility. In particular, its abil- ity to collaborate with private entities and individuals is clear in the general and special powers granted to it under Public Authorities Law 3404 and 3405. However, in a recent Supreme Court decision FTC v Phoebe Putney Health System, Inc, the Court held that in order for state action immunity to apply the state must clearly articulate and affirmatively express a policy to displace competition. Therefore, WHCC seeks to clar- ify the state's intention that such collaborations may be carried out regardless of whether they displace competition and may otherwise be considered violations of state or federal antitrust laws.

Legislative history

New bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.