Let Doctors Negotiate Together

Section 1. The insurance law is amended by adding a new article 57 to read as follows:

ARTICLE 57

HEALTH CARE CONSUMER AND PROVIDER PROTECTION

AND EQUITY ACT Section 5701. Legislative findings.

5702. Collective action by competing physicians.

5703. Application for hearing.

5704. Fee for registration of authorized third parties.

5705. Regulations.

5706. Good faith negotiations.

5707. Prohibition of collective cessation of services.

5708. No interference with other statutory rights.

5709. Definitions.

§ 5701. Legislative findings. The legislature finds and declares that:

(a) Under the McCarran-Ferguson act of 1945, 15 U.S.C. § 1011, et seq., insurance companies are exempt from federal anti-trust laws that otherwise apply to most other businesses;

(b) Active, robust and fully competitive markets for health care and dental services provide the best opportunity for the residents of this state to receive high-quality health care and dental services at an appropriate cost;

(c) A substantial amount of health care and dental services in this state is purchased for the benefit of patients by health and dental insurance carriers engaged in the financing of health care and dental

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD07424-01-7

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services or is otherwise delivered subject to the terms of agreements between carriers and physicians and dentists;

(d) Carriers are able to control the flow of patients to physicians and dentists through compelling financial incentives for patients in their health and dental benefits plans to utilize only the services of physicians and dentists with whom the carriers have contracted;

(e) Carriers also control the health care and dental services rendered to patients through utilization management and other managed care tools and associated coverage and payment policies;

(f) Carriers are often able to virtually dictate the terms of the contracts that they offer physicians and dentists and commonly offer these contracts on a take-it-or-leave-it basis;

(g) The power of carriers to unilaterally impose provider contract terms jeopardizes the ability of physicians and dentists to deliver the superior quality health care and dental services traditionally available in this state;

(h) Physicians and dentists do not have sufficient market power to reject unfair provider contract terms offered by carriers that impede their ability to deliver medically appropriate care without undue delay or difficulties;

(i) Inadequate reimbursement and other unfair payment terms offered by carriers adversely affect the quality of patient care and access to care by reducing the resources that physicians and dentists can devote to patient care and decreasing the time that physicians and dentists are able to spend with their patients;

(j) Inequitable reimbursement and other unfair payment terms also endanger the health care infrastructure and medical progress by diverting capital needed for reinvestment in the health care delivery system, curtailing the purchase of state-of-the-art technology, the pursuit of medical research, and expansion of medical services, all to the detriment of the residents of this state;

(k) The inevitable collateral reduction and migration of the health care work force will also have negative consequences for the economy of this state;

(l) Empowering independent physicians and dentists to jointly negotiate with carriers as provided in this article will help restore the competitive balance and improve competition in the markets for health care and dental services in this state, thereby providing benefits for consumers, physicians and dentists and less dominant carriers;

(m) This article is necessary and proper, and constitutes an appropriate exercise of the authority of this state to regulate the business of insurance and the delivery of health care and dental services;

(n) The pro-competitive and other benefits of the joint negotiations and related joint activity authorized by this article, including, but not limited to, restoring the competitive balance in the market for health care services, protecting access to quality patient care, promoting the health care infrastructure and medical progress, and improving communications, outweigh any potential anti-competitive effects of this article; and

(o) It is the intention of the legislature to authorize independent physicians and dentists to jointly negotiate with carriers and to qualify such joint negotiations and related joint activities for the stateaction exemption to the federal antitrust laws through the articulated state policy and active supervision provided under this article.

§ 5702. Collective action by competing physicians. (a) Competing physicians may meet and communicate in order to collectively negotiate

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with a health benefit plan concerning any of the contract terms and conditions described in this subsection, but may not negotiate the exclusion of providers who are non-physicians from direct reimbursement by a health benefit plan, and may not negotiate the setting in which providers who are non-physicians deliver services. Competing physicians may not engage in a boycott related to these terms and conditions. Competing physicians may meet and communicate concerning:

(1) physician clinical practice guidelines and coverage criteria;

(2) the respective liability of physicians and the health benefit plan for the treatment or lack of treatment of insured or enrolled persons;

(3) administrative procedures, including methods and timing of the payment of services to physicians;

(4) procedures for the resolution of disputes between the health benefit plan and physicians;

(5) patient referral procedures;

(6) the formulation and application of reimbursement methodology;

(7) quality assurance programs;

(8) health service utilization review procedures; and

(9) criteria to be used by health benefit plans for the selection and termination of physicians, including whether to engage in selective contracting.

(b) An authorized third party that intends to negotiate with a health benefit plan the items identified under subsection (a) of this section shall provide the independent review panel, as established by subsection (c) of this section, with written notice of the intended negotiations before the negotiations begin.

(c) The independent review panel shall consist of three members:

(1) The attorney general, or his or her designee who shall have particular expertise in the area of antitrust law;

(2) The state commissioner of health, or his or her designee; and

(3) The state commissioner of labor, or his or her designee.

(d) In exercising the collective rights granted by subsection (a) of this section:

(1) physicians may communicate with each other with respect to the contractual terms and conditions to be negotiated with a health benefit plan;

(2) physicians may communicate with an authorized third party regarding the terms and conditions of contracts allowed under this section;

(3) the authorized third party is the sole party authorized to negotiate with a health benefit plan on behalf of a defined group of physicians;

(4) physicians can be bound by the terms and conditions negotiated by the authorized third party that represents their interests;

(5) a health benefit plan communicating or negotiating with the authorized third party may contract with, or offer different contract terms and conditions to, individual competing physicians;

(6) an authorized third party may not represent more than thirty percent of the market of practicing physicians for the provision of services in the geographic service area or proposed geographic service area, if the health benefit plan has less than a five percent market share as determined by the number of covered lives as reported by the superintendent of the insurance department for the most recently completed calendar year or by the actual number of consumers of prepaid comprehensive health services; in this paragraph, "covered lives" means the total number of individuals who are entitled to benefits under the health benefit plan;

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(7) the independent review panel may limit the percentage of practicing physicians represented by an authorized third party; however, the limitation may not be less than thirty percent of the market of practicing physicians in the geographic service area or proposed geographic service area; when determining whether to impose a limitation described under this paragraph, the attorney general shall consider the provisions described under subsections (f), (g) and (h) of this section; this paragraph does not apply if the market of practicing physicians in the geographic service area or proposed geographic service area consists of forty or fewer individuals; and

(8) the authorized third party shall comply with the provisions of subsection (e) of this section.

(e) A person acting or proposing to act as an authorized third party under this section shall:

(1) Before engaging in collective negotiations with a health benefit plan:

(A) file with the independent review panel the information that identifies the authorized third party, the physicians represented by the third party, the authorized third party's plan of operation, and the authorized third party's procedures to ensure compliance with this section;

(B) furnish to the independent review panel for its approval, a brief report that identifies the proposed subject matter of the negotiations or discussions with a health benefit plan and that contains an explanation of the efficiencies or benefits that are expected to be achieved through the collective negotiations, product and geographic market definition, current price levels, availability of substitutes, and ease of entry for new competing physicians;

(C) the panel shall review whether the group of physicians represented by the authorized third party is appropriate to represent the interests involved in the negotiations; the panel may not approve the report if the group of physicians is not appropriate to represent the interests involved in the negotiations or if the proposed negotiations exceed the authority granted in this chapter and, if the group is not appropriate or the negotiations exceed the granted authority, shall provide written notice prohibiting the collective negotiations from proceeding, at which time the proposed authorized third party may request a hearing pursuant to section five thousand seven hundred three of this article;

(D) the authorized third party shall provide supplemental information to the panel as new information becomes available that indicates that the subject matter of negotiations with the health benefit plan has changed or will change; the panel may, as it deems appropriate, request additional information in order to assess the likely competitive effects of negotiation; the panel may also solicit input from other physicians, affected health plans, and patients regarding the potential competitive effects of negotiations;

(E) within fourteen days after receiving a health benefit plan's decision to decline to negotiate or to terminate negotiations, or within fourteen days after requesting negotiations with a health benefit plan that fails to respond within that time, report to the attorney general that negotiations have ended or have been declined;

(2) While negotiating with a health benefit plan:

(A) provide the independent review panel, upon the independent review panel's request, with copies of all written communications that are relevant to the negotiations, that are in the possession of the authorized third party, and that are between:

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i. physicians and the health benefit plan,

ii. physicians and authorized third parties,

iii. authorized third parties and health plans,

iv. the individual physicians, and

v. authorized third parties;

(B) before reporting the results of negotiations with a health benefit plan and before giving physicians an evaluation of any offer made by a health benefit plan, provide to the independent review panel for its approval, a copy of all communications to be made to physicians related to the negotiations, discussion, and health benefit plan offers.

(3) Must be an organization that represents both consumers and providers of health care.

(f) The independent review panel shall either approve or disapprove the contract that was the subject of the collective negotiation within sixty days after receiving the reports required under subsection (d) of this section. If the contract is disapproved, the independent review panel shall furnish a written explanation. Upon disapproval, the independent review panel shall denote any deficiencies along with a statement of specific remedial measures that would correct any identified deficiencies. An authorized third party who fails to obtain the independent review panel's approval is considered to be acting outside the authority of this section.