By: Sibley S.B. No. 886
A BILL TO BE ENTITLED
AN ACT
1-1 relating to cooperative agreements among hospitals.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Title 4, Health and Safety Code, is amended by
1-4 adding Chapter 313 to read as follows:
1-5 CHAPTER 313. COOPERATIVE AGREEMENTS AMONG HOSPITALS
1-6 Sec. 313.001. DEFINITIONS. In this chapter:
1-7 (1) "Attorney General" means the Attorney General of
1-8 Texas or any assistant attorney general acting under the direction
1-9 of the Attorney General of Texas.
1-10 (2) "Cooperative agreement" means an agreement among
1-11 two or more hospitals for the allocation or sharing of health care
1-12 equipment, facilities, personnel or services.
1-13 (3) "Department" means the Texas Department of Health.
1-14 (4) "Hospital" means a general or special hospital
1-15 licensed under Chapter 241 or a private mental hospital licensed
1-16 under Chapter 577.
1-17 Sec. 313.002. REVIEW AND CERTIFICATION OF COOPERATIVE
1-18 AGREEMENTS
1-19 (a) A hospital may negotiate and enter into cooperative
1-20 agreements with other hospitals in the state if the likely benefits
1-21 resulting from the agreement outweigh any disadvantages
1-22 attributable to a reduction in competition that may result from the
1-23 agreements. A board member, employee or officer of a hospital may
2-1 conduct discussions or negotiations with board members, employees
2-2 or officers of other hospitals concerning cooperative agreements,
2-3 and participation in such discussions or negotiations shall not
2-4 subject the board member, employee or officer to civil or criminal
2-5 enforcement action under Chapter 15 of the Business and Commerce
2-6 Code.
2-7 (b) Parties to a cooperative agreement may apply to the
2-8 department for a certification of public advantage governing the
2-9 cooperative agreement. The application must include a written copy
2-10 of the cooperative agreement and describe the nature and scope of
2-11 the cooperation in the agreement and any consideration passing to
2-12 any party under the agreement. A copy of the application and
2-13 copies of all additional related materials must be submitted to the
2-14 attorney general and to the department at the same time.
2-15 (c) The department shall review the application in
2-16 accordance with the standards set forth in subsection (e) and may
2-17 hold a public hearing in accordance with rules adopted by the
2-18 department. The department shall grant or deny the application
2-19 within 120 days of the date of filing of the application and that
2-20 decision must be in writing and set forth the basis for the
2-21 decision. The department shall furnish a copy of the decision to
2-22 the applicants, the attorney general and any intervenor within 10
2-23 days of its issuance.
2-24 (d) The department shall issue a certificate of public
2-25 advantage for a cooperative agreement if it determines that the
3-1 applicants have demonstrated by clear and convincing evidence that
3-2 the likely benefits resulting from the agreement outweigh any
3-3 disadvantages attributable to a reduction in competition that may
3-4 result from the agreement.
3-5 (e) In evaluating the potential benefits of a cooperative
3-6 agreement, the department shall consider whether one or more of the
3-7 following benefits may result from the cooperative agreement:
3-8 (1) Enhancement of the quality of hospital and
3-9 hospital-related care provided to Texas citizens;
3-10 (2) Preservation of hospital facilities in
3-11 geographical proximity to the communities traditionally served by
3-12 those facilities;
3-13 (3) Gains in the cost efficiency of services provided
3-14 by the hospitals involved;
3-15 (4) Improvements in the utilization of hospital
3-16 resources and equipment; and
3-17 (5) Avoidance of duplication of hospital resources.
3-18 (f) The department's evaluation of any disadvantages
3-19 attributable to any reduction in competition likely to result from
3-20 the agreement may include, but need not be limited to, the
3-21 following factors:
3-22 (1) The extent of any adverse impact on the ability of
3-23 health maintenance organizations, preferred provider organizations
3-24 or other health care payors to negotiate payment and service
3-25 arrangements with hospitals, physicians, allied health care
4-1 professionals or other health care providers;
4-2 (2) The extent of any reduction in competition among
4-3 physicians, allied health professionals, other health care
4-4 providers or other persons furnishing goods or services to, or in
4-5 competition with, hospitals;
4-6 (3) The extent of any adverse impact on patients in
4-7 the quality, availability and price of health care services; and
4-8 (4) The availability of arrangements that are less
4-9 restrictive to competition and achieve the similar benefits.
4-10 (g) The department shall consult with the attorney general
4-11 regarding any potential reduction in competition that may result
4-12 from a cooperative agreement. The attorney general shall review
4-13 the application and all supporting documents provided by the
4-14 applicants, any documents or other information provided by any
4-15 intervenors, any documents or testimony provided at a public
4-16 hearing, if any, on the application and shall advise the department
4-17 whether the proposed cooperative agreement would have inappropriate
4-18 impact on competition. If the attorney general advises the
4-19 department to deny an application, the attorney general shall state
4-20 the basis and reasons for the recommended denial.
4-21 SEC. 313.003. IMMUNITY PROVIDED APPROVED COOPERATIVE
4-22 AGREEMENTS
4-23 (a) Hospitals participating in an approved cooperative
4-24 agreement are immune from civil enforcement action and criminal
4-25 prosecution for actions that otherwise violate Section 15.05 of the
5-1 Business and Commerce Code.
5-2 (b) A board member, employee or officer of a hospital who
5-3 participates in the implementation of an approved cooperative
5-4 agreement are also immune from any civil enforcement action or
5-5 criminal prosecution for actions that might otherwise violate
5-6 Section 15.05 of the Business and Commerce Code.
5-7 SEC. 313.004. MONITORING OF APPROVED COOPERATIVE AGREEMENTS
5-8 (a) If, at any time following the approval of a cooperative
5-9 agreement by the department, the attorney general or the department
5-10 determines that as a result of changed circumstances the benefits
5-11 resulting from an approved agreement no longer outweigh any
5-12 disadvantages attributable to a reduction in competition resulting
5-13 from the agreement, the department may initiate proceedings to
5-14 terminate the certificate of public advantage.
5-15 (b) The department may request documents from the parties to
5-16 the cooperative agreement regarding the current status of the
5-17 agreement, including information relative to the continued benefits
5-18 and any disadvantages of the agreement and may hold a public
5-19 hearing to solicit additional information concerning the effects of
5-20 the cooperative agreement.
5-21 (c) The attorney general may issue a civil investigative
5-22 demand on the parties to the cooperative agreement as authorized by
5-23 Section 15.10 of the Business and Commerce Code, and may
5-24 participate in any investigations or hearings conducted by the
5-25 department relative to the termination of a certificate of public
6-1 advantage.
6-2 (d) If the department determines that the likely benefits
6-3 resulting from an approved cooperative agreement no longer outweigh
6-4 any disadvantages attributable to any potential reduction in
6-5 competition resulting from the agreement, the department may
6-6 terminate the certificate of public advantage.
6-7 SEC. 313.005. JUDICIAL REVIEW OF DEPARTMENT ACTION
6-8 (a) Any party aggrieved by a decision of the department in
6-9 granting or denying an application, refusing to act on an
6-10 application or terminating a certificate is entitled to judicial
6-11 review of the decision in accordance with the Administrative
6-12 Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas
6-13 Civil Statutes).
6-14 SEC. 313.006. ATTORNEY GENERAL AUTHORITY
6-15 Nothing in this section shall limit the authority of the
6-16 attorney general to initiate civil enforcement action or criminal
6-17 enforcement if the attorney general determines that the hospitals
6-18 participating in an approved cooperative agreement have exceeded
6-19 the scope of the approved agreement.
6-20 SECTION 2. This Act takes effect September 1, 1993.
6-21 SECTION 3. The importance of this legislation and the
6-22 crowded condition of the calendars in both houses create an
6-23 emergency and an imperative public necessity that the
6-24 constitutional rule requiring bills to be read on three several
6-25 days in each house be suspended, and this rule is hereby suspended.