SRC-SLL, DBM, JXG S.B. 1468 76(R)BILL ANALYSIS Senate Research CenterS.B. 1468 By: Harris Economic Development 8/23/1999 Enrolled DIGEST Currently, federal antitrust law prohibits physicians from establishing networks to negotiate contract provisions with health benefit plans. S.B. 1468 authorizes physicians practicing within the service area of a health benefit plan to jointly negotiate the terms and conditions described by Subsection (b) of this article, if the health plan has substantial market power and if the physicians have a representative to engage in joint negotiations. PURPOSE As enrolled, S.B. 1468 sets forth provisions for the requirements of joint negotiations by physicians, or their representative, with certain health benefit plans. RULEMAKING AUTHORITY Rulemaking authority is granted to the attorney general in SECTION 1 (Articles 29.11 and 29.13, Chapter 29, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends the Insurance Code, by adding Chapter 29, as follows: CHAPTER 29. JOINT NEGOTIATIONS BY PHYSICIANS WITH HEALTH BENEFIT PLANS Art. 29.01. FINDING AND PURPOSES. Provides that the legislature finds that joint negotiation by competing physicians of certain terms and conditions of contracts with health plans will result in pro-competitive effects in the absence of any express or implied threat of retaliatory joint action, such as boycott or strike, by physicians. Provides that although the legislature finds that joint negotiations over fee-related terms may in some circumstances yield anti-competitive effects, it also recognizes that there are instances in which health plans dominate the market to such a degree that fair negotiations between physicians and the plan are instances in which health plans dominate the market to such a degree that fair negotiations between physicians and the plan are unobtainable absent any joint action on behalf of physicians. Provides that health plans have the ability to virtually dictate the terms of the contract they offer physicians, in these instances. Provides that the legislature finds it appropriate and necessary to authorize joint negotiations on fee-related and other issues where it determines that such imbalances exist. Art. 29.02. DEFINITIONS. Defines "health benefit plan," "person," "physicians' representative." Art. 29.03. SCOPE OF CHAPTER. Provides that this chapter applies only to a health benefit plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident, or sickness, including certain entities. Sets forth descriptions of the limitations of this chapter. Art. 29.04. JOINT NEGOTIATION AUTHORIZED. Authorizes competing physicians within the service area of a health plan to meet and communicate for the purpose of jointly negotiating certain terms and conditions, including the inclusion or alteration of terms and conditions to the extent they are the subject of government regulation prohibiting or requiring the particular term or condition in question; however, such restriction does not limit physician rights to jointly petition government for a change in such regulation. Makes conforming changes. Art. 29.05. LIMITATIONS ON JOINT NEGOTIATION. Prohibits competing physicians from meeting and communicating for the purposes of jointly negotiating certain conditions of the health plan. Makes conforming changes. Art. 29.06. EXCEPTION TO LIMITATIONS ON JOINT NEGOTIATION. Authorizes competing physicians within the service area of a health plan to jointly negotiate the terms and conditions specified in Article 29.05 where the health plan has substantial market power and those terms and conditions have already affected or threaten to adversely affect the quality and availability of patient care. Requires the attorney general to make the determination of what constitutes substantial market power. Requires the Department of Insurance (department) to have the authority to collect and investigate information necessary to make certain determinations. Provides that Subsection (a) of this article does not apply to certain health care plans. Art. 29.07. JOINT NEGOTIATION REQUIREMENTS. Sets forth the required joint negotiation rights conformities. Art. 29.08. REQUIREMENTS FOR PHYSICIANS' REPRESENTATIVE. Requires any person or organization proposing to act or acting as a representative of physicians for the purpose of exercising authority granted under this chapter to comply with certain requirements. Makes conforming changes. Art. 29.09. APPROVAL PROCESS BY ATTORNEY GENERAL. Requires the attorney general to either approve or disapprove an initial filing, supplemental filing and a proposed contract within 30 days of each filing. Requires the attorney general to furnish a written explanation of any deficiencies along with a statement of specific remedial measures as to how such deficiencies could be corrected, if disapproved. Provides that a representative who fails to obtain the attorney general's approval is deemed to act outside the authority granted under this section. Requires the attorney general to approve a request to enter into joint negotiations or a proposed contract, if the attorney general determines that the applicants have demonstrated that the likely benefits resulting from the joint negotiation or proposed contract outweigh the disadvantages attributable to a reduction in competition that may result from the joint negotiation or proposed contract. Requires the attorney general to consider physician distribution by specialty and its effect on competition. Requires the joint negotiation to represent no more than a certain percentage of physicians. Requires an approval of the initial filing by the attorney general to be effective for all subsequent negotiations between the parties specified in the initial filing. Requires the applicant to have the right to petition a district court for a mandamus order requiring the attorney general to approve or disapprove the contents of the filing forthwith, if the attorney general does not issue a written approval or rejection of an initial filing, supplemental filing, or proposed contract within the specified time period. Requires the petition to be filed in a district court in Travis County. Art. 29.10. CERTAIN JOINT ACTION PROHIBITED. Provides that nothing contained in this chapter shall be construed to enable physicians to jointly coordinate any cessation, reduction, or limitation of health care services. Prohibits physicians from meeting and communicating for the purpose of jointly negotiating a requirement that a physician or group of physicians' participation in a health benefit plan, must participate in all the products within the same health benefit plan. Prohibits physicians from negotiating with the plan to exclude, limit or otherwise restrict non-physician health care providers from participation in a health benefit plan based substantially on the fact the health care provider is not a licensed physician unless that restriction, exclusion, or limitation is otherwise permitted by law. Requires the representative of the physicians to advise physicians of the provisions of this article and to warn physicians of the potential for legal action against physicians who violate state or federal antitrust laws when acting outside the authority of this chapter. Art. 29.11. RULEMAKING AUTHORITY. Requires the attorney general and commissioner of insurance to have the authority to promulgate rules necessary to implement the provisions of this chapter. Authorizes the attorney general and the commissioner of insurance, by rule, to authorize podiatric physicians to participate in the joint negotiations permitted by this chapter. Art. 29.12. CONSTRUCTION. Prohibits this chapter from being construed to prohibit physicians from negotiating the terms and conditions of contracts as permitted by other state or federal law. Art. 29.13. FEES. Requires each person who acts as the representative of negotiating parties under this chapter to pay to the department a fee to act as a representative. Authorizes the attorney general, by rule, to set fees in amounts reasonable and necessary to cover the costs incurred by the state in administering this chapter. Requires a fee collected under this article to be deposited in the state treasury to the credit of the operating fund from which the expense was incurred. Art. 29.14. EXPIRATION. Provides that this chapter expires September 1, 2003. SECTION 2.Effective date: September 1, 1999. SECTION 3.Emergency clause.