By Smithee H.B. No. 3039
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of physician collective negotiation.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. The Insurance Code is amended by adding a new
1-5 Chapter 27, to read as follows:
1-6 Art. 27.01 Finding and Purposes. The Legislature finds that
1-7 collective negotiation by competing physicians of certain terms and
1-8 conditions of contracts with health plans will result in
1-9 pro-competitive effects in the absence of any express or implied
1-10 threat of retaliatory collective action, such as a boycott or
1-11 strike, by physicians. Although the Legislature finds that
1-12 collective negotiations over fee-related terms may in some
1-13 circumstances yield anti-competitive effects, it also recognizes
1-14 that there are instances in which health plans dominate the market
1-15 to such a degree that fair negotiations between physicians and the
1-16 plan are unobtainable absent any collective action on behalf of
1-17 physicians. In these instances, health plans have the ability to
1-18 virtually dictate the terms of the contracts they offer physicians.
1-19 Consequently, the Legislature finds it appropriate and necessary to
1-20 authorize collective negotiations on fee-related and other issues
1-21 where it determines that such imbalances exist.
2-1 Art. 27.02. Competing physicians within the service area of
2-2 a health plan may meet and communicate for the purpose of
2-3 collectively negotiating the following terms and conditions of
2-4 contracts with the health plan:
2-5 (1) clinical practice guidelines and coverage criteria
2-6 (2) administrative procedures including methods and
2-7 timing of physician payment for services;
2-8 (3) dispute resolution procedures relating to disputes
2-9 between health plans and physicians;
2-10 (4) patient referral procedures;
2-11 (5) formulation and application of reimbursement
2-12 methodology;
2-13 (6) quality assurance programs;
2-14 (7) health service utilization review procedures; and
2-15 (8) health plan physician selection and termination
2-16 criteria.
2-17 Nothing here in shall be construed to allow a boycott.
2-18 Art. 27.03. Except as provided in Art. 27.04 of this
2-19 Chapter, competing physicians shall not meet and communicate for
2-20 the purposes of collectively negotiating the following terms and
2-21 conditions of contracts with health plans:
2-22 (1) the fees or prices for services, including those
2-23 arrived at by applying any reimbursement methodology procedures;
2-24 (2) the conversion factors in a resource-based
2-25 relative value scale reimbursement methodology or similar
3-1 methodologies;
3-2 (3) the amount of any discount on the price of
3-3 services to be rendered by physicians;
3-4 (4) the dollar amount of capitation or fixed payment
3-5 for health services rendered by physicians to health plan
3-6 enrollees; or
3-7 (5) the inclusion or alteration of terms and
3-8 conditions to the extent they are the subject of government
3-9 regulation prohibiting or requiring the particular term or
3-10 condition in question; however, such restriction does not limit
3-11 physician rights to collectively petition government for a change
3-12 in such regulation.
3-13 Art. 27.04. Competing physicians within the service area of
3-14 a health plan may collectively negotiate the terms and conditions
3-15 specified in Art. 27.03 where the health plans has substantial
3-16 market power. Substantial market power will be found where the
3-17 health plan's market share exceeds 15%, as measured by 1) number of
3-18 covered lives as reported by the Commissioner of Insurance, or 2)
3-19 the actual number of consumers of prepaid comprehensive health
3-20 services. Substantial market power also exists where a health
3-21 plan's market share exceeds 15% within a particular market segment,
3-22 broken down into the following market segments: Medicare, Medicaid,
3-23 commercial, managed care and HMO.
3-24 Art. 27.05. Competing health care physicians' exercise of
3-25 collective negotiation rights granted by Articles 2 and 4 of this
4-1 Chapter shall conform to the following criteria:
4-2 (1) physicians may communicate with each other with
4-3 respect to the contractual terms and conditions to be negotiated
4-4 with a health plan;
4-5 (2) physicians may communicate with the third party
4-6 who is authorized to negotiate on their behalf with health plans
4-7 over these contractual, terms and conditions;
4-8 (3) the third party is the sole party authorized to
4-9 negotiate with health plans on behalf of the physicians as a group;
4-10 (4) physicians can be bound by the terms and
4-11 conditions negotiated by the third party authorized to represent
4-12 their interests;
4-13 (5) health plans communicating or negotiating with the
4-14 physicians' representative shall remain free to contract with or
4-15 offer different contract terms and conditions to individual
4-16 competing physicians;
4-17 (6) the physicians' representative shall not represent
4-18 more than 30% of the market of practicing physicians for the
4-19 provision of services or a particular physician type or specialty
4-20 in the service area or proposed service area of a health plan with
4-21 less than 5% of the market, as measured by a) number of covered
4-22 lives as reported by the Commissioner of Insurance, or b) the
4-23 actual number of consumers of prepaid comprehensive health
4-24 services; and
4-25 (7) the physicians' representative shall comply with
5-1 the provision of Art. 27.06 of this Chapter.
5-2 Art. 27.06. Any person or organization proposing to act or
5-3 acting as a representative of physicians for the purpose of
5-4 exercising authority granted under this Chapter shall comply with
5-5 the following requirements:
5-6 (1) before engaging in any collective negotiation with
5-7 health plans on behalf of competing physicians, the representative
5-8 shall file with the Commissioner of Insurance information
5-9 identifying the representative, the representative's plan of
5-10 operation, and the representative's procedures to ensure compliance
5-11 with this section;
5-12 (2) before engaging in any collective negotiations
5-13 with health plans on behalf of physicians, the representative shall
5-14 furnish for the Commission of Insurance's approval, a brief report
5-15 identifying the proposed subject matter of the negotiations or
5-16 discussions with health plans and the efficiencies or benefits
5-17 expected to be achieved thereby. Approval shall be withheld by the
5-18 Commissioner of Insurance if the proposed negotiations would exceed
5-19 the authority granted under this Chapter. The representative shall
5-20 supplement the report to the Commissioner of Insurance as new
5-21 information becomes available that indicates that the subject
5-22 matter of the negotiations with the health plan has or will change;
5-23 (3) within 14 days of a health plan decision declining
5-24 negotiation, terminating negotiation, or failing to respond to a
5-25 request for negotiation the representative shall report to the
6-1 Commissioner of Insurance the end of negotiations; and
6-2 (4) before reporting the results of negotiations with
6-3 a health plan and before giving physicians an evaluation of any
6-4 offer made by a health carrier, the representative shall furnish
6-5 for the Commissioner of Insurance's approval prior to dissemination
6-6 to physicians, a copy of all communications to be made to
6-7 physicians related to negotiations, discussions, and health plan
6-8 offers.
6-9 Art. 27.07. With the advice of the Attorney General, the
6-10 Commissioner Of Insurance shall either approve or disapprove the
6-11 activity as identified in the report within 30 days of filing. If
6-12 disapproved, the Commissioner of Insurance shall furnish a written
6-13 explanation of any deficiencies along with a statement of specific
6-14 remedial measures as to how such deficiencies could be corrected.
6-15 A representative who fails to obtain the Commissioner of
6-16 Insurance's approval is deemed to act outside the authority granted
6-17 under this section.
6-18 Art. 27.08. Nothing contained in this Chapter is intended to
6-19 authorize competing physicians to act in concert in response to a
6-20 report issued by the physicians' representative related to the
6-21 representative's discussions or negotiations with health plans. The
6-22 representative of the physicians shall advise physicians of the
6-23 provisions of this section and shall warn physicians of the
6-24 potential for legal action against physicians who violate state or
6-25 federal antitrust laws by exceeding the authority granted under
7-1 this section.
7-2 Art. 27.09. The costs and expenses of administering this
7-3 Chapter shall be paid by the persons or organizations proposing to
7-4 act or acting as the representatives of the negotiating parties
7-5 under this Chapter in such amount as the Commission of Insurance
7-6 shall certify to be just and reasonable. All sums collected by the
7-7 Commission provided in this Chapter shall be deposited in the State
7-8 Treasury to the credit of the Texas Department of Insurance for the
7-9 administration of the Chapter as established by appropriation by
7-10 the Legislature.
7-11 SECTION 2. This Act becomes effective September 1, 1999.
7-12 SECTION 3. The importance of the legislation and the crowded
7-13 condition of the calendars in both houses create an emergency and
7-14 an imperative public necessity that the constitutional rule
7-15 requiring bills to be read on three several days in each house be
7-16 suspended, and this rule is hereby suspended.