By: Harris S.B. No. 1468
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of physician joint negotiation.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. The Insurance Code is amended by adding Chapter
1-4 29 to read as follows:
1-5 CHAPTER 29. JOINT NEGOTIATIONS BY PHYSICIANS
1-6 WITH HEALTH BENEFIT PLANS
1-7 Art. 29.01. FINDINGS AND PURPOSES. The legislature finds
1-8 that joint negotiation by competing physicians of certain terms and
1-9 conditions of contracts with health plans will result in
1-10 procompetitive effects in the absence of any express or implied
1-11 threat of retaliatory joint action, such as a boycott or strike, by
1-12 physicians. Although the legislature finds that joint negotiations
1-13 over fee-related terms may in some circumstances yield
1-14 anticompetitive effects, it also recognizes that there are
1-15 instances in which health plans dominate the market to such a
1-16 degree that fair negotiations between physicians and the plan are
1-17 unobtainable absent any joint action on behalf of physicians. In
1-18 these instances, health plans have the ability to virtually dictate
1-19 the terms of the contracts they offer physicians. Consequently,
1-20 the legislature finds it appropriate and necessary to authorize
1-21 joint negotiations on fee-related and other issues where it
1-22 determines that such imbalances exist.
1-23 Art. 29.02. DEFINITIONS. In this chapter:
1-24 (1) "Health benefit plan" means a plan described by
2-1 Article 29.03 of this code.
2-2 (2) "Person" means an individual, association,
2-3 corporation, or any other legal entity.
2-4 (3) "Physicians' representative" means a third party
2-5 who is authorized by physicians to negotiate on their behalf with
2-6 health benefit plans over contractual terms and conditions
2-7 affecting those physicians.
2-8 Art. 29.03. SCOPE OF CHAPTER. (a) This chapter applies
2-9 only to a health benefit plan that provides benefits for medical or
2-10 surgical expenses incurred as a result of a health condition,
2-11 accident, or sickness, including an individual, group, blanket, or
2-12 franchise insurance policy or insurance agreement, a group hospital
2-13 service contract, or an individual or group evidence of coverage or
2-14 similar coverage document that is offered by:
2-15 (1) an insurance company;
2-16 (2) a group hospital service corporation operating
2-17 under Chapter 20 of this code;
2-18 (3) a fraternal benefit society operating under
2-19 Chapter 10 of this code;
2-20 (4) a stipulated premium insurance company operating
2-21 under Chapter 22 of this code;
2-22 (5) a reciprocal exchange operating under Chapter 19
2-23 of this code;
2-24 (6) a health maintenance organization operating under
2-25 the Texas Health Maintenance Organization Act (Chapter 20A,
2-26 Vernon's Texas Insurance Code); or
3-1 (7) a multiple employer welfare agreement that holds a
3-2 certificate of authority under Article 3.95-2 of this code.
3-3 (b) This chapter does not apply to:
3-4 (1) a plan that provides coverage:
3-5 (A) only for a specified disease or other
3-6 limited benefit;
3-7 (B) only for accidental death or dismemberment;
3-8 (C) for wages or payments in lieu of wages for a
3-9 period during which an employee is absent from work because of
3-10 sickness or injury;
3-11 (D) as a supplement to liability insurance;
3-12 (E) for credit insurance;
3-13 (F) only for dental or vision care;
3-14 (G) only for hospital expenses; or
3-15 (H) only for indemnity for hospital confinement;
3-16 (2) a small employer health benefit plan written under
3-17 Chapter 26 of this code;
3-18 (3) a Medicare supplemental policy as defined by
3-19 Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
3-20 as amended;
3-21 (4) workers' compensation insurance coverage;
3-22 (5) a "group model health maintenance organization"
3-23 that is a state-certified health maintenance organization that
3-24 provides the majority of its professional services through a single
3-25 group medical practice that educates medical students or resident
3-26 physicians through a contract with the medical school component of
4-1 a Texas state-supported college or university accredited by the
4-2 Accreditation Council of Graduate Medical Education or the American
4-3 Osteopathic Association;
4-4 (6) medical payment insurance coverage issued as part
4-5 of a motor vehicle insurance policy; or
4-6 (7) a long-term care policy, including a nursing home
4-7 fixed indemnity policy, unless the attorney general determines that
4-8 the policy provides benefit coverage so comprehensive that the
4-9 policy is a health benefit plan as described by Subsection (a) of
4-10 this article.
4-11 Art. 29.04. JOINT NEGOTIATION AUTHORIZED. Competing
4-12 physicians within the service area of a health benefit plan may
4-13 meet and communicate for the purpose of jointly negotiating the
4-14 following terms and conditions of contracts with the health benefit
4-15 plan:
4-16 (1) clinical practice guidelines and coverage
4-17 criteria;
4-18 (2) administrative procedures including methods and
4-19 timing of physician payment for services;
4-20 (3) dispute resolution procedures relating to disputes
4-21 between health benefit plans and physicians;
4-22 (4) patient referral procedures;
4-23 (5) formulation and application of physician
4-24 reimbursement methodology;
4-25 (6) quality assurance programs;
4-26 (7) health service utilization review procedures;
5-1 (8) health benefit plan physician selection and
5-2 termination criteria; and
5-3 (9) the inclusion or alteration of terms and
5-4 conditions to the extent they are the subject of government
5-5 regulation prohibiting or requiring the particular term or
5-6 condition in question; provided, however, that such restriction
5-7 does not limit physician rights to jointly petition government for
5-8 a change in such regulation.
5-9 Art. 29.05. LIMITATIONS ON JOINT NEGOTIATION. Except as
5-10 provided in Article 29.06 of this code, competing physicians shall
5-11 not meet and communicate for the purposes of jointly negotiating
5-12 the following terms and conditions of contracts with health benefit
5-13 plans:
5-14 (1) the fees or prices for services, including those
5-15 arrived at by applying any reimbursement methodology procedures;
5-16 (2) the conversion factors in a resource-based
5-17 relative value scale reimbursement methodology or similar
5-18 methodologies;
5-19 (3) the amount of any discount on the price of
5-20 services to be rendered by physicians; and
5-21 (4) the dollar amount of capitation or fixed payment
5-22 for health services rendered by physicians to health benefit plan
5-23 enrollees.
5-24 Art. 29.06. EXCEPTION TO LIMITATIONS ON JOINT NEGOTIATION.
5-25 (a) Competing physicians within the service area of a health
5-26 benefit plan may jointly negotiate the terms and conditions
6-1 specified in Article 29.05 of this code where the health benefit
6-2 plan has substantial market power. The attorney general shall make
6-3 the determination of what constitutes substantial market power.
6-4 (b) The department shall have the authority to collect and
6-5 investigate information necessary to determine on an annual basis
6-6 the average number of covered lives per month per county by every
6-7 health care entity in the state.
6-8 Art. 29.07. JOINT NEGOTIATION REQUIREMENTS. Competing
6-9 health care physicians' exercise of joint negotiation rights
6-10 granted by Articles 29.04 and 29.06 of this code shall conform to
6-11 the following criteria:
6-12 (1) physicians may communicate with each other with
6-13 respect to the contractual terms and conditions to be negotiated
6-14 with a health benefit plan;
6-15 (2) physicians may communicate with the third party
6-16 who is authorized to negotiate on their behalf with health benefit
6-17 plans over these contractual terms and conditions;
6-18 (3) the third party is the sole party authorized to
6-19 negotiate with health benefit plans on behalf of the physicians as
6-20 a group;
6-21 (4) physicians are bound by the terms and conditions
6-22 negotiated by the third party authorized to represent their
6-23 interests;
6-24 (5) health benefit plans communicating or negotiating
6-25 with the physicians' representative shall remain free to contract
6-26 with or offer different contract terms and conditions to individual
7-1 competing physicians; and
7-2 (6) the physicians' representative shall comply with
7-3 the provision of Article 29.08 of this code.
7-4 Art. 29.08. REQUIREMENTS FOR PHYSICIANS' REPRESENTATIVE.
7-5 Any person or organization proposing to act or acting as a
7-6 representative of physicians for the purpose of exercising
7-7 authority granted under this chapter shall comply with the
7-8 following requirements:
7-9 (1) before engaging in any joint negotiations with
7-10 health benefit plans on behalf of physicians, the representative
7-11 shall furnish, for the attorney general's approval, a report
7-12 identifying:
7-13 (A) the representative's name and business
7-14 address;
7-15 (B) the names and addresses of the physicians
7-16 who will be represented by the identified representative;
7-17 (C) the relationship of the physicians
7-18 requesting joint representation to the total population of
7-19 physicians in a geographic service area;
7-20 (D) the health benefit plans with which the
7-21 representative intends to negotiate on behalf of the identified
7-22 physicians;
7-23 (E) the proposed subject matter of the
7-24 negotiations or discussions with the identified health benefit
7-25 plans;
7-26 (F) the representative's plan of operation and
8-1 procedures to ensure compliance with this section;
8-2 (G) the expected impact of the negotiations on
8-3 the quality of patient care; and
8-4 (H) the benefits of a contract between the
8-5 identified health benefit plan and physicians;
8-6 (2) after the parties identified in the initial filing
8-7 have reached an agreement, the representative shall furnish, for
8-8 the attorney general's approval, a copy of the proposed contract
8-9 and plan of action; and
8-10 (3) within 14 days of a health benefit plan decision
8-11 declining negotiation, terminating negotiation, or failing to
8-12 respond to a request for negotiation, the representative shall
8-13 report to the attorney general the end of negotiations. If
8-14 negotiations resume within 60 days of such notification to the
8-15 attorney general, the applicant shall be permitted to renew the
8-16 previously filed report without submitting a new report for
8-17 approval.
8-18 Art. 29.09. APPROVAL PROCESS BY ATTORNEY GENERAL. (a) The
8-19 attorney general shall either approve or disapprove an initial
8-20 filing, supplemental filing, or a proposed contract within 30 days
8-21 of each filing. If disapproved, the attorney general shall furnish
8-22 a written explanation of any deficiencies along with a statement of
8-23 specific remedial measures as to how such deficiencies could be
8-24 corrected. A representative who fails to obtain the attorney
8-25 general's approval is deemed to act outside the authority granted
8-26 under this article.
9-1 (b) The attorney general shall approve a request to enter
9-2 into joint negotiations or a proposed contract if the attorney
9-3 general determines that the applicants have demonstrated that the
9-4 likely benefits resulting from the joint negotiation or proposed
9-5 contract outweigh the disadvantages attributable to a reduction in
9-6 competition that may result from the joint negotiation or proposed
9-7 contract. The joint negotiation shall represent no more than 10
9-8 percent of the licensed physicians in a defined geographic area.
9-9 Either the health benefit plan or the physicians' representative
9-10 shall have the right to appeal the percentage, and if conditions
9-11 support such a change, a higher or lower percentage can be
9-12 authorized by the attorney general.
9-13 (c) An approval of the initial filing by the attorney
9-14 general shall be effective for all subsequent negotiations between
9-15 the parties specified in the initial filing.
9-16 (d) If the attorney general does not issue a written
9-17 approval or rejection of an initial filing, supplemental filing, or
9-18 proposed contract within the specified time period, the applicant
9-19 shall have the right to petition a district court for a mandamus
9-20 order requiring the attorney general to approve or disapprove the
9-21 contents of the filing forthwith. The petition shall be filed in a
9-22 district court in Travis County.
9-23 Art. 29.10. CERTAIN JOINT ACTION PROHIBITED. Nothing
9-24 contained in this chapter shall be construed to enable physicians
9-25 to jointly coordinate any cessation, reduction, or limitation of
9-26 health care services. The representative of the physicians shall
10-1 advise physicians of the provisions of this article and shall warn
10-2 physicians of the potential for legal action against physicians who
10-3 violate state or federal antitrust laws when acting outside the
10-4 authority of this chapter.
10-5 Art. 29.11. RULEMAKING AUTHORITY. The attorney general and
10-6 the commissioner shall have the authority to promulgate rules
10-7 necessary to implement the provisions of this chapter.
10-8 Art. 29.12. CONSTRUCTION. This chapter shall not be
10-9 construed to prohibit physicians from negotiating the terms and
10-10 conditions of contracts as permitted by other state or federal law.
10-11 Art. 29.13. FEES. Each person who acts as the
10-12 representative of negotiating parties under this chapter shall pay
10-13 to the department a fee to act as a representative. The attorney
10-14 general, by rule, shall set fees in amounts reasonable and
10-15 necessary to cover the costs incurred by the state in administering
10-16 this chapter. A fee collected under this article shall be
10-17 deposited in the state treasury to the credit of the operating fund
10-18 from which the expense was incurred.
10-19 SECTION 2. This Act takes effect September 1, 1999.
10-20 SECTION 3. The importance of this legislation and the
10-21 crowded condition of the calendars in both houses create an
10-22 emergency and an imperative public necessity that the
10-23 constitutional rule requiring bills to be read on three several
10-24 days in each house be suspended, and this rule is hereby suspended.