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 including a member of the physicians who will engage in joint
2-6 negotiations, who is authorized by physicians to negotiate on their
2-7 behalf with health benefit plans over contractual terms and
2-8 conditions affecting those physicians.
2-9 Art. 29.03. SCOPE OF CHAPTER. (a) This chapter applies
2-10 only to a health benefit plan that provides benefits for medical or
2-11 surgical expenses incurred as a result of a health condition,
2-12 accident, or sickness, including an individual, group, blanket, or
2-13 franchise insurance policy or insurance agreement, a group hospital
2-14 service contract, or an individual or group evidence of coverage or
2-15 similar coverage document that is offered by:
2-16 (1) an insurance company;
2-17 (2) a group hospital service corporation operating
2-18 under Chapter 20 of this code;
2-19 (3) a fraternal benefit society operating under
2-20 Chapter 10 of this code;
2-21 (4) a stipulated premium insurance company operating
2-22 under Chapter 22 of this code;
2-23 (5) a reciprocal exchange operating under Chapter 19
2-24 of this code;
2-25 (6) a health maintenance organization operating under
2-26 the Texas Health Maintenance Organization Act (Chapter 20A,
3-1 Vernon's Texas Insurance Code); or
3-2 (7) a multiple employer welfare agreement that holds a
3-3 certificate of authority under Article 3.95-2 of this code.
3-4 (b) This chapter does not apply to:
3-5 (1) a plan that provides coverage:
3-6 (A) only for a specified disease or other
3-7 limited benefit;
3-8 (B) only for accidental death or dismemberment;
3-9 (C) for wages or payments in lieu of wages for a
3-10 period during which an employee is absent from work because of
3-11 sickness or injury;
3-12 (D) as a supplement to liability insurance;
3-13 (E) for credit insurance;
3-14 (F) only for dental or vision care;
3-15 (G) only for hospital expenses; or
3-16 (H) only for indemnity for hospital confinement;
3-17 (2) a small employer health benefit plan written under
3-18 Chapter 26 of this code;
3-19 (3) a Medicare supplemental policy as defined by
3-20 Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
3-21 as amended;
3-22 (4) workers' compensation insurance coverage;
3-23 (5) medical payment insurance coverage issued as part
3-24 of a motor vehicle insurance policy; or
3-25 (6) a long-term care policy, including a nursing home
3-26 indemnity policy, unless the attorney general determines that the
4-1 policy provides benefit coverage so comprehensive that the policy
4-2 is a health benefit plan as described by Subsection (a) of this
4-3 article.
4-4 Art. 29.04. JOINT NEGOTIATION AUTHORIZED. Competing
4-5 physicians within the service area of a health benefit plan may
4-6 meet and communicate for the purpose of jointly negotiating the
4-7 following terms and conditions of contracts with the health benefit
4-8 plan:
4-9 (1) practices and procedures to assess and improve the
4-10 delivery of effective, cost-efficient preventive health care
4-11 services, including childhood immunizations, prenatal care, and
4-12 mammograms and other cancer screening tests or procedures;
4-13 (2) practices and procedures to encourage early
4-14 detection and effective, cost-efficient management of diseases and
4-15 illnesses in children;
4-16 (3) practices and procedures to assess and improve the
4-17 delivery of women's medical and health care, including menopause
4-18 and osteoporosis;
4-19 (4) clinical criteria for effective, cost-efficient
4-20 disease management programs, including diabetes, asthma, and
4-21 cardiovascular disease;
4-22 (5) practices and procedures to encourage and promote
4-23 patient education and treatment compliance, including parental
4-24 involvement with their children's health care;
4-25 (6) practices and procedures to identify, correct, and
4-26 prevent potentially fraudulent activities;
5-1 (7) practices and procedures for the effective,
5-2 cost-efficient use of outpatient surgery;
5-3 (8) clinical practice guidelines and coverage
5-4 criteria;
5-5 (9) administrative procedures, including methods and
5-6 timing of physician payment for services;
5-7 (10) dispute resolution procedures relating to
5-8 disputes between health benefit plans and physicians;
5-9 (11) patient referral procedures;
5-10 (12) formulation and application of physician
5-11 reimbursement methodology;
5-12 (13) quality assurance programs;
5-13 (14) health service utilization review procedures;
5-14 (15) health benefit plan physician selection and
5-15 termination criteria; and
5-16 (16) the inclusion or alteration of terms and
5-17 conditions to the extent they are the subject of government
5-18 regulation prohibiting or requiring the particular term or
5-19 condition in question; provided, however, that such restriction
5-20 does not limit physician rights to jointly petition government for
5-21 a change in such regulation.
5-22 Art. 29.05. LIMITATIONS ON JOINT NEGOTIATION. Except as
5-23 provided in Article 29.06 of this code, competing physicians shall
5-24 not meet and communicate for the purposes of jointly negotiating
5-25 the following terms and conditions of contracts with health benefit
5-26 plans:
6-1 (1) the fees or prices for services, including those
6-2 arrived at by applying any reimbursement methodology procedures;
6-3 (2) the conversion factors in a resource-based
6-4 relative value scale reimbursement methodology or similar
6-5 methodologies;
6-6 (3) the amount of any discount on the price of
6-7 services to be rendered by physicians; and
6-8 (4) the dollar amount of capitation or fixed payment
6-9 for health services rendered by physicians to health benefit plan
6-10 enrollees.
6-11 Art. 29.06. EXCEPTION TO LIMITATIONS ON JOINT NEGOTIATION.
6-12 (a) Competing physicians within the service area of a health
6-13 benefit plan may jointly negotiate the terms and conditions
6-14 specified in Article 29.05 of this code where the health benefit
6-15 plan has substantial market power and those terms and conditions
6-16 have already affected or threaten to adversely affect the quality
6-17 and availability of patient care. The attorney general shall make
6-18 the determination of what constitutes substantial market power.
6-19 (b) The department shall have the authority to collect and
6-20 investigate information necessary to determine, on an annual basis:
6-21 (1) the average number of covered lives per month per
6-22 county by every health care entity in the state; and
6-23 (2) the annual impact, if any, of this article on
6-24 average physician fees in this state.
6-25 (c) Subsection (a) of this article does not apply to:
6-26 (1) a Medicaid managed care plan under the Medicaid
7-1 managed care delivery system established under Chapters 532 and
7-2 533, Government Code; or
7-3 (2) a child health plan:
7-4 (A) for certain low-income children issued under
7-5 the Health and Safety Code; or
7-6 (B) designed under Section 2101, Social Security
7-7 Act (42 U.S.C. Section 1397aa).
7-8 Art. 29.07. JOINT NEGOTIATION REQUIREMENTS. Competing
7-9 health care physicians' exercise of joint negotiation rights
7-10 granted by Articles 29.04 and 29.06 of this code shall conform to
7-11 the following criteria:
7-12 (1) physicians may communicate with each other with
7-13 respect to the contractual terms and conditions to be negotiated
7-14 with a health benefit plan;
7-15 (2) physicians may communicate with the third party
7-16 who is authorized to negotiate on their behalf with health benefit
7-17 plans over these contractual terms and conditions;
7-18 (3) the third party is the sole party authorized to
7-19 negotiate with health benefit plans on behalf of the physicians as
7-20 a group;
7-21 (4) at the option of each physician, the physicians
7-22 may agree to be bound by the terms and conditions negotiated by the
7-23 third party authorized to represent their interests;
7-24 (5) health benefit plans communicating or negotiating
7-25 with the physicians' representative shall remain free to contract
7-26 with or offer different contract terms and conditions to individual
8-1 competing physicians; and
8-2 (6) the physicians' representative shall comply with
8-3 the provisions of Article 29.08 of this code.
8-4 Art. 29.08. REQUIREMENTS FOR PHYSICIANS' REPRESENTATIVE.
8-5 Any person or organization proposing to act or acting as a
8-6 representative of physicians for the purpose of exercising
8-7 authority granted under this chapter shall comply with the
8-8 following requirements:
8-9 (1) before engaging in any joint negotiations with
8-10 health benefit plans on behalf of physicians, the representative
8-11 shall furnish, for the attorney general's approval, a report
8-12 identifying:
8-13 (A) the representative's name and business
8-14 address;
8-15 (B) the names and addresses of the physicians
8-16 who will be represented by the identified representative;
8-17 (C) the relationship of the physicians
8-18 requesting joint representation to the total population of
8-19 physicians in a geographic service area;
8-20 (D) the health benefit plans with which the
8-21 representative intends to negotiate on behalf of the identified
8-22 physicians;
8-23 (E) the proposed subject matter of the
8-24 negotiations or discussions with the identified health benefit
8-25 plans;
8-26 (F) the representative's plan of operation and
9-1 procedures to ensure compliance with this section;
9-2 (G) the expected impact of the negotiations on
9-3 the quality of patient care; and
9-4 (H) the benefits of a contract between the
9-5 identified health benefit plan and physicians;
9-6 (2) after the parties identified in the initial filing
9-7 have reached an agreement, the representative shall furnish, for
9-8 the attorney general's approval, a copy of the proposed contract
9-9 and plan of action; and
9-10 (3) within 14 days of a health benefit plan decision
9-11 declining negotiation, terminating negotiation, or failing to
9-12 respond to a request for negotiation, the representative shall
9-13 report to the attorney general the end of negotiations. If
9-14 negotiations resume within 60 days of such notification to the
9-15 attorney general, the applicant shall be permitted to renew the
9-16 previously filed report without submitting a new report for
9-17 approval.
9-18 Art. 29.09. APPROVAL PROCESS BY ATTORNEY GENERAL. (a) The
9-19 attorney general shall either approve or disapprove an initial
9-20 filing, supplemental filing, or a proposed contract within 30 days
9-21 of each filing. If disapproved, the attorney general shall furnish
9-22 a written explanation of any deficiencies along with a statement of
9-23 specific remedial measures as to how such deficiencies could be
9-24 corrected. A representative who fails to obtain the attorney
9-25 general's approval is deemed to act outside the authority granted
9-26 under this article.
10-1 (b) The attorney general shall approve a request to enter
10-2 into joint negotiations or a proposed contract if the attorney
10-3 general determines that the applicants have demonstrated that the
10-4 likely benefits resulting from the joint negotiation or proposed
10-5 contract outweigh the disadvantages attributable to a reduction in
10-6 competition that may result from the joint negotiation or proposed
10-7 contract. The attorney general shall consider physician
10-8 distribution by specialty and its effect on competition. The joint
10-9 negotiation shall represent no more than 10 percent of the
10-10 physicians in a health benefit plan's defined geographic service
10-11 area except in cases where in conformance with the other provisions
10-12 of this subsection conditions support the approval of a greater or
10-13 lesser percentage.
10-14 (c) An approval of the initial filing by the attorney
10-15 general shall be effective for all subsequent negotiations between
10-16 the parties specified in the initial filing.
10-17 (d) If the attorney general does not issue a written
10-18 approval or rejection of an initial filing, supplemental filing, or
10-19 proposed contract within the specified time period, the applicant
10-20 shall have the right to petition a district court for a mandamus
10-21 order requiring the attorney general to approve or disapprove the
10-22 contents of the filing forthwith. The petition shall be filed in a
10-23 district court in Travis County.
10-24 Art. 29.10. CERTAIN JOINT ACTION PROHIBITED. Nothing
10-25 contained in this chapter shall be construed to enable physicians
10-26 to jointly coordinate any cessation, reduction, or limitation of
11-1 health care services. Physicians may not meet and communicate for
11-2 the purpose of jointly negotiating a requirement that a physician
11-3 or group of physicians, as a condition of the physicians' or group
11-4 of physicians' participation in a health benefit plan, must
11-5 participate in all the products within the same health benefit
11-6 plan. Physicians may not negotiate with the plan to exclude,
11-7 limit, or otherwise restrict non-physician health care providers
11-8 from participation in a health benefit plan based substantially on
11-9 the fact the health care provider is not a licensed physician
11-10 unless that restriction, exclusion, or limitation is otherwise
11-11 permitted by law. The representative of the physicians shall
11-12 advise physicians of the provisions of this article and shall warn
11-13 physicians of the potential for legal action against physicians who
11-14 violate state or federal antitrust laws when acting outside the
11-15 authority of this chapter.
11-16 Art. 29.11. RULEMAKING AUTHORITY. The attorney general and
11-17 the commissioner shall have the authority to promulgate rules
11-18 necessary to implement the provisions of this chapter. The
11-19 attorney general and the commissioner may by rule authorize
11-20 podiatric physicians to participate in the joint negotiations
11-21 permitted by this chapter.
11-22 Art. 29.12. CONSTRUCTION. This chapter shall not be
11-23 construed to prohibit physicians from negotiating the terms and
11-24 conditions of contracts as permitted by other state or federal law.
11-25 Art. 29.13. FEES. Each person who acts as the
11-26 representative of negotiating parties under this chapter shall pay
12-1 to the department a fee to act as a representative. The attorney
12-2 general, by rule, shall set fees in amounts reasonable and
12-3 necessary to cover the costs incurred by the state in administering
12-4 this chapter. A fee collected under this article shall be
12-5 deposited in the state treasury to the credit of the operating fund
12-6 from which the expense was incurred.
12-7 Art. 29.14. EXPIRATION. This chapter expires September 1,
12-8 2003.
12-9 SECTION 2. This Act takes effect September 1, 1999.
12-10 SECTION 3. The importance of this legislation and the
12-11 crowded condition of the calendars in both houses create an
12-12 emergency and an imperative public necessity that the
12-13 constitutional rule requiring bills to be read on three several
12-14 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1468 passed the Senate on
April 28, 1999, by a viva-voce vote; and that the Senate concurred
in House amendments on May 28, 1999, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1468 passed the House, with
amendments, on May 26, 1999, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor