76R15367 E By Harris S.B. No. 1468 Substitute the following for S.B. No. 1468: By Burnam C.S.S.B. No. 1468 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the regulation of physician joint 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 Chapter 1-5 29 to read as follows: 1-6 CHAPTER 29. JOINT NEGOTIATIONS BY PHYSICIANS 1-7 WITH HEALTH BENEFIT PLANS 1-8 Art. 29.01. FINDINGS AND PURPOSES. The legislature finds 1-9 that joint negotiation by competing physicians of certain terms and 1-10 conditions of contracts with health plans will result in 1-11 procompetitive effects in the absence of any express or implied 1-12 threat of retaliatory joint action, such as a boycott or strike, by 1-13 physicians. Although the legislature finds that joint negotiations 1-14 over fee-related terms may in some circumstances yield 1-15 anticompetitive effects, it also recognizes that there are 1-16 instances in which health plans dominate the market to such a 1-17 degree that fair negotiations between physicians and the plan are 1-18 unobtainable absent any joint action on behalf of physicians. In 1-19 these instances, health plans have the ability to virtually dictate 1-20 the terms of the contracts they offer physicians. Consequently, 1-21 the legislature finds it appropriate and necessary to authorize 1-22 joint negotiations on fee-related and other issues where it 1-23 determines that such imbalances exist. 1-24 Art. 29.02. DEFINITIONS. In this chapter: 2-1 (1) "Health benefit plan" means a plan described by 2-2 Article 29.03 of this code. 2-3 (2) "Person" means an individual, association, 2-4 corporation, or any other legal entity. 2-5 (3) "Physicians' representative" means a third party, 2-6 including a member of the physicians who will engage in joint 2-7 negotiations, who is authorized by physicians to negotiate on their 2-8 behalf with health benefit plans over contractual terms and 2-9 conditions affecting those physicians. 2-10 Art. 29.03. SCOPE OF CHAPTER. (a) This chapter applies 2-11 only to a health benefit plan that provides benefits for medical or 2-12 surgical expenses incurred as a result of a health condition, 2-13 accident, or sickness, including an individual, group, blanket, or 2-14 franchise insurance policy or insurance agreement, a group hospital 2-15 service contract, or an individual or group evidence of coverage or 2-16 similar coverage document that is offered by: 2-17 (1) an insurance company; 2-18 (2) a group hospital service corporation operating 2-19 under Chapter 20 of this code; 2-20 (3) a fraternal benefit society operating under 2-21 Chapter 10 of this code; 2-22 (4) a stipulated premium insurance company operating 2-23 under Chapter 22 of this code; 2-24 (5) a reciprocal exchange operating under Chapter 19 2-25 of this code; 2-26 (6) a health maintenance organization operating under 2-27 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 3-27 policy provides benefit coverage so comprehensive that the policy 4-1 is a health benefit plan as described by Subsection (a) of this 4-2 article. 4-3 Art. 29.04. JOINT NEGOTIATION AUTHORIZED. Competing 4-4 physicians within the service area of a health benefit plan may 4-5 meet and communicate for the purpose of jointly negotiating the 4-6 following terms and conditions of contracts with the health benefit 4-7 plan: 4-8 (1) practices and procedures to assess and improve the 4-9 delivery of effective, cost-efficient preventive health care 4-10 services, including childhood immunizations, prenatal care, and 4-11 mammograms and other cancer screening tests or procedures; 4-12 (2) practices and procedures to encourage early 4-13 detection and effective, cost-efficient management of diseases and 4-14 illnesses in children; 4-15 (3) practices and procedures to assess and improve the 4-16 delivery of women's medical and health care, including menopause 4-17 and osteoporosis; 4-18 (4) clinical criteria for effective, cost-efficient 4-19 disease management programs, including diabetes, asthma, and 4-20 cardiovascular disease; 4-21 (5) practices and procedures to encourage and promote 4-22 patient education and treatment compliance, including parental 4-23 involvement with their children's health care; 4-24 (6) practices and procedures to identify, correct, and 4-25 prevent potentially fraudulent activities; 4-26 (7) practices and procedures for the effective, 4-27 cost-efficient use of outpatient surgery; 5-1 (8) clinical practice guidelines and coverage 5-2 criteria; 5-3 (9) administrative procedures, including methods and 5-4 timing of physician payment for services; 5-5 (10) dispute resolution procedures relating to 5-6 disputes between health benefit plans and physicians; 5-7 (11) patient referral procedures; 5-8 (12) formulation and application of physician 5-9 reimbursement methodology; 5-10 (13) quality assurance programs; 5-11 (14) health service utilization review procedures; 5-12 (15) health benefit plan physician selection and 5-13 termination criteria; and 5-14 (16) the inclusion or alteration of terms and 5-15 conditions to the extent they are the subject of government 5-16 regulation prohibiting or requiring the particular term or 5-17 condition in question; provided, however, that such restriction 5-18 does not limit physician rights to jointly petition government for 5-19 a change in such regulation. 5-20 Art. 29.05. LIMITATIONS ON JOINT NEGOTIATION. Except as 5-21 provided in Article 29.06 of this code, competing physicians shall 5-22 not meet and communicate for the purposes of jointly negotiating 5-23 the following terms and conditions of contracts with health benefit 5-24 plans: 5-25 (1) the fees or prices for services, including those 5-26 arrived at by applying any reimbursement methodology procedures; 5-27 (2) the conversion factors in a resource-based 6-1 relative value scale reimbursement methodology or similar 6-2 methodologies; 6-3 (3) the amount of any discount on the price of 6-4 services to be rendered by physicians; and 6-5 (4) the dollar amount of capitation or fixed payment 6-6 for health services rendered by physicians to health benefit plan 6-7 enrollees. 6-8 Art. 29.06. EXCEPTION TO LIMITATIONS ON JOINT NEGOTIATION. 6-9 (a) Competing physicians within the service area of a health 6-10 benefit plan may jointly negotiate the terms and conditions 6-11 specified in Article 29.05 of this code where the health benefit 6-12 plan has substantial market power and those terms and conditions 6-13 have already affected or threaten to adversely affect the quality 6-14 and availability of patient care. The attorney general shall make 6-15 the determination of what constitutes substantial market power. 6-16 (b) The department shall have the authority to collect and 6-17 investigate information necessary to determine, on an annual basis: 6-18 (1) the average number of covered lives per month per 6-19 county by every health care entity in the state; and 6-20 (2) the annual impact, if any, of this article on 6-21 average physician fees in this state. 6-22 (c) Section (a) of this article does not apply to: 6-23 (1) a Medicaid Managed Care plan under the Medicaid 6-24 managed care delivery system established under Chapters 532 and 6-25 533, Government Code; or 6-26 (2) a child health plan: 6-27 (A) for certain low-income children issued under 7-1 the Health and Safety Code; or 7-2 (B) designed under Section 2101, Social 7-3 Security Act (42 U.S.C. Section 1397aa). 7-4 Art. 29.07. JOINT NEGOTIATION REQUIREMENTS. Competing 7-5 health care physicians' exercise of joint negotiation rights 7-6 granted by Articles 29.04 and 29.06 of this code shall conform to 7-7 the following criteria: 7-8 (1) physicians may communicate with each other with 7-9 respect to the contractual terms and conditions to be negotiated 7-10 with a health benefit plan; 7-11 (2) physicians may communicate with the third party 7-12 who is authorized to negotiate on their behalf with health benefit 7-13 plans over these contractual terms and conditions; 7-14 (3) the third party is the sole party authorized to 7-15 negotiate with health benefit plans on behalf of the physicians as 7-16 a group; 7-17 (4) at the option of each physician, the physicians 7-18 may agree to be bound by the terms and conditions negotiated by the 7-19 third party authorized to represent their interests; 7-20 (5) health benefit plans communicating or negotiating 7-21 with the physicians' representative shall remain free to contract 7-22 with or offer different contract terms and conditions to individual 7-23 competing physicians; and 7-24 (6) the physicians' representative shall comply with 7-25 the provisions of Article 29.08 of this code. 7-26 Art. 29.08. REQUIREMENTS FOR PHYSICIANS' REPRESENTATIVE. 7-27 Any person or organization proposing to act or acting as a 8-1 representative of physicians for the purpose of exercising 8-2 authority granted under this chapter shall comply with the 8-3 following requirements: 8-4 (1) before engaging in any joint negotiations with 8-5 health benefit plans on behalf of physicians, the representative 8-6 shall furnish, for the attorney general's approval, a report 8-7 identifying: 8-8 (A) the representative's name and business 8-9 address; 8-10 (B) the names and addresses of the physicians 8-11 who will be represented by the identified representative; 8-12 (C) the relationship of the physicians 8-13 requesting joint representation to the total population of 8-14 physicians in a geographic service area; 8-15 (D) the health benefit plans with which the 8-16 representative intends to negotiate on behalf of the identified 8-17 physicians; 8-18 (E) the proposed subject matter of the 8-19 negotiations or discussions with the identified health benefit 8-20 plans; 8-21 (F) the representative's plan of operation and 8-22 procedures to ensure compliance with this section; 8-23 (G) the expected impact of the negotiations on 8-24 the quality of patient care; and 8-25 (H) the benefits of a contract between the 8-26 identified health benefit plan and physicians; 8-27 (2) after the parties identified in the initial filing 9-1 have reached an agreement, the representative shall furnish, for 9-2 the attorney general's approval, a copy of the proposed contract 9-3 and plan of action; and 9-4 (3) within 14 days of a health benefit plan decision 9-5 declining negotiation, terminating negotiation, or failing to 9-6 respond to a request for negotiation, the representative shall 9-7 report to the attorney general the end of negotiations. If 9-8 negotiations resume within 60 days of such notification to the 9-9 attorney general, the applicant shall be permitted to renew the 9-10 previously filed report without submitting a new report for 9-11 approval. 9-12 Art. 29.09. APPROVAL PROCESS BY ATTORNEY GENERAL. (a) The 9-13 attorney general shall either approve or disapprove an initial 9-14 filing, supplemental filing, or a proposed contract within 30 days 9-15 of each filing. If disapproved, the attorney general shall furnish 9-16 a written explanation of any deficiencies along with a statement of 9-17 specific remedial measures as to how such deficiencies could be 9-18 corrected. A representative who fails to obtain the attorney 9-19 general's approval is deemed to act outside the authority granted 9-20 under this article. 9-21 (b) The attorney general shall approve a request to enter 9-22 into joint negotiations or a proposed contract if the attorney 9-23 general determines that the applicants have demonstrated that the 9-24 likely benefits resulting from the joint negotiation or proposed 9-25 contract outweigh the disadvantages attributable to a reduction in 9-26 competition that may result from the joint negotiation or proposed 9-27 contract. The joint negotiation shall represent no more than 10 10-1 percent of the physicians in a health benefit plan's defined 10-2 geographic service area except in cases where in conformance with 10-3 the other provisions of this subsection conditions support the 10-4 approval of a greater or lesser percentage. 10-5 (c) An approval of the initial filing by the attorney 10-6 general shall be effective for all subsequent negotiations between 10-7 the parties specified in the initial filing. 10-8 (d) If the attorney general does not issue a written 10-9 approval or rejection of an initial filing, supplemental filing, or 10-10 proposed contract within the specified time period, the applicant 10-11 shall have the right to petition a district court for a mandamus 10-12 order requiring the attorney general to approve or disapprove the 10-13 contents of the filing forthwith. The petition shall be filed in a 10-14 district court in Travis County. 10-15 Art. 29.10. CERTAIN JOINT ACTION PROHIBITED. Nothing 10-16 contained in this chapter shall be construed to enable physicians 10-17 to jointly coordinate any cessation, reduction, or limitation of 10-18 health care services. Physicians shall not meet and communicate 10-19 solely for the purpose of jointly negotiating a requirement that a 10-20 physician or group of physicians, as a condition of the physicians' 10-21 or group of physicians' participation in a health benefit plan, 10-22 must participate in all the products within the same health benefit 10-23 plan. The representative of the physicians shall advise physicians 10-24 of the provisions of this article and shall warn physicians of the 10-25 potential for legal action against physicians who violate state or 10-26 federal antitrust laws when acting outside the authority of this 10-27 chapter. 11-1 Art. 29.11. RULEMAKING AUTHORITY. The attorney general and 11-2 the commissioner shall have the authority to promulgate rules 11-3 necessary to implement the provisions of this chapter. 11-4 Art. 29.12. CONSTRUCTION. This chapter shall not be 11-5 construed to prohibit physicians from negotiating the terms and 11-6 conditions of contracts as permitted by other state or federal law. 11-7 Art. 29.13. FEES. Each person who acts as the 11-8 representative of negotiating parties under this chapter shall pay 11-9 to the department a fee to act as a representative. The attorney 11-10 general, by rule, shall set fees in amounts reasonable and 11-11 necessary to cover the costs incurred by the state in administering 11-12 this chapter. A fee collected under this article shall be 11-13 deposited in the state treasury to the credit of the operating fund 11-14 from which the expense was incurred. 11-15 Art. 29.14. EXPIRATION. This chapter expires September 1, 11-16 2003. 11-17 SECTION 2. This Act takes effect September 1, 1999. 11-18 SECTION 3. The importance of this legislation and the 11-19 crowded condition of the calendars in both houses create an 11-20 emergency and an imperative public necessity that the 11-21 constitutional rule requiring bills to be read on three several 11-22 days in each house be suspended, and this rule is hereby suspended.