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.