By Smithee H.B. No. 3012
77R7079 PB-F
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. Article 29.01, Insurance Code, is amended to read
1-5 as follows:
1-6 Art. 29.01. FINDINGS AND PURPOSES. The legislature finds
1-7 that joint negotiation by competing physicians of certain terms and
1-8 conditions of contracts with health plans will result in
1-9 improvements in the quality and availability of medical services
1-10 for patients in this state [procompetitive effects in the absence
1-11 of any express or implied threat of retaliatory joint action, such
1-12 as a boycott or strike, by physicians]. Although the legislature
1-13 finds that joint negotiations over fee-related terms may in some
1-14 circumstances yield anticompetitive effects, it also recognizes
1-15 that there are instances in which health plans dominate the market
1-16 to such a degree that fair negotiations between physicians and the
1-17 plan are unobtainable absent any joint action on behalf of
1-18 physicians. The legislature further finds that the risk of
1-19 potential anticompetitive effects from joint negotiations is
1-20 outweighed by the public interest in access to quality medical
1-21 services, particularly where state oversight exists to minimize the
1-22 risk of those effects. [In these instances, health plans have the
1-23 ability to virtually dictate the terms of the contracts they offer
1-24 physicians.] Consequently, the legislature finds it appropriate and
2-1 necessary to authorize joint negotiations between approved groups
2-2 of physicians and health plans on fee-related and other issues
2-3 [where it determines that such imbalances exist].
2-4 SECTION 2. Article 29.02, Insurance Code, is amended by
2-5 adding Subdivision (4) to read as follows:
2-6 (4) "Attorney general" means the attorney general of
2-7 the State of Texas.
2-8 SECTION 3. Article 29.04, Insurance Code, is amended to read
2-9 as follows:
2-10 Art. 29.04. JOINT NEGOTIATION AUTHORIZED. (a) Competing
2-11 physicians within the service area of a health benefit plan may
2-12 meet and communicate for the purpose of jointly negotiating the
2-13 following terms and conditions of contracts with the health benefit
2-14 plan:
2-15 (1) practices and procedures to assess and improve the
2-16 delivery of effective, cost-efficient preventive health care
2-17 services, including childhood immunizations, prenatal care, and
2-18 mammograms and other cancer screening tests or procedures;
2-19 (2) practices and procedures to encourage early
2-20 detection and effective, cost-efficient management of diseases and
2-21 illnesses in children;
2-22 (3) practices and procedures to assess and improve the
2-23 delivery of women's medical and health care, including menopause
2-24 and osteoporosis;
2-25 (4) clinical criteria for effective, cost-efficient
2-26 disease management programs, including diabetes, asthma, and
2-27 cardiovascular disease;
3-1 (5) practices and procedures to encourage and promote
3-2 patient education and treatment compliance, including parental
3-3 involvement with their children's health care;
3-4 (6) practices and procedures to identify, correct, and
3-5 prevent potentially fraudulent activities;
3-6 (7) practices and procedures for the effective,
3-7 cost-efficient use of outpatient surgery;
3-8 (8) clinical practice guidelines and coverage
3-9 criteria;
3-10 (9) administrative procedures, including methods and
3-11 timing of physician payment for services;
3-12 (10) dispute resolution procedures relating to
3-13 disputes between health benefit plans and physicians;
3-14 (11) patient referral procedures;
3-15 (12) formulation and application of physician
3-16 reimbursement methodology;
3-17 (13) quality assurance programs;
3-18 (14) health service utilization review procedures;
3-19 (15) health benefit plan physician selection and
3-20 termination criteria; [and]
3-21 (16) the inclusion or alteration of terms and
3-22 conditions to the extent they are the subject of government
3-23 regulation prohibiting or requiring the particular term or
3-24 condition in question; provided, however, that such restriction
3-25 does not limit physician rights to jointly petition government for
3-26 a change in such regulation;
3-27 (17) the fees or prices for services, including fees
4-1 or prices determined by applying any reimbursement methodology
4-2 procedures;
4-3 (18) the conversion factors in a resource-based
4-4 relative value scale reimbursement methodology or similar
4-5 methodologies;
4-6 (19) the amount of any discount on the price of
4-7 services to be rendered by physicians; and
4-8 (20) the dollar amount of capitation or fixed payment
4-9 for health services rendered by physicians to health benefit plan
4-10 enrollees.
4-11 (b) Subsections (a)(17), (18), (19), and (20) of this
4-12 article do not apply to:
4-13 (1) a Medicaid managed care plan under the Medicaid
4-14 managed care delivery system established under Chapters 532 and
4-15 533, Government Code; or
4-16 (2) a child health plan:
4-17 (A) issued under the Health and Safety Code for
4-18 certain low-income children; or
4-19 (B) designed under Section 2101, Social Security
4-20 Act (42 U.S.C. Section 1397aa).
4-21 SECTION 4. Article 29.05, Insurance Code, is amended to read
4-22 as follows:
4-23 Art. 29.05. MEETINGS PRIOR TO APPLICATION [LIMITATIONS ON
4-24 JOINT NEGOTIATION]. (a) Before filing an application to jointly
4-25 negotiate under this chapter, competing physicians within the
4-26 service area of a health benefit plan may meet and communicate to:
4-27 (1) organize a joint negotiating group; and
5-1 (2) select and authorize a representative under
5-2 Article 29.08 of this code.
5-3 (b) Competing physicians organizing under Subsection (a) of
5-4 this article must notify the attorney general not later than the
5-5 15th business day after the first day of an organizational meeting
5-6 conducted under this article.
5-7 (c) On receipt of notice under Subsection (b) of this
5-8 article, the attorney general or the attorney general's designee
5-9 may:
5-10 (1) attend any meeting held under the authority of
5-11 this article; and
5-12 (2) receive and review any correspondence, including
5-13 electronic correspondence, of the joint negotiating group under
5-14 this article relating to the organization and selection process.
5-15 [Except as provided in Article 29.06 of this code, competing
5-16 physicians shall not meet and communicate for the purposes of
5-17 jointly negotiating the following terms and conditions of contracts
5-18 with health benefit plans:]
5-19 [(1) the fees or prices for services, including those
5-20 arrived at by applying any reimbursement methodology procedures;]
5-21 [(2) the conversion factors in a resource-based
5-22 relative value scale reimbursement methodology or similar
5-23 methodologies;]
5-24 [(3) the amount of any discount on the price of
5-25 services to be rendered by physicians; and]
5-26 [(4) the dollar amount of capitation or fixed payment
5-27 for health services rendered by physicians to health benefit plan
6-1 enrollees.]
6-2 SECTION 5. Article 29.06, Insurance Code, is amended to read
6-3 as follows:
6-4 Art. 29.06. DEPARTMENT DUTIES; RULES [EXCEPTION TO
6-5 LIMITATIONS ON JOINT NEGOTIATION]. (a) [Competing physicians
6-6 within the service area of a health benefit plan may jointly
6-7 negotiate the terms and conditions specified in Article 29.05 of
6-8 this code where the health benefit plan has substantial market
6-9 power and those terms and conditions have already affected or
6-10 threaten to adversely affect the quality and availability of
6-11 patient care. The attorney general shall make the determination of
6-12 what constitutes substantial market power.]
6-13 [(b)] The department shall [have the authority to] collect
6-14 and maintain [investigate] information as necessary to determine,
6-15 on an annual basis, [:]
6-16 [(1)] the average number of covered lives per [month
6-17 per] county by every health benefit plan [care entity] in the
6-18 state. The department shall release the information collected and
6-19 maintained under this article to any person on written request.
6-20 (b) The commissioner shall adopt rules to implement this
6-21 article[; and]
6-22 [(2) the annual impact, if any, of this article on
6-23 average physician fees in this state.]
6-24 [(c) Subsection (a) of this article does not apply to:]
6-25 [(1) a Medicaid managed care plan under the Medicaid
6-26 managed care delivery system established under Chapters 532 and
6-27 533, Government Code; or]
7-1 [(2) a child health plan:]
7-2 [(A) for certain low-income children issued
7-3 under the Health and Safety Code; or]
7-4 [(B) designed under Section 2101, Social
7-5 Security Act (42 U.S.C. Section 1397aa)].
7-6 SECTION 6. Article 29.07, Insurance Code, is amended to read
7-7 as follows:
7-8 Art. 29.07. JOINT NEGOTIATION REQUIREMENTS. Except as
7-9 provided by Article 29.05 of this code, competing [Competing health
7-10 care] physicians' exercise of joint negotiation rights granted by
7-11 Article [Articles] 29.04 [and 29.06] of this code must [shall]
7-12 conform to the following criteria:
7-13 (1) physicians may communicate with each other with
7-14 respect to the contractual terms and conditions to be negotiated
7-15 with a health benefit plan;
7-16 (2) physicians may communicate with the third party
7-17 who is authorized to negotiate on their behalf with health benefit
7-18 plans over these contractual terms and conditions;
7-19 (3) the third party is the sole party authorized to
7-20 negotiate with health benefit plans on behalf of the physicians as
7-21 a group;
7-22 (4) at the option of each physician, the physicians
7-23 may agree to be bound by the terms and conditions negotiated by the
7-24 third party authorized to represent their interests;
7-25 (5) health benefit plans communicating or negotiating
7-26 with the physicians' representative shall remain free to contract
7-27 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 SECTION 7. Article 29.08, Insurance Code, is amended to read
8-5 as follows:
8-6 Art. 29.08. APPLICATION REQUIREMENTS FOR PHYSICIANS'
8-7 REPRESENTATIVE. (a) Any person or organization proposing to act
8-8 or acting as a representative of physicians for the purpose of
8-9 exercising authority granted under this chapter must [shall] comply
8-10 with the [following] requirements of this article.
8-11 (b) Before[: (1) before] engaging in any joint negotiations
8-12 with health benefit plans on behalf of physicians, the
8-13 representative shall furnish to[, for] the attorney general an
8-14 application [general's approval, a report] identifying:
8-15 (1) [(A)] the representative's name and business
8-16 address;
8-17 (2) [(B)] the names and addresses of the physicians
8-18 who will be represented by the identified representative;
8-19 (3) the representative's best estimate of [(C)] the
8-20 relationship of the physicians requesting joint representation to
8-21 the total population of physicians in a geographic service area;
8-22 (4) [(D)] the health benefit plans with which the
8-23 representative intends to negotiate on behalf of the identified
8-24 physicians and a description of the size and market strength of
8-25 those health benefit plans, taking into account factors such as:
8-26 (A) the number of covered lives in the plan per
8-27 county;
9-1 (B) the size of competing health benefit plans
9-2 in the plan's service area; and
9-3 (C) any barriers to entry faced by other
9-4 competing health benefit plans;
9-5 (5) [(E)] the proposed subject matter of the
9-6 negotiations or discussions with the identified health benefit
9-7 plans;
9-8 (6) [(F)] the representative's plan of operation and
9-9 procedures to ensure compliance with this section;
9-10 (7) [(G)] the expected impact of the negotiations on
9-11 the quality of patient care; and
9-12 (8) [(H)] the benefits of a contract between the
9-13 identified health benefit plan and physicians.
9-14 (c) The attorney general shall determine the sufficiency of
9-15 an application to negotiate and may require additional information.
9-16 (d) The attorney general may adopt rules setting forth
9-17 technical and procedural requirements for the application, but may
9-18 not expand on the substantive requirements for the application set
9-19 forth in Subsection (b) of this article[;]
9-20 [(2) after the parties identified in the initial
9-21 filing have reached an agreement, the representative shall furnish,
9-22 for the attorney general's approval, a copy of the proposed
9-23 contract and plan of action; and]
9-24 [(3) within 14 days of a health benefit plan decision
9-25 declining negotiation, terminating negotiation, or failing to
9-26 respond to a request for negotiation, the representative shall
9-27 report to the attorney general the end of negotiations. If
10-1 negotiations resume within 60 days of such notification to the
10-2 attorney general, the applicant shall be permitted to renew the
10-3 previously filed report without submitting a new report for
10-4 approval].
10-5 SECTION 8. Article 29.09, Insurance Code, is amended to read
10-6 as follows:
10-7 Art. 29.09. REVIEW AND APPROVAL OF APPLICATION [PROCESS BY
10-8 ATTORNEY GENERAL]. (a) The attorney general shall either approve
10-9 or disapprove an application [initial filing, supplemental filing,
10-10 or a proposed contract] within 30 days of each filing. If
10-11 disapproved, the attorney general shall furnish a written
10-12 explanation of any deficiencies along with a statement of specific
10-13 remedial measures as to how such deficiencies could be corrected.
10-14 [A representative who fails to obtain the attorney general's
10-15 approval is deemed to act outside the authority granted under this
10-16 article.]
10-17 (b) The attorney general shall approve an application [a
10-18 request] to enter into joint negotiations [or a proposed contract]
10-19 if the attorney general determines that the proposed joint
10-20 negotiations are in the best interest of patients, taking into
10-21 account the likely effects of the joint negotiations on the quality
10-22 of patient care and access to care. In reviewing an application,
10-23 the attorney general shall take into account the number and
10-24 specialty composition of physicians in the joint negotiating group
10-25 in relationship to the total number of health care professionals
10-26 providing the same or similar services in the geographic area
10-27 [applicants have demonstrated that the likely benefits resulting
11-1 from the joint negotiation or proposed contract outweigh the
11-2 disadvantages attributable to a reduction in competition that may
11-3 result from the joint negotiation or proposed contract. The
11-4 attorney general shall consider physician distribution by specialty
11-5 and its effect on competition. The joint negotiation shall
11-6 represent no more than 10 percent of the physicians in a health
11-7 benefit plan's defined geographic service area except in cases
11-8 where in conformance with the other provisions of this subsection
11-9 conditions support the approval of a greater or lesser percentage].
11-10 (c) An approval of the application [initial filing] by the
11-11 attorney general shall be effective for all subsequent negotiations
11-12 by the joint negotiating group until the second anniversary of the
11-13 the date of approval by the attorney general unless the joint
11-14 negotiating group or its representative notifies the attorney
11-15 general that the composition of the joint negotiating group has not
11-16 substantially changed. If the joint negotiating group notifies the
11-17 attorney general under this section, the approval shall be
11-18 effective for an additional two years. For purposes of this
11-19 subsection, the composition of a joint negotiating group has
11-20 substantially changed if the composition changes by more than 20
11-21 percent in either membership or specialty [between the parties
11-22 specified in the initial filing].
11-23 (d) If the attorney general does not issue a written
11-24 approval or rejection of an application [initial filing,
11-25 supplemental filing, or proposed contract] within 30 days [the
11-26 specified time period], the applicant shall have the right to
11-27 petition a district court for a mandamus order requiring the
12-1 attorney general to approve or disapprove the contents of the
12-2 filing forthwith. The petition shall be filed in a district court
12-3 in Travis County.
12-4 (e) The attorney general may monitor and have a
12-5 representative at any negotiations or meetings and may receive
12-6 copies of any correspondence, including electronic communications,
12-7 between the joint negotiating group and a health benefit plan.
12-8 SECTION 9. Article 29.10, Insurance Code, is amended to read
12-9 as follows:
12-10 Art. 29.10. CERTAIN JOINT ACTION PROHIBITED. (a) Nothing
12-11 contained in this chapter shall be construed to enable physicians
12-12 to jointly coordinate any cessation, reduction, or limitation of
12-13 health care services. [Physicians may not meet and communicate for
12-14 the purpose of jointly negotiating a requirement that a physician
12-15 or group of physicians, as a condition of the physicians' or group
12-16 of physicians' participation in a health benefit plan, must
12-17 participate in all the products within the same health benefit
12-18 plan. Physicians may not negotiate with the plan to exclude,
12-19 limit, or otherwise restrict non-physician health care providers
12-20 from participation in a health benefit plan based substantially on
12-21 the fact the health care provider is not a licensed physician
12-22 unless that restriction, exclusion, or limitation is otherwise
12-23 permitted by law.] The representative of the physicians shall
12-24 advise physicians of the provisions of this article and shall warn
12-25 physicians of the potential for legal action against physicians who
12-26 violate state or federal antitrust laws when acting outside the
12-27 authority of this chapter.
13-1 (b) The denial or refusal to sign or agree to renew a
13-2 contract by a member or members of a joint negotiating group after
13-3 the end of negotiations may not be construed as a violation of, or
13-4 evidence of a violation of, this chapter and does not form the
13-5 basis for a civil or administrative action for antitrust against
13-6 the joint negotiating group, its representative, or the individual
13-7 physicians or components of the joint negotiating group.
13-8 SECTION 10. Chapter 29, Insurance Code, is amended by adding
13-9 Article 29.11A to read as follows:
13-10 Art. 29.11A. CONFIDENTIALITY. Any information, reports, or
13-11 records provided to the attorney general by a representative of
13-12 physicians or the physicians negotiating group or a physician under
13-13 this chapter and any information, records, reports, or material
13-14 received or developed by the attorney general under this chapter
13-15 are privileged and confidential and not subject to release
13-16 including by subpoena or under the open records law, Chapter 552,
13-17 Government Code.
13-18 SECTION 11. Article 29.14, Insurance Code, is repealed.
13-19 SECTION 12. This Act takes effect immediately if it receives
13-20 a vote of two-thirds of all the members elected to each house, as
13-21 provided by Section 39, Article III, Texas Constitution. If this
13-22 Act does not receive the vote necessary for immediate effect, this
13-23 Act takes effect September 1, 2001.