HBA-TYH C.S.S.B. 1468 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 1468 By: Harris Insurance 5/8/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under existing provisions of antitrust law, physicians wishing to meet and discuss contracts may be subject to an antitrust action. This permits health benefit plans to refuse to negotiate with physicians regarding contract provisions. These contracts contain requirements that can have a direct impact on patients. When physicians attempt to form networks that are large enough to oppose certain contract provisions, the health benefit plans can threaten them with antitrust action. C.S.S.B. 1468 sets forth the provisions by which physicians may join together to be represented by knowledgeable individuals to negotiate on their behalf. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the attorney general in SECTION 1 (Articles 29.11 and 29.13, Insurance Code) and the commissioner of insurance in SECTION 1 (Article 29.11, Insurance Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends the Insurance Code by adding Chapter 29, as follows: CHAPTER 29. JOINT NEGOTIATIONS BY PHYSICIANS WITH HEALTH BENEFIT PLANS Art. 29.01. FINDING AND PURPOSES. Provides legislative findings regarding physician joint negotiation and sets forth the purposes of this chapter. Art. 29.02. DEFINITIONS. Defines "health benefit plan," "person," and "physicians' representative." Art. 29.03. SCOPE OF CHAPTER. (a) Specifies that Chapter 29 applies only to a health benefit plan (plan) that provides benefits for medical or surgical expenses incurred because of a health condition, accident, or sickness. These types of plans include an individual, group, blanket, or franchise insurance policy or insurance agreement, a group hospital service contract, and individual or group coverage. Specifies that these plans are offered by an insurance company; a group hospital service corporation; a fraternal benefit society; a stipulated premium insurance company; a reciprocal exchange; a health maintenance organization; or a multiple employer welfare arrangement. (b) Provides that Chapter 29 does not apply to a plan that provides coverage only for a specific disease or other limited benefit; only for accidental death or dismemberment; for wages or payments for a period during which an employee is absent from work because of sickness or injury; as a supplement to liability insurance; for credit insurance; only for dental or vision care; only for hospital expenses; or only for indemnity for hospital confinement. Also excluded is a small employer health benefit plan; a Medicare supplemental policy; workers' compensation insurance coverage; medical payment insurance coverage issued as part of a motor vehicle insurance policy; or a long-term care policy. Art. 29.04. JOINT NEGOTIATION AUTHORIZED. Authorizes competing physicians within the service area of a health benefit plan to meet and communicate for the purpose of jointly negotiating the enumerated terms and conditions of contracts with the health benefit plan. Art. 29.05. LIMITATIONS ON JOINT NEGOTIATION. Prohibits competing physicians from meeting and communicating for the purposes of jointly negotiating the enumerated terms and conditions of contracts with health benefit plans, except as provided in Article 29.06. Art. 29.06. EXCEPTION TO LIMITATIONS ON JOINT NEGOTIATION. Authorizes competing physicians within the service area of a health benefit plan to jointly negotiate the terms and conditions specified in Article 29.05 where the health benefit plan has substantial market power and those terms and conditions have already affected or threaten to adversely affect the quality and availability of patient care. Requires the attorney general to make the determination of what constitutes substantial market power. Requires the Texas Department of Insurance (department) to have the authority to collect and investigate information necessary to determine, on an annual basis, the average number of covered lives per month per county by every health care entity in the state, and the annual impact, if any, of this article on average physician fees in this state. Provides that this article does not apply to a Medicaid Managed Care plan or a certain child health plan. Art. 29.07. JOINT NEGOTIATION REQUIREMENTS. Requires competing health care physicians' exercise of joint negotiation rights granted by Articles 29.04 and 29.06 of this chapter to conform to the enumerated criteria. Art. 29.08. REQUIREMENTS FOR PHYSICIANS' REPRESENTATIVE. Requires any person or organization proposing to act or acting as a representative of physicians for the purpose of exercising authority granted under this chapter, before engaging in any joint negotiations with health benefit plans on behalf of physicians, to furnish for the attorney general's approval a report. Sets forth the requirements of the report. Requires the representative, after the parties identified in the initial filing have reached an agreement, to furnish for the attorney general's approval, a copy of the proposed contract, and plan of action. Requires the representative to report to the attorney general the end of negotiations, within 14 days of a health benefit plan decision declining negotiation, terminating negotiation, or failing to respond to a request for negotiation. Requires the applicant to be permitted, if negotiations resume within 60 days of such notification to the attorney general, to renew the previously filed report without submitting a new report for approval. Art. 29.09. APPROVAL PROCESS BY ATTORNEY GENERAL. Requires the attorney general to either approve or disapprove an initial filing, supplemental filing, and a proposed contract within 30 days of each filing. Requires the attorney general, if disapproved, to furnish a written explanation of any deficiencies along with a statement of specific remedial measures as to how such deficiencies could be corrected. Provides that a representative who fails to obtain the attorney general's approval is deemed to act outside the authority granted. Requires the attorney general to approve a request to enter into joint negotiations if the advantages outweigh the disadvantages. Requires the joint negotiation to represent no more than 10 percent of the physicians in a health benefit plan's defined geographic service area, except in cases where, in conformance with the other provisions of this subsection, conditions support the approval of a greater or lesser percentage. Requires the approval to be effective for all subsequent negotiations. Grants an applicant the right to petition a district court for a mandamus order requiring the attorney general to issue a written approval or rejection of a filing. Requires the petition to be filed in a district court in Travis County. Art. 29.10. CERTAIN JOINT ACTION PROHIBITED. Requires nothing contained in this chapter to be construed to enable physicians to jointly coordinate any cessation, reduction, or limitation of health care services. Prohibits the physicians from meeting and communicating solely for the purpose of jointly negotiating a requirement that a physician or group of physicians, as a condition of the physicians' or group of physicians' participation in a health benefit plan, must participate in all the products within the same health benefit plan. Requires the representative of the physicians to advise physicians of the provisions of this article and to warn physicians of the potential for legal action against physicians who violate state or federal antitrust laws by exceeding the authority of this chapter. Art. 29.11. RULEMAKING AUTHORITY. Grants the attorney general and the commissioner of insurance the authority to promulgate rules necessary to implement the provisions of this chapter. Art. 29.12. CONSTRUCTION. Prohibits the construction of this chapter from prohibiting physicians from negotiating the terms and conditions of contracts as permitted by other state or federal law. Art. 29.13. FEES. Requires each person who acts as the representative of negotiating parties to pay to the department a fee to act as representative. Requires the attorney general, by rule, to set reasonable and necessary fees to cover the costs incurred by the state in administering this chapter. Requires the fees to be deposited in the state treasury to the credit of the operating fund from which the expense was incurred. Art. 29.14. EXPIRATION. Provides that this chapter expires September 1, 2003. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original bill in proposed Article 29.02(3), Insurance Code, by including in the definition of "physicians' representative" a member of the physicians who will engage in joint negotiations. The substitute modifies the original bill in proposed Article 29.03(b), Insurance Code, by deleting, from the list of plans to which this chapter does not apply, a "group model health maintenance organization,"and by redesignating the subsequent subdivisions. The substitute modifies the original bill in proposed Article 29.03(b), Insurance Code, by providing that a long-term care policy includes a nursing home indemnity policy, rather than a nursing home fixed indemnity policy. The substitute modifies the original bill in proposed Article 29.04, Insurance Code, by including the following contract terms and conditions among those that may be jointly negotiated with the health benefit plan by competing physicians, and redesignating the subsequent subdivisions: _practices and procedures to assess and improve the delivery of effective, costefficient preventive health care services; _practices and procedures to encourage early detection and effective, cost-efficient management of diseases and illnesses in children; _practices and procedures to assess and improve the delivery of women's medical and health care; _clinical criteria for effective, cost-efficient disease management programs; _practices and procedures to encourage and promote patient education and treatment compliance; _practices and procedures to identify, correct, and prevent potentially fraudulent activities; and _practices and procedures for the effective, cost-efficient use of outpatient surgery. The substitute modifies the original bill in proposed Article 29.06(a), Insurance Code, by authorizing competing physicians within the service area of a health benefit plan to jointly negotiate the terms and conditions specified in Article 29.05 where those terms and conditions have already affected or threaten to adversely affect the quality and availability of patient care. The substitute modifies the original bill in proposed Article 29.06(b), Insurance Code, by requiring the Texas Department of Insurance (department) to have the authority to collect and investigate information necessary to determine the annual impact, if any, of this article on average physician fees in this state. Makes conforming changes. The substitute modifies the original bill in proposed Article 29.06, Insurance Code, by adding Subsection (c) to provide that this article does not apply to a Medicaid Managed Care plan or certain child health plans. The substitute modifies the original bill in proposed Article 29.07, Insurance Code, by providing that at the option of each physician, the physicians are authorized to agree to be bound by the terms and conditions negotiated by the representative. The original bill provided that the physicians are bound by the terms and conditions negotiated by the representative. The substitute modifies the original bill in proposed Article 29.09(b), Insurance Code, by requiring that the joint negotiation to represent no more than 10 percent of the physicians in a health benefit plan's defined geographic service area, rather than a defined geographic area, except in cases where, in conformance with the other provisions of this subsection, conditions support the approval of a greater or lesser percentage. The original bill required either the health benefit plan or the physicians' representative to have the right to appeal the percentage, and if conditions support such a change, a higher or lower percentage can be authorized by the attorney general. The substitute modifies the original bill in proposed Article 29.10, Insurance Code, by adding a new provision to prohibit the physicians from meeting and communicating solely for the purpose of jointly negotiating a requirement that a physician or group of physicians, as a condition of the physicians' or group of physicians' participation in a health benefit plan, must participate in all the products within the same health benefit plan. The substitute modifies the original bill by adding a new Article 29.14, Insurance Code, which provides that this chapter expires September 1, 2003.