HOUSE CONCURRENT RESOLUTION NO. 124

(By Delegates Perry, Hall, Moore, Reynolds, Cann,

Ferns, Frazier, Hartman, Iaquinta, Mahan, Manchin,

Michael, Shaver, Stowers, Ashley, Walters,

 Carmichael, Nelson, and O’Neal)

(Originating in the Committee on Banking and Insurance)

(March 3, 2011)

Requesting the Joint Committee on Government and Finance to conduct a study on the possible need to regulate the rental network PPO market in West Virginia.

    Whereas, A “preferred provider organization” is a managed care organization of various health care providers, which may include doctors, hospitals and other providers who have contracted with an insurer or a third-party administrator to provide health care services at reduced rates to the insurers or administrator’s clients who subscribe for participation in the organization; and

    Whereas, The health insurance market has developed a secondary market in physician and other healthcare provider discounts consisting of entities that are engaged in developing health care provider panels and then leasing the panels and associated discounts to various entities to various payers, including but not limited to, third party administrators acting on behalf of a self-insured employer or managed care organization that does not have a network in a particular market; and

    Whereas, These entities are often called “rental network PPOs”; when the provider discount is shared without authorization from the provider, the arrangement is often referred to as a “silent PPO”; and

    Whereas, Physicians and other healthcare providers are concerned that rental network PPO companies in some instances lease their discounted rate without providing notice to the provider of the persons and entities that are entitled to the discount under the lease of the contract; and

    Whereas, When a third party entity inappropriately accesses the network and discount, even though it lacks any privity of contract with the providers in the network, the providers may be deprived of rightful reimbursement, and as a result thereof, the integrity of the PPO agreement may be subverted;

    Whereas, Although this secondary market has existed for a number of years, it is growing in prevalence throughout the country and in many cases without any regulation or oversight; and

    Whereas, The National Conference of Insurance Legislators researched this issue over a period of three years and in 2008 adopted the model Rental Network Contract Arrangements Act which is intended to provide means to assist physicians and other healthcare providers to identify illegitimate discounts and will authorize them to deny their discounts to noncomplying entities; and

    Whereas, Concerns have been raised about the provisions of the model act, including, but not limited to, the usefulness of simply registering the networks over which the insurance commissioner will otherwise have no authority, as well as the suitability of methods of enforcement; and

    Whereas, Other states have passed rental network laws based on over the past three years; therefore, be it

    Resolved by the Legislature of West Virginia:

    That the Joint Committee on Government and Finance is hereby requested to study the possible need to regulate the rental network PPO market in West Virginia; and, be it

    Further Resolved, That the Joint Committee on Government and Finance report to the Legislature, on the first day of the regular session, 2012, on its findings, conclusions and recommendations, together with drafts of legislation necessary to effectuate its recommendations; and, be it

    Further Resolved, That the expense necessary to conduct this study, to prepare a report and to draft necessary legislation be paid from legislative appropriations to the Joint Committee on Government and Finance.