Senate Bill No. 335
(By Senators Ross, Helmick, Love, Anderson,
Schoonover and Sharpe)
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[Introduced February 8, 1996;
referred to the Committee on Health and Human Resources;
and then to the Committee on Finance.]
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A BILL to amend chapter sixteen of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article one-b, relating to
collaborative health care networks; cooperative agreements
among health care providers and third-party payers or either
thereof; applications for certificates of public advantage
from the department of health and human resources; payment
of assessments by parties to cooperative agreements; a
special, nonexpiring fund for such assessments available for
evaluation and active supervision of cooperative agreements;
required determination that benefits to health care
consumers outweighs potential reduction of competition; standards for issuing certificates of public advantage;
conditions for active supervision, modification or
revocation of certificates of public advantage; exclusion
from state antitrust enforcement; and intended federal
antitrust immunity.
Be it enacted by the Legislature of West Virginia:
That chapter sixteen of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article one-b, to read
as follows:
ARTICLE 1B. COORDINATED HEALTH CARE DELIVERY ACT.
§16-1B-1. Statement of legislative intent.
It is the policy of this state to promote:
(a) The quality of health care provided to the citizens of
West Virginia;
(b) Access to appropriate health care for all citizens of
this state;
(c) Containment of health care costs;
(d) Promotion of comprehensive and coordinated health care
delivery in this state;
(e) That health care providers, payers, purchasers and consumers, or any thereof, may desire to work voluntarily
together to form integrated health care networks to plan,
organize, provide and arrange for their health care services;
(f) That federal antitrust laws may pose barriers to
competing rural providers, payers, purchasers and consumers, or
any thereof, from developing cooperative agreements unless this
state becomes actively involved in the supervision of voluntary
networks;
§16-1B-2. Definition.
For purposes of this article, the following terms shall have
the meanings set forth in this section:
(a) "Active supervision" means actual state direction,
supervision or control that results in the exercise of power by
the department to review anticompetitive conduct that results
from, or is authorized by, a cooperative agreement for which a
certificate of public advantage has been issued pursuant to this
article. The term includes the authority granted the department
by this article to terminate or cancel a certificate of public
advantage or to investigate or enjoin a cooperative agreement and
other conditions to the certificate provided under section six of this article.
(b) "Cooperative agreement" means:
(1) An agreement among two or more health care providers or
third-party payers for the sharing, allocation or referral of
patients, personnel, patient information, instructional programs,
equipment, support services or facilities, or medical,
diagnostic, or laboratory facilities or procedures or other
services traditionally offered or purchased by health care
facilities or other health care providers; or
(2) An agreement among two or more health care providers for
acquisition of control, consolidation, merger or sale of assets
of those health care providers.
(c) "Department" means the department of health and human
resources of this state.
(d) "Health care provider" means any person who or entity
which delivers, administers or supervises health care products or
services, for profit or otherwise, in the ordinary course of
business or professional practice.
(e) "Secretary" means the secretary of the department.
(f) "Third-party payer" means any insurer or other entity
responsible for providing payment for health care services, including state and federal programs and self-insured entities.
§16-1B-3. Discussions or negotiations; certificate of public
advantage.
A health care provider may discuss preliminary matters
toward or may negotiate a cooperative agreement with another
health care provider or third-party payer if the likely benefits
to health care consumers which may result from the agreement
outweigh the disadvantages attributable to a potential reduction
in competition that may result from the agreement. The parties
to a cooperative agreement may apply to the department for a
certificate of public advantage governing the agreement.
Although a health care provider or third-party payer is not
required to apply for a certificate of public advantage, a party
that does not apply for a certificate does not receive the
exclusion from state antitrust enforcement and intended federal
antitrust immunity provided by section eight of this article.
The application must include an executed copy of the cooperative
agreement and must describe the nature and scope of the
cooperation in the agreement and any consideration passing to any
party under the agreement. The applicants shall file a copy of
the application and related materials with the department. The department shall review the application and may hold a public
hearing within ninety days of the date of filing the application.
The decision must be in writing and must set forth the basis for
the decision. The department shall furnish a copy of the
decision to the applicants and any intervenor.
§16-1B-4. Assessment; health care cooperative agreement fund.
The department shall establish an assessment to be paid by
each party to a cooperative agreement. The aggregate amount of
the assessment for a cooperative agreement may not exceed forty
thousand dollars, unless the department determines that an
extraordinary need exists for an additional amount to ensure
effective evaluation of the application or supervision under this
article. After consultation with the parties, the department may
require the payment of the assessment on an incremental basis and
may require separate payments for the process of evaluating the
application or for the process of active supervision. The
assessment may be modified by agreement between the department
and the parties to the cooperative agreement. The department
shall deposit the moneys received under this section in the
health care cooperative agreement fund, which is hereby created
as a special fund in the state treasury. The funds in the health care cooperative agreement fund are available to the department,
subject to legislative appropriation and upon requisition of the
secretary, for evaluation and active supervision of cooperative
agreements among health care providers or third-party payers.
Any balance in the fund at the end of any fiscal year shall
remain in the fund and shall not expire or revert.
§16-1B-5. Certificate of public advantage; standards.
(a) The department shall issue a certificate of public
advantage for a cooperative agreement if the department
determines that the applicants have demonstrated by clear and
convincing evidence that the likely benefits to health care
consumers which may result from the agreement outweigh the
disadvantages attributable to a potential reduction in
competition that may result from the agreement.
(b) In evaluating the likely benefits of a cooperative
agreement to health care consumers, the department shall consider
whether any of the following benefits may result from the
cooperative agreement:
(1) Enhancement of the quality of health care services
provided to residents of this state;
(2) Preservation of health care facilities or services in geographical proximity to the communities traditionally served by
those facilities or services;
(3) Gains in the cost efficiency or clinical effectiveness
of services provided by the parties involved;
(4) Improvements in the utilization of health care resources
and equipment;
(5) Avoidance of duplication of health care resources; and
(6) Enhancement of the ability to cooperatively provide
services to underserved, uninsured or low-income patients.
(c) The department's evaluation of the disadvantages
attributable to a potential reduction in competition which may
result from the agreement may include the following factors:
(1) The extent of any likely adverse impact on the
bargaining power of health maintenance organizations, preferred
provider organizations, managed health care service agents or
other health care payers in negotiating payment and service
arrangements with hospitals, physicians, allied health care
professionals or other health care providers;
(2) The extent of any reduction in competition among
physicians, allied health professionals, other health care
providers or persons furnishing goods or services to or in competition with providers or third-party payers that is likely
to result directly or indirectly from the cooperative agreement;
(3) The extent of any likely adverse impact on patients in
the quality, availability and price of health care services; and
(4) The availability of arrangements that are less
restrictive to competition and achieve the same benefits or a
more favorable balance of likely benefits to health care
consumers over disadvantages attributable to a potential
reduction in competition which may result from the agreement.
§16-1B-6. Conditions for active supervision.
The decision granting an application for a certificate of
public advantage must include conditions for active supervision.
The active supervision must be sufficient for the department to
determine periodically whether circumstances may be present to
meet the criteria for certificate termination pursuant to section
seven of this article and shall otherwise be structured to
provide a reasonable basis for state action immunity from federal
antitrust laws as interpreted by applicable laws, judicial
decisions, opinions of the attorney general, and statements of
antitrust enforcement policy issued by the United States
department of justice and the federal trade commission. The conditions for active supervision, except the authority granted
the department or attorney general by this chapter, may be
modified or terminated by agreement between the parties to the
cooperative agreement and the department.
§16-1B-7. Modification or revocation of certificate of public
advantage; standards; procedures.
(a) The department may revoke a certificate of public
advantage only if:
(1) The arrangement is not in substantial compliance with
the terms of the application for the certificate of public
advantage;
(2) The arrangement is not in substantial compliance with
the conditions of the certificate of public advantage;
(3) The arrangement has not and is not likely to
substantially achieve the improvements in cost, access or quality
identified in the department's order issuing the certificate of
public advantage as the basis for issuing the certificate; or
(4) The conditions in the marketplace have changed to such
an extent that competition would promote reductions in cost and
improvements in access and quality better than does the
arrangement at issue. In order to revoke on the basis that conditions in the marketplace have changed, the department's
order must identify specific changes in the marketplace and
articulate why those changes warrant revocation.
(b) The department shall begin a proceeding to revoke a
certificate of public advantage by providing written notice to
the holders of the certificate describing in detail the basis for
the proposed revocation. Notice of the proceeding must be
published in the state register established by article two-k,
chapter twenty-nine-a of this code. The notice must invite the
submission of comments to the department.
(c) A proceeding to revoke a certificate of public advantage
must be conducted as a contested case proceeding upon the written
request of the holders or a holder of the certificate. Decisions
of the department in a proceeding to revoke a certificate are
subject to judicial review under the provisions of article five,
chapter twenty-nine-a of this code.
(d) In deciding whether to revoke a certificate of public
advantage, the department shall take into account the hardship
that the revocation may impose on the holders or on any holder
and any potential disruption of the market as a whole. The
department shall not revoke a certificate if the arrangement can be modified, restructured or regulated so as to remedy the
problem as an alternative to revocation. Before approving an
alternative to revocation that involves modifying or
restructuring an arrangement, the department shall publish notice
in the state register that any person may comment on the proposed
modification or restructuring within twenty days after
publication of the notice. The department shall not approve the
modification or restructured arrangement until the comment period
has concluded. An approved, modified or restructured arrangement
is subject to appropriate supervision under section six of this
article.
(e) Holders or a holder that has had its certificate of
public advantage revoked is not required to terminate the
arrangement. The holders or holder cannot be held liable under
state or federal antitrust law for acts that occurred while the
approval was in effect, except to the extent that the holders or
holder failed to substantially comply with the arrangement as set
forth in its application for the certificate of public advantage
or with the terms of its certificate. The holders or holder is
fully subject to state and federal law after the revocation
becomes effective and may be held liable for acts that occur after the revocation.
§16-1B-8. Exclusion from state antitrust enforcement; federal
antitrust immunity intended.
A health care provider or third-party payer which
participates in the discussion or negotiation of a cooperative
agreement for which an application is filed is engaged in conduct
for which no action may be brought pursuant to article eighteen,
chapter forty-eight of this code for penalties, damages,
injunctive enforcement, or other remedies. A health care
provider or third-party payer which participates in the
implementation of a cooperative agreement, for which a
certificate of public advantage was issued, is engaged in conduct
for which no action may be brought pursuant to penalties,
damages, injunctive enforcement, or other remedies. The intent
of this section is that the conduct be provided state action
immunity from federal antitrust laws. This exclusion from state
antitrust enforcement and intended federal antitrust immunity
applies unless the discussion or negotiation exceeds the scope of
a cooperative agreement as authorized by this chapter or the
implementation exceeds the scope of the cooperative agreement for
which a certificate of public advantage was issued. This section does not exempt hospitals or other health care providers from
compliance with laws governing hospital cost reimbursement.
Notwithstanding any provisions of this code to the contrary, any
improvements, construction, expansion or acquisition of health
care equipment or services approved as a condition of a
cooperative agreement are not subject to laws governing
certificate of need.
NOTE: The purpose of this bill is to establish a program
under which certificates of public advantage are issued by the
department of health and human resources to health care providers
and third-party payers, or any thereof, who negotiate and enter
into cooperative agreements with likely benefits outweighing the
disadvantages attributable to a potential reduction in
competition; to establish standards for such certificates; to
require conditions of active supervision for each certificate; to
provide funding for the evaluation and supervision of cooperative
agreements through an assessment to be deposited in a special,
nonexpiring fund; to provide for modification or revocation of
certificates of public advantage; to exclude participation in
cooperative agreements for which an application is filed or
issued from state antitrust enforcement; and to specify the
Legislature's intent to create state-action immunity from federal
antitrust laws.
This article is new; therefore, strike-throughs and
underscoring have been omitted.