H. B. 4604
(By Mr. Speaker, Mr. Kiss, and Delegate Trump)
[By Request of the Executive]
[Introduced February 22, 2000; referred to the
Committee on Government Organization then Finance.]
A BILL to amend and reenact section eight, article twenty-nine-b,
chapter sixteen of the code of West Virginia, one thousand
nine hundred thirty-one, as amended; and to amend chapter
thirty-three of said code, by adding thereto a new article,
designated as article twenty-five-e, all relating to powers of
the health care authority; joint negotiations by physicians
with health benefit plans; defining terms, authorizing joint
negotiations; exceptions to joint negotiations; joint
negotiations agreements; physicians' representatives; health
care authority; rulemaking authority; and fees.
Be it enacted by the Legislature of West Virginia:
That section eight, article twenty-nine-b, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; and that chapter thirty-three of
said code be amended by adding thereto a new article, designated
article twenty-five-e, all to read as follows:
CHAPTER 16. PUBLIC HEALTH.
ARTICLE 29B. HEALTH CARE AUTHORITY.
§16-29B-8. Powers generally; budget expenses of the board.
(a) In addition to the powers granted to the board elsewhere
in this article, the board may:
(1) Adopt, amend and repeal necessary, appropriate and lawful
policy guidelines and rules in accordance with article three,
chapter twenty-nine-a of this code: Provided, That subsequent
amendments and modifications to any rule promulgated pursuant to
this article and not exempt from the provisions of article three,
chapter twenty-nine-a of this code may be implemented by emergency
rule;
(2) Hold public hearings, conduct investigations and require
the filing of information relating to matters affecting the costs
of health care services subject to the provisions of this article
and may subpoena witnesses, papers, records, documents and all
other data in connection therewith. The board may administer oaths or affirmations in any hearing or investigation;
(3) Oversee and approve joint negotiations by physicians with
health benefit plans as set forth in section one, article
twenty-five-e, chapter thirty-three of the code;
(3)
(4)
(5)
(6)
(b) The board shall annually prepare a budget for the next
fiscal year for submission to the governor and the Legislature
which shall include all sums necessary to support the activities of
the board and its staff.
(c) Each hospital subject to the provisions of this article
shall be assessed by the board on a pro rata basis using the gross
revenues of each hospital as reported under the authority of
section eighteen of this article as the measure of the hospital's
obligation. The amount of such fee shall be determined by the board except that in no case shall the hospital's obligation exceed
one tenth of one percent of its gross revenue. Such fees shall be
paid on before the first day of July in each year and shall be paid
into the state treasury and kept as a special revolving fund
designated "health care cost review fund," with the moneys in such
fund being expendable after appropriation by the Legislature for
purposes consistent with this article. Any balance remaining in
said fund at the end of any fiscal year shall not revert to the
treasury, but shall remain in said fund and such moneys shall be
expendable after appropriation by the Legislature in ensuring
fiscal years.
(d) Each hospital's assessment shall be treated as an
allowable expense by the board.
(e) The board is empowered to withhold rate approvals,
certificates of need and rural health system loans and grants if
any such fees remain unpaid, unless exempted under subsection (g),
section four, article two-d of this chapter.
CHAPTER 33. INSURANCE.
ARTICLE 25E. JOINT NEGOTIATIONS BY PHYSICIANS WITH HEALTH BENEFIT
PLANS.
§33-25E-1. Findings and purposes.
The Legislature finds that joint negotiation by competing
physicians of certain terms and conditions of contracts with health
benefit plans will result in procompetitive effects in the absence
of any express or implied threat of retaliatory joint action, such
as a boycott or strike, by physicians. Although the Legislature
finds that joint negotiations over fee-related terms may in some
circumstances yield anti-competitive effects, it also recognizes
that there are instances in which health benefit plans dominate the
market to such a degree that fair negotiations between physicians
and health benefit plans are unobtainable absent any joint action
on behalf of physicians. In these instances, health plans have the
ability to virtually dictate the terms of the contracts they offer
physicians. Consequently, the Legislature finds it appropriate and
necessary to authorize joint negotiations on fee-related and other
issues where determined that such imbalances exist.
§33-25E-2. Definitions.
In this article:
(1) "Health benefit plan" means a plan described by section
three, article twenty-five-e, chapter thirty-three of this article.
(2) "Person" means an individual, association, corporation or
any other legal entity.
(3) "Physician" means an individual licensed under the laws of
the state to practice medicine or dentistry.
(4) "Physicians' representative" means a third party who will
engage in joint negotiations, and is authorized by physicians to
negotiate on their behalf with health benefit plans over
contractual terms and conditions affecting those physicians.
§33-25E-3. Scope of article.
(a) This article applies only to a health benefit plan that
provides benefits for medical or surgical expenses incurred as a
result of a health condition, accident or sickness, including an
individual, group, blanket or franchise insurance policy or
insurance agreement, a group hospital service contract, or an
individual or group evidence of coverage or similar coverage
document that is offered by:
(1) An insurance company;
(2) A group hospital service corporation;
(3) A fraternal benefit society;
(4) A medical service corporation;
(5) A health service corporation;
(6) A health maintenance organization.
(b) This chapter does not apply to:
(1) A plan that provides coverage:
(A) Only for a specified disease or other limited benefit;
(B) Only for accidental death or dismemberment;
(C) For wages or payments in lieu of wages for a period during
which an employee is absent from work because of sickness or
injury;
(D) As a supplement to liability insurance;
(E) For credit insurance;
(F) Only for dental or vision care;
(G) Only for hospital expenses; or
(H) Only for indemnity for hospital confinement.
(2) A small employer health benefit plan written under article
sixteen-d, chapter thirty-three
of this code;
(3) A Medicare supplemental policy as defined by section 1882
(g) (1), Social Security Act (42 U.S.C. §1395 et seq.), as amended;
(4) Workers' compensation insurance coverage;
(5) Medical payment insurance coverage issued as part of a
motor vehicle insurance policy; or
(6) A long term care policy, including a nursing home
indemnity policy, unless the health care authority determines that
the policy provides benefit coverage so comprehensive that the policy is a health benefit plan as described by subsection (a) of
this article.
§33-25E-4. Joint negotiation authorized.
Competing physicians within the service area of a health
benefit plan may meet and communicate for the purpose of jointly
negotiating the following terms and conditions of contracts with
the health benefit plan:
(1) Practices and procedures to assess and improve the
delivery of effective, cost-efficient preventive health care
services, including childhood immunizations, prenatal care and
mammograms and other cancer screening tests or procedures;
(2) Practices and procedures to encourage early detection and
effective, cost-efficient management of diseases and illnesses in
children;
(3) Practices and procedures to assess and improve the
delivery of women's medical and health care, including menopause
and osteoporosis;
(4) Clinical criteria for effective, cost-efficient disease
management programs, including diabetes, asthma and cardiovascular
disease;
(5) Practices and procedures to encourage and promote patient education and treatment compliance, including parental involvement
with their children's health care;
(6) Practices and procedures to identify, correct and prevent
potentially fraudulent activities;
(7) Practices and procedures for the effective, cost-efficient
use of outpatient surgery;
(8) Clinical practice guidelines and coverage criteria;
(9) Administrative procedures, including methods and timing of
physician payment for services;
(10) Dispute resolution procedures relating to disputes
between health benefit plans and physicians;
(11) Patient referral procedures;
(12) Formulation and application of physician reimbursement
methodology;
(13) Quality assurance programs;
(14) Health service utilization review procedures;
(15) Health benefit plan physician selection and termination
criteria; and
(16) The inclusion or alteration of terms and conditions to
the extent they are the subject of government regulation
prohibiting or requiring the particular term or condition in question: Provided, That such restriction does not limit physician
rights to jointly petition government for a change in such
regulation.
§33-25E-5. Limitations on joint negotiation.
Except as provided in section six of this article, competing
physicians shall not meet and communicate for the purpose of
jointly negotiating the following terms and conditions of contracts
with health benefit plans:
(1) The fees or prices for services, including those arrived
at by applying any reimbursement methodology procedures;
(2) The conversion factors in a resource-based relative value
scale reimbursement methodology or similar methodologies;
(3) The amount of any discount on the price of services to be
rendered by physicians; and
(4) The dollar amount of capitation or fixed payment for
health services rendered by physicians to health benefit plan
enrollees.
§33-25E-6. Exception to limitations on joint negotiation.
(a) Competing physicians within the service area of a health
benefit plan may jointly negotiate the terms and conditions
specified in section five of this article 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. The health care authority shall
make the determination of what constitutes substantial market
power.
(b) The commissioner shall have the authority to collect and
investigate information necessary to determine, on an annual basis:
(1) The average number of covered lives per month per county
by every health care entity in the state; and
(2) The annual impact, if any, of this article on average
physician fees in this state.
§33-25E-7. Joint negotiation agreements.
Competing health care physicians' exercise of joint
negotiation rights granted by sections four and six of this article
shall conform to the following criteria:
(1) Physicians may communicate with each other with respect to
the contractual terms and conditions to be negotiated with a health
benefit plan;
(2) Physicians may communicate with a third party, who is
authorized to negotiate on their behalf with health benefit plans
over contractual terms and conditions;
(3) The third party is the sole party authorized to negotiate
with health benefit plans on behalf of the physicians as a group;
(4) At the option of each physician, the physicians may agree
to be bound by the terms and conditions negotiated by the third
party authorized to represent their interests;
(5) Health benefit plans communicating or negotiating with the
physicians' representative shall remain free to contract with or
offer different contract terms and conditions to individual
competing physicians; and
(6) The physicians' representative shall comply with the
provisions of section eight of this article.
§33-25E-8. Requirements for physicians' representative.
Any person or organization proposing to act or acting as a
representative of physicians for the purpose of exercising
authority granted under this chapter shall comply with the
following requirements:
(a) Before engaging in any joint negotiations with health
benefit plans on behalf of physicians, the representative shall
furnish, for health care authority approval, a report identifying:
(1) The representative's name and business address;
(2) The names and addresses of the physicians who will be represented by the identified representative;
(3) The relationship of the physicians requesting joint
representation to the total population of physicians in a
geographic service area;
(4) The health benefit plans with which the representative
intends to negotiate on behalf of the identified physicians;
(5) The proposed subject matter of the negotiations or
discussions with the identified health benefit plans;
(6) The representative's plan of operation and procedures to
ensure compliance with this section;
(7) The expected impact of the negotiations on the quality of
patient care; and
(8) The benefits of a contract between the identified health
benefit plan and physicians;
(b) After the parties identified in the initial filing have
reached an agreement, the representative shall furnish, for health
care authority approval, a copy of the proposed contract and plan
of action; and
(c) Within fourteen days of a health benefit plan decision
declining negotiation, terminating negotiation, or failing to
respond to a request for negotiation, the representative shall report to the health care authority the end of negotiations. If
negotiations resume within sixty days of such notification to the
health care authority, the applicant shall be permitted to renew
the previously filed report without submitting a new report for
approval.
§33-25E-9. Approval process by health care authority.
(a) The health care authority shall either approve or
disapprove an initial filing, supplemental filing or proposed
filing, within thirty days of each filing. If disapproved, the
health care authority shall furnish a written explanation of any
deficiencies along with a statement of specific remedial measures
as to how such deficiencies could be corrected. A representative
who fails to obtain the health care authority approval is deemed
to act outside the authority granted under this article.
(b) The health care authority shall approve a request to enter
into joint negotiations or a proposed contract if it determines
that the applicants have demonstrated that the likely benefits
resulting from the joint negotiation or proposed contract outweigh
the disadvantages attributable to a reduction in competition that
may result from the joint negotiation or proposed contract. The
health care authority shall consider physician distribution by specialty and its effect on competition. The joint negotiation
shall represent no more than ten per cent 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
article conditions support the approval of a greater or lesser
percentage.
(c) An approval of the initial filing by the health care
authority shall be effective for all subsequent negotiations
between the parties specified in the initial filing.
(d) If the health care authority does not issue a written
approval or rejection of an initial filing, supplemental filing or
proposed contract within the specified time period, the applicant
shall have the right to petition a circuit court for a writ of
mandamus requiring the health care authority to approve or
disapprove the contents of the filing forthwith.
§33-25E-10. Certain joint action prohibited.
Nothing contained in this chapter shall be construed to enable
physicians to jointly coordinate any cessation, reduction or
limitation of healthcare services. Physicians may not meet and
communicate 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. Physicians may not negotiate with the plan to
exclude, limit or otherwise restrict nonphysician health care
providers from participation in a health benefit plan based
substantially on the fact the health care provider is not a
licensed physician unless that restriction, exclusion or limitation
is otherwise permitted by law. The representative of the
physicians shall advise physicians of the provisions of this
article and shall warn physicians of the potential for legal action
against physicians who violate state or federal antitrust laws when
acting outside the authority of this chapter.
§33-25E-11. Rulemaking authority.
The health care authority shall have the authority to
promulgate emergency rules necessary to implement the provisions of
this chapter. The health care authority may by rule authorize
podiatric physicians to participate in the joint negotiations
permitted by this chapter.
§33-25E-12. Construction.
This chapter shall not be construed to prohibit physicians
from negotiating the terms and conditions of contracts as permitted by other state or federal law.
§33-25E-13. Fees.
Each person who acts as the representative of negotiating
parties under this chapter shall pay to the commissioner a fee to
act as a representative. The health care authority, by rule, shall
set fees in amounts reasonable and necessary to cover the costs
incurred by the state in administering this chapter.
NOTE: The purpose of this bill is to permit joint negotiation
by competing physicians of certain terms and conditions of
contracts with health benefit plans.
This article is new; therefore, strike-throughs and
underscoring have been omitted.