CSSB 256(HES): "An Act relating to regulation of managed health care and allowing physicians to collectively negotiate with a health benefit plan that has substantial market power."
00CS FOR SENATE BILL NO. 256(HES) 01 "An Act relating to regulation of managed health care and allowing physicians 02 to collectively negotiate with a health benefit plan that has substantial market 03 power." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. The uncodified law of the State of Alaska is amended by adding a new 06 section to read: 07 FINDINGS AND INTENT FOR SECTION 2. (a) The legislature finds that 08 (1) providing patients and health care providers greater protection in dealing 09 with managed care insurers is in the best interests of residents of the state; 10 (2) the protections contained in sec. 2 of this Act would be beneficial for 11 insurers and for those health care plans offered by businesses that are self-insured; 12 (3) under the Employee Retirement Income Security Act of 1974, health care 13 plans offered by self-insured businesses have largely been exempt from regulation by the state; 14 (4) recently there have been changes recognized by the federal courts regarding
01 the scope of the exemption from state regulation given to health care plans offered by self- 02 insured businesses. 03 (b) It is the intent of the legislature that the provisions of sec. 2 of this Act apply to 04 health care plans offered by self-insured businesses to the maximum extent allowed under 05 federal law. 06 * Sec. 2. AS 21.42 is amended by adding a new section to read: 07 Sec. 21.42.175. Patient and health care provider protection. (a) A contract 08 between a participating health care provider and a managed care entity that offers a 09 group managed care plan must contain a provision that 10 (1) clearly identifies all health care services to be provided; 11 (2) clearly identifies which health care services are to be provided by 12 a contracting health care provider; 13 (3) clearly identifies and describes each insurance policy used by the 14 group managed care plan to provide identified health care services to a covered person; 15 (4) clearly states the rate and method of compensation for health care 16 services provided by the provider for a covered person; 17 (5) clearly states all ways in which the contract between the health care 18 provider and managed care entity may be terminated; a provision that provides for 19 discretionary termination by either party must apply equitably to both parties; 20 (6) provides that, in the event of a dispute between the parties to the 21 contract, the following procedure must be used before either party may pursue other 22 remedies: 23 (A) an initial meeting at which all parties are present or 24 represented by individuals with full decision-making authority regarding the 25 matters in dispute shall be held within seven days after the plan receives notice 26 of the dispute or gives notice to the provider; 27 (B) if, within 30 days following the initial meeting, the parties 28 have not resolved the dispute, the dispute shall be submitted to mediation 29 directed by a mediator who is mutually agreeable to the parties and who is not 30 regularly under contract to or employed by either of the parties; each party 31 shall bear its proportionate share of the cost of mediation, including the
01 mediator fees; 02 (C) if, after a period of 60 days following commencement of 03 mediation, the parties are unable to resolve the dispute, either party may submit 04 the dispute to binding arbitration in accordance with (E) of this paragraph; 05 (D) the parties shall agree to negotiate in good faith in the 06 initial meeting and in mediation; 07 (E) after 10 days' written notice to the other party, either party 08 may submit the dispute to final and binding arbitration; binding arbitration shall 09 be held in the judicial district in this state where the services at issue in the 10 dispute were or are to be performed; at the request of either party, an 11 arbitration proceeding may be conducted electronically, including by telephone 12 or video conferencing; and 13 (F) binding arbitration shall be conducted under the rules of the 14 National Health Lawyers Association Alternative Dispute Resolution Project; 15 each party shall be responsible for its own costs and expenses related to the 16 arbitration, including attorney fees, and shall bear a proportionate share of the 17 arbitrator fees; the arbitrator shall be selected by mutual agreement between the 18 parties; the arbitrator shall be an attorney and a member of the National 19 Academy of Arbitrators or the National Health Lawyers Association; 20 (7) states that a health care provider may not be penalized or the health 21 care provider's contract terminated by the managed care entity because the health care 22 provider acts as an advocate for a covered person in seeking appropriate, medically 23 necessary health care services; 24 (8) protects the ability of a health care provider to communicate openly 25 with a covered person about all appropriate diagnostic testing and treatment options; 26 (9) clearly identifies the length of time during which the contract is to 27 remain in effect; a contract term may not exceed five years; and 28 (10) defines words in a clear and concise manner. 29 (b) A contract between a participating health care provider and a managed care 30 entity that offers a group managed care plan may not contain a provision that 31 (1) provides financial incentives to the health care provider for
01 withholding covered health care services that are medically necessary; 02 (2) describes the products used by the plan as including all products 03 that are currently offered or that may be offered in the future by the managed care 04 entity; and 05 (3) requires the health care provider to be compensated for health care 06 services performed at the same rate as the health care provider has contracted with 07 another managed care entity. 08 (c) A managed care entity may not enter into a contract with a health care 09 provider that includes an indemnification or hold harmless clause for the acts or 10 conduct of the managed care entity. An indemnification or hold harmless clause 11 entered into in violation of this subsection is void. 12 (d) The standard provisions, other than those specifying the exact 13 compensation, of a contract between a health care provider and a managed care entity 14 must be filed and approved by the director before being used. 15 (e) In this section, 16 (1) "group managed care plan" or "plan" means a group health 17 insurance plan operated by a managed care entity; "group managed care plan" does not 18 include an integrated medical group; 19 (2) "health care provider" means a person licensed in this state or 20 another state of the United States to provide health care services; 21 (3) "health care services" means treatment of an individual for an 22 injury, illness, or disability and includes preventative treatment of an injury or illness; 23 (4) "health insurance" has the meaning given in AS 21.12.050(a); 24 (5) "integrated medical group" means a group of providers who 25 contract with a health care plan for the direct provision of health care services to a 26 person covered by a health care plan; 27 (6) "managed care" means a contract given to an individual, family, or 28 group of individuals under which a member is entitled to receive a defined set of 29 health care benefits through an organized system of health care providers in exchange 30 for defined consideration and that requires the member to use, or creates financial 31 incentives for the member to use, health care providers managed, employed by, or
01 under contract with a managed care entity; "managed care" does not include Medicaid 02 coverage under 42 U.S.C. 1396 - 1396p (Social Security Act); 03 (7) "managed care contractor" means a contractor who establishes, 04 operates, or maintains a network of participating health care providers, conducts or 05 arranges for utilization review activities, and contracts with a managed care entity; 06 (8) "managed care entity" means an insurer, a hospital or medical 07 service corporation, a health maintenance organization, an employer or employee 08 health care organization, or a managed care contractor that operates a group managed 09 care plan; 10 (9) "participating health care provider" means a health care provider 11 who has entered into an agreement with a managed care entity to provide services or 12 supplies to a patient covered by a group managed care plan; 13 (10) "provider" means a health care provider. 14 * Sec. 3. AS 23 is amended by adding a new chapter to read: 15 Chapter 50. Collective Negotiation by Physicians. 16 Sec. 23.50.010. Legislative findings. (a) The legislature finds that permitting 17 competing physicians to engage in collective negotiation of certain terms and 18 conditions of contracts with a health benefit plan will benefit competition, so long as 19 the physicians do not engage in an express or implied threat of retaliatory collective 20 action, including boycotts or strikes. 21 (b) The legislature finds that permitting physicians to engage in collective 22 negotiations over fee-related terms may, in some circumstances, yield anti-competitive 23 effects. There are, however, instances in which a health benefit plan dominates the 24 market to the degree that fair negotiations between physicians and the health benefit 25 plan are not possible in the absence of joint action on behalf of the physicians. In 26 those circumstances, the health benefit plan can virtually dictate the terms of the 27 contracts that it offers to physicians. 28 (c) The legislature finds that it is appropriate and necessary to authorize 29 collective negotiations between competing physicians and health benefit plans on fee- 30 related and other issues when the imbalances in bargaining capacity described in this section 31 exist.
01 Sec. 23.50.020. Collective action by physicians. (a) Competing physicians 02 may meet and communicate in order to collectively negotiate with the health benefit 03 plan concerning any of the contract terms and conditions described in this subsection. 04 Competing physicians may not engage in a boycott related to these terms and 05 conditions. Competing physicians may meet and communicate concerning 06 (1) clinical practice guidelines and coverage criteria; 07 (2) the respective liability of physicians and the health benefit plan for 08 the treatment or lack of treatment of insured or enrolled persons; 09 (3) administrative procedures, including methods and timing of the 10 payment of services to physicians; 11 (4) procedures for the resolution of disputes between the health benefit 12 plan and physicians; 13 (5) patient referral procedures; 14 (6) the formulation and application of reimbursement methodology; 15 (7) quality assurance programs; 16 (8) health service utilization review procedures; and 17 (9) criteria to be used by health benefit plans for the selection and 18 termination of physicians, including whether to engage in selective contracting. 19 (b) Except as provided in (c) of this section, competing physicians may not 20 meet and communicate for the purpose of collectively negotiating the following terms 21 and conditions with a health benefit plan: 22 (1) the fees or prices for services, including fees or prices arrived at by 23 applying any reimbursement methodology procedures; 24 (2) the conversion factor in a resource-based relative value scale 25 reimbursement methodology or similar methodologies; 26 (3) the amount of any discount on the price of services to be rendered 27 by the physicians; 28 (4) the dollar amount for capitation or fixed payment for each person 29 covered by the health benefit plan for health services rendered by physicians to a 30 health benefit plan's insureds, beneficiaries, or enrollees; or 31 (5) the inclusion or alteration of terms and conditions to the extent that
01 they are prohibited or required by law; however, this paragraph does not limit 02 physician rights to collectively petition the government for a change in the law. 03 (c) Competing physicians within the service area of a health benefit plan may 04 collectively negotiate the terms and conditions of contracts described in (b) of this 05 section if the health benefit plan has substantial market power. If the commissioner 06 receives notice under (f) of this section that an authorized third party intends to 07 negotiate with a health benefit plan, the commissioner shall provide written notice of 08 the intended negotiation to the health benefit plan. A health benefit plan 09 (1) is rebuttably presumed to have substantial market power; and 10 (2) has the burden to prove that the health benefit plan does not have 11 substantial market power if the health benefit plan elects not to negotiate under this 12 chapter. 13 (d) A health benefit plan may rebut the presumption of substantial market 14 power described under (c) of this section by providing proof satisfactory to the 15 commissioner that the health benefit plan's market share does not exceed 15 percent 16 (1) as measured by the number of covered lives as reported by the 17 director of insurance for the most recently completed calendar year or by the actual 18 number of consumers of prepaid comprehensive health services; or 19 (2) within a particular service area when its market segments are added 20 together for all types of health insurance insureds, beneficiaries, or enrollees and for 21 Medicare and Medicaid beneficiaries. 22 (e) In exercising the collective rights granted by (a) and (c) of this section, 23 (1) physicians may communicate with each other with respect to the 24 contractual terms and conditions to be negotiated with a health benefit plan; 25 (2) physicians may communicate with an authorized third party 26 regarding the terms and conditions of contracts allowed under this section; 27 (3) the authorized third party is the sole party authorized to negotiate 28 with a health benefit plan on behalf of a defined group of physicians; 29 (4) physicians can be bound by the terms and conditions negotiated by 30 the authorized third party that represents their interests; 31 (5) a health benefit plan communicating or negotiating with the
01 authorized third party may contract with, or offer different contract terms and 02 conditions to, individual competing physicians; 03 (6) an authorized third party may not represent more than 30 percent 04 of the market of practicing physicians for the provision of services, or a particular 05 physician type or specialty in the service area or proposed service area, if the health 06 benefit plan has less than a five percent market share as determined by the number of 07 covered lives as reported by the director of insurance for the most recently completed 08 calendar year or by the actual number of consumers of prepaid comprehensive health 09 services; and 10 (7) the authorized third party shall comply with the provisions of (f) 11 of this section. 12 (f) A person acting or proposing to act as an authorized third party under this 13 section shall, 14 (1) before engaging in collective negotiations with a health benefit plan, 15 (A) file with the commissioner the information that identifies 16 the authorized third party, the authorized third party's plan of operation, and the 17 authorized third party's procedures to ensure compliance with this section; 18 (B) furnish to the commissioner, for the commissioner's 19 approval, a brief report that identifies the proposed subject matter of the 20 negotiations or discussions with a health benefit plan and that contains an 21 explanation of the efficiencies or benefits that are expected to be achieved 22 through the collective negotiations; the commissioner may not approve the 23 report if the proposed negotiations exceed the authority granted in this chapter 24 and, if they do, shall enter an order prohibiting the collective negotiations from 25 proceeding; the authorized third party shall provide supplemental information 26 to the commissioner as new information becomes available that indicates that 27 the subject matter of negotiations with the health benefit plan has changed or 28 will change; 29 (2) within 14 days after receiving a health benefit plan's decision to 30 decline to negotiate or to terminate negotiations, or within 14 days after requesting 31 negotiations with a health benefit plan who fails to respond within that time, report to
01 the commissioner that negotiations have ended or have been declined; 02 (3) before reporting the results of negotiations with a health benefit 03 plan and before giving physicians an evaluation of any offer made by a health benefit 04 plan, provide to the commissioner, for the commissioner's approval, a copy of all 05 communications to be made to physicians related to the negotiations, discussions, and 06 health benefit plan offers. 07 (g) With the advice of the attorney general, the commissioner shall either 08 approve or disapprove the collective negotiation subject to the reporting required in (f) 09 of this section within 30 days after receiving the reports. If disapproved, the 10 commissioner shall furnish a written explanation of any deficiencies along with a 11 statement of specific remedial measures that would correct any identified deficiencies. 12 An authorized third party who fails to obtain the commissioner's approval is 13 considered to be acting outside the authority of this section. 14 (h) This section does not authorize competing physicians to act in concert in 15 response to a report issued by an authorized third party related to the authorized third 16 party's discussion or negotiations with a health benefit plan. The authorized third party 17 shall advise the physicians of the provisions of this subsection and shall warn them of 18 the potential for legal action against those who violate state or federal anti-trust laws 19 by exceeding the authority granted under this section. 20 (i) A contract allowed under this section may not exceed a term of five years. 21 (j) The documents relating to a collective negotiation described under this 22 section that are in the possession of the department are confidential and not open to 23 public inspection. 24 Sec. 23.50.030. Fee for registration of authorized third parties. (a) The 25 commissioner shall adopt regulations that establish the amount and manner of payment 26 of a registration fee for authorized third parties. The commissioner shall establish the 27 fee level so that the total amount of fees collected from authorized third parties 28 approximately equals the actual regulatory costs for the oversight of joint negotiations 29 between physicians and health benefit plans. The commissioner shall annually review 30 the fee level to determine whether the regulatory costs are approximately equal to fee 31 collections. If the review indicates that the fee collections and regulatory costs are not
01 approximately equal, the commissioner shall calculate fee adjustments and adopt 02 regulations under this subsection to implement the adjustments. In January of each 03 year, the commissioner shall report on the fee level and revisions for the previous year 04 under this subsection to the office of management and budget. 05 (b) In this section, "regulatory costs" means costs of the department that are 06 attributable to oversight of joint negotiations between physicians and health benefit 07 plans. 08 Sec. 23.50.040. Voluntary negotiation by health benefit plan. A health 09 benefit plan that is not required to negotiate under this chapter may voluntarily comply 10 with the provisions of this chapter and negotiate with an authorized third party. 11 Sec. 23.50.050. Regulations. The commissioner may adopt regulations 12 necessary to implement this chapter. 13 Sec. 23.50.099. Definitions. In this chapter, 14 (1) "authorized third party" means a person authorized by the 15 physicians to negotiate on their behalf with a health benefit plan under this chapter; 16 (2) "commissioner" means the commissioner of labor and workforce 17 development; 18 (3) "health benefit plan" has the meaning given in AS 21.54.500. 19 * Sec. 4. AS 45.50.572 is amended by adding a new subsection to read: 20 (k) AS 45.50.562 - 45.50.596 do not forbid the existence or operation of 21 organizations of physicians acting in accordance with AS 23.50, or forbid or restrain 22 members of those organizations from lawfully carrying out the legitimate objectives 23 of them; nor are these organizations or members illegal combinations or conspiracies 24 in restraint of trade under the provisions of AS 45.50.562 - 45.50.596.