CSSB 256(FIN): "An Act relating to allowing physicians to collectively negotiate with a health benefit plan that has substantial market power."
00CS FOR SENATE BILL NO. 256(FIN) 01 "An Act relating to allowing physicians to collectively negotiate with a health 02 benefit plan that has substantial market power." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 23 is amended by adding a new chapter to read: 05 Chapter 50. Collective Negotiation by Physicians. 06 Sec. 23.50.010. Legislative findings. (a) The legislature finds that permitting 07 competing physicians to engage in collective negotiation of certain terms and 08 conditions of contracts with a health benefit plan will benefit competition, so long as 09 the physicians do not engage in an express or implied threat of retaliatory collective 10 action, including boycotts or strikes. 11 (b) The legislature finds that permitting physicians to engage in collective 12 negotiations over fee-related terms may, in some circumstances, yield anti-competitive 13 effects. There are, however, instances in which a health benefit plan dominates the 14 market to the degree that fair negotiations between physicians and the health benefit
01 plan are not possible in the absence of joint action on behalf of the physicians. In 02 those circumstances, the health benefit plan can virtually dictate the terms of the 03 contracts that it offers to physicians. 04 (c) The legislature finds that it is appropriate and necessary to authorize 05 collective negotiations between competing physicians and health benefit plans on fee- 06 related and other issues when the imbalances in bargaining capacity described in this section 07 exist. 08 Sec. 23.50.020. Collective action by physicians. (a) Competing physicians 09 may meet and communicate in order to collectively negotiate with the health benefit 10 plan concerning any of the contract terms and conditions described in this subsection. 11 Competing physicians may not engage in a boycott related to these terms and 12 conditions. Competing physicians may meet and communicate concerning 13 (1) clinical practice guidelines and coverage criteria; 14 (2) the respective liability of physicians and the health benefit plan for 15 the treatment or lack of treatment of insured or enrolled persons; 16 (3) administrative procedures, including methods and timing of the 17 payment of services to physicians; 18 (4) procedures for the resolution of disputes between the health benefit 19 plan and physicians; 20 (5) patient referral procedures; 21 (6) the formulation and application of reimbursement methodology; 22 (7) quality assurance programs; 23 (8) health service utilization review procedures; and 24 (9) criteria to be used by health benefit plans for the selection and 25 termination of physicians, including whether to engage in selective contracting. 26 (b) Except as provided in (c) of this section, competing physicians may not 27 meet and communicate for the purpose of collectively negotiating the following terms 28 and conditions with a health benefit plan: 29 (1) the fees or prices for services, including fees or prices arrived at by 30 applying any reimbursement methodology procedures; 31 (2) the conversion factor in a resource-based relative value scale
01 reimbursement methodology or similar methodologies; 02 (3) the amount of any discount on the price of services to be rendered 03 by the physicians; 04 (4) the dollar amount for capitation or fixed payment for each person 05 covered by the health benefit plan for health services rendered by physicians to a 06 health benefit plan's insureds, beneficiaries, or enrollees; or 07 (5) the inclusion or alteration of terms and conditions to the extent that 08 they are prohibited or required by law; however, this paragraph does not limit 09 physician rights to collectively petition the government for a change in the law. 10 (c) Competing physicians within the service area of a health benefit plan may 11 collectively negotiate the terms and conditions of contracts described in (b) of this 12 section if the health benefit plan has substantial market power. If the attorney general 13 receives notice under (f) of this section that an authorized third party intends to 14 negotiate with a health benefit plan, the attorney general shall provide written notice 15 of the intended negotiation to the health benefit plan. A health benefit plan is 16 rebuttably presumed to have substantial market power. 17 (d) A health benefit plan may rebut the presumption of substantial market 18 power described under (c) of this section by providing proof satisfactory to the 19 attorney general that the health benefit plan's market share does not exceed 15 percent 20 (1) as measured by the number of covered lives at the end of the most 21 recently completed calendar year or by the actual number of consumers of prepaid 22 comprehensive health services at the end of the most recently completed calendar 23 quarter divided by the total population of the geographic service area as of the most 24 recent census; or 25 (2) within a particular geographic service area when its market 26 segments are added together for all types of health insurance insureds, beneficiaries, 27 or enrollees and for Medicare and Medicaid beneficiaries. 28 (e) In exercising the collective rights granted by (a) and (c) of this section, 29 (1) physicians may communicate with each other with respect to the 30 contractual terms and conditions to be negotiated with a health benefit plan; 31 (2) physicians may communicate with an authorized third party
01 regarding the terms and conditions of contracts allowed under this section; 02 (3) the authorized third party is the sole party authorized to negotiate 03 with a health benefit plan on behalf of a defined group of physicians; 04 (4) physicians can be bound by the terms and conditions negotiated by 05 the authorized third party that represents their interests; 06 (5) a health benefit plan communicating or negotiating with the 07 authorized third party may contract with, or offer different contract terms and 08 conditions to, individual competing physicians; 09 (6) an authorized third party may not represent more than 30 percent 10 of the market of practicing physicians for the provision of services, or a particular 11 physician type or specialty in the geographic service area or proposed geographic 12 service area, if the health benefit plan has less than a five percent market share as 13 determined by the number of covered lives as reported by the director of insurance for 14 the most recently completed calendar year or by the actual number of consumers of 15 prepaid comprehensive health services; and 16 (7) the authorized third party shall comply with the provisions of (f) 17 of this section. 18 (f) A person acting or proposing to act as an authorized third party under this 19 section shall, 20 (1) before engaging in collective negotiations with a health benefit plan, 21 (A) file with the attorney general the information that identifies 22 the authorized third party, the authorized third party's plan of operation, and the 23 authorized third party's procedures to ensure compliance with this section; 24 (B) furnish to the attorney general, for the attorney general's 25 approval, a brief report that identifies the proposed subject matter of the 26 negotiations or discussions with a health benefit plan and that contains an 27 explanation of the efficiencies or benefits that are expected to be achieved 28 through the collective negotiations; the attorney general may not approve the 29 report if the proposed negotiations exceed the authority granted in this chapter 30 and, if they do, shall enter an order prohibiting the collective negotiations from 31 proceeding; the authorized third party shall provide supplemental information
01 to the attorney general as new information becomes available that indicates that 02 the subject matter of negotiations with the health benefit plan has changed or 03 will change; 04 (2) within 14 days after receiving a health benefit plan's decision to 05 decline to negotiate or to terminate negotiations, or within 14 days after requesting 06 negotiations with a health benefit plan who fails to respond within that time, report to 07 the attorney general that negotiations have ended or have been declined; 08 (3) before reporting the results of negotiations with a health benefit 09 plan and before giving physicians an evaluation of any offer made by a health benefit 10 plan, provide to the attorney general, for the attorney general's approval, a copy of all 11 communications to be made to physicians related to the negotiations, discussions, and 12 health benefit plan offers. 13 (g) The attorney general shall either approve or disapprove the contract that 14 was the subject of the collective negotiation within 30 days after receiving the reports 15 required under (f) of this section. If the contract is disapproved, the attorney general 16 shall furnish a written explanation of any deficiencies along with a statement of 17 specific remedial measures that would correct any identified deficiencies. An 18 authorized third party who fails to obtain the attorney general's approval is considered 19 to be acting outside the authority of this section. 20 (h) The attorney general shall approve a collective negotiation if 21 (1) the competitive and other benefits of the contract terms outweigh 22 any anticompetitive effects; and 23 (2) the contract terms are consistent with other applicable laws and 24 regulations. 25 (i) The competitive and other benefits of joint negotiations or negotiated 26 provider contract terms may include 27 (1) restoration of the competitive balance in the market for health care 28 services; 29 (2) protections for access to quality patient care; 30 (3) promotion of health care infrastructure and medical advancement; 31 or
01 (4) improved communications between health care providers and health 02 care insurers. 03 (j) When weighing the anticompetitive effects of contract terms, the attorney 04 general may consider whether the terms 05 (1) provide for excessive payments; or 06 (2) contribute to the escalation of the cost of providing health care 07 services. 08 (k) This section does not authorize competing physicians to act in concert in 09 response to a report issued by an authorized third party related to the authorized third 10 party's discussion or negotiations with a health benefit plan. The authorized third party 11 shall advise the physicians of the provisions of this subsection and shall warn them of 12 the potential for legal action against those who violate state or federal anti-trust laws 13 by exceeding the authority granted under this section. 14 (l) A contract allowed under this section may not exceed a term of five years. 15 (m) The documents relating to a collective negotiation described under this 16 section that are in the possession of the Department of Law are confidential and not 17 open to public inspection. 18 Sec. 23.50.030. Fee for registration of authorized third parties. (a) The 19 attorney general shall adopt regulations that establish the amount and manner of 20 payment of a registration fee for authorized third parties. The attorney general shall 21 establish the fee level so that the total amount of fees collected from authorized third 22 parties approximately equals the actual regulatory costs for the oversight of joint 23 negotiations between physicians and health benefit plans. The attorney general shall 24 annually review the fee level to determine whether the regulatory costs are 25 approximately equal to fee collections. If the review indicates that the fee collections 26 and regulatory costs are not approximately equal, the attorney general shall calculate 27 fee adjustments and adopt regulations under this subsection to implement the 28 adjustments. In January of each year, the attorney general shall report on the fee level 29 and revisions for the previous year under this subsection to the office of management 30 and budget. 31 (b) In this section, "regulatory costs" means costs of the Department of Law
01 that are attributable to oversight of joint negotiations between physicians and health 02 benefit plans. 03 Sec. 23.50.040. Regulations. The attorney general may adopt regulations 04 necessary to implement this chapter. 05 Sec. 23.50.099. Definitions. In this chapter, 06 (1) "authorized third party" means a person authorized by the 07 physicians to negotiate on their behalf with a health benefit plan under this chapter; 08 (2) "covered lives" means the total number of individuals who are 09 entitled to benefits under the health benefit plan; 10 (3) "geographic service area" means the geographic area of the 11 physicians seeking to jointly negotiate; 12 (4) "health benefit plan" has the meaning given in AS 21.54.500. 13 * Sec. 2. AS 45.50.572 is amended by adding a new subsection to read: 14 (k) AS 45.50.562 - 45.50.596 do not forbid the existence or operation of 15 organizations of physicians acting in accordance with AS 23.50, or forbid or restrain 16 members of those organizations from lawfully carrying out the legitimate objectives 17 of them; nor are these organizations or members illegal combinations or conspiracies 18 in restraint of trade under the provisions of AS 45.50.562 - 45.50.596. 19 * Sec. 3. AS 23.50.010, 23.50.020, 23.50.030, 23.50.040, 23.50.099; and AS 45.50.572(k) 20 are repealed July 1, 2005.