CSSB 37(L&C): "An Act relating to collective negotiation by physicians with health benefit plans, to health benefit plan contracts with individual competing physicians, to the application of state antitrust laws to agreements involving providers and groups of providers affected by collective negotiations, and to the effect of the collective negotiation provisions on health care providers."
00 CS FOR SENATE BILL NO. 37(L&C) 01 "An Act relating to collective negotiation by physicians with health benefit plans, to 02 health benefit plan contracts with individual competing physicians, to the application of 03 state antitrust laws to agreements involving providers and groups of providers affected 04 by collective negotiations, and to the effect of the collective negotiation provisions on 05 health care providers." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 23 is amended by adding a new chapter to read: 08 Chapter 50. Collective Negotiation by Physicians. 09 Sec. 23.50.010. Legislative findings. (a) The legislature finds that permitting 10 competing physicians to engage in collective negotiation of certain terms and 11 conditions of contracts with a health benefit plan will benefit competition, so long as 12 the physicians do not engage in an express or implied threat of retaliatory collective 13 action, including boycotts or strikes.
01 (b) The legislature finds that permitting physicians to engage in collective 02 negotiations over fee-related terms may, in some circumstances, yield anti-competitive 03 effects. There are, however, instances in which a health benefit plan dominates the 04 market to the degree that fair negotiations between physicians and the health benefit 05 plan are not possible in the absence of joint action on behalf of the physicians. In 06 those circumstances, the health benefit plan can virtually dictate the terms of the 07 contracts that it offers to physicians. 08 (c) The legislature finds that it is appropriate and necessary to authorize 09 collective negotiations between competing physicians and health benefit plans on fee- 10 related and other issues when the imbalances in bargaining capacity described in this 11 section exist. 12 Sec. 23.50.020. Collective action by physicians. (a) Competing physicians 13 may meet and communicate in order to collectively negotiate with a health benefit 14 plan concerning any of the contract terms and conditions described in this subsection. 15 Competing physicians may not engage in a boycott related to these terms and 16 conditions. Competing physicians may meet and communicate concerning 17 (1) physician clinical practice guidelines and coverage criteria; 18 (2) the respective liability of physicians and the health benefit plan for 19 the treatment or lack of treatment of insured or enrolled persons; 20 (3) administrative procedures, including methods and timing of the 21 payment of services to physicians; 22 (4) procedures for the resolution of disputes between the health benefit 23 plan and physicians; 24 (5) patient referral procedures; 25 (6) the formulation and application of reimbursement methodology; 26 (7) quality assurance programs; 27 (8) health service utilization review procedures; and 28 (9) criteria to be used by health benefit plans for the selection and 29 termination of physicians, including whether to engage in selective contracting. 30 (b) Except as provided in (c) of this section, competing physicians may not 31 meet and communicate for the purpose of collectively negotiating the following terms
01 and conditions with a health benefit plan: 02 (1) the fees or prices for services, including fees or prices arrived at by 03 applying any reimbursement methodology procedures; 04 (2) the conversion factor in a resource-based relative value scale 05 reimbursement methodology or similar methodologies; 06 (3) the amount of any discount on the price of services to be rendered 07 by the physicians; 08 (4) the dollar amount for capitation or fixed payment for each person 09 covered by the health benefit plan for health services rendered by physicians to a 10 health benefit plan's insureds, beneficiaries, or enrollees; or 11 (5) the inclusion or alteration of terms and conditions to the extent that 12 they are prohibited or required by law; however, this paragraph does not limit 13 physician rights to collectively petition the government for a change in the law. 14 (c) Competing physicians within the service area of a health benefit plan may 15 collectively negotiate with a health benefit plan the terms and conditions of contracts 16 described in (b) of this section if the health benefit plan has substantial market power. 17 If the attorney general receives notice under (f) of this section that an authorized third 18 party intends to negotiate with a health benefit plan, the attorney general shall provide 19 written notice of the intended negotiation to the health benefit plan. A health benefit 20 plan is rebuttably presumed to have substantial market power. 21 (d) A health benefit plan may rebut the presumption of substantial market 22 power described under (c) of this section by providing proof satisfactory to the 23 attorney general that the health benefit plan's market share does not exceed 15 percent 24 (1) as measured by the number of covered lives at the end of the most 25 recently completed calendar year or by the actual number of consumers of prepaid 26 comprehensive health services at the end of the most recently completed calendar 27 quarter divided by the total population of the geographic service area as of the most 28 recent census; or 29 (2) within a particular geographic service area when its market 30 segments are added together for all types of health insurance insureds, beneficiaries, or 31 enrollees and for Medicare and Medicaid beneficiaries.
01 (e) In exercising the collective rights granted by (a) and (c) of this section, 02 (1) physicians may communicate with each other with respect to the 03 contractual terms and conditions to be negotiated with a health benefit plan; 04 (2) physicians may communicate with an authorized third party 05 regarding the terms and conditions of contracts allowed under this section; 06 (3) the authorized third party is the sole party authorized to negotiate 07 with a health benefit plan on behalf of a defined group of physicians; 08 (4) physicians can be bound by the terms and conditions negotiated by 09 the authorized third party that represents their interests; 10 (5) a health benefit plan communicating or negotiating with the 11 authorized third party may contract with, or offer different contract terms and 12 conditions to, individual competing physicians; 13 (6) an authorized third party may not represent more than 30 percent of 14 the market of practicing physicians for the provision of services in the geographic 15 service area or proposed geographic service area, if the health benefit plan has less 16 than a five percent market share as determined by the number of covered lives as 17 reported by the director of insurance for the most recently completed calendar year or 18 by the actual number of consumers of prepaid comprehensive health services; 19 (7) the attorney general may limit the percentage of practicing 20 physicians represented by an authorized third party; however, the limitation may not 21 be less than 30 percent of the market of practicing physicians in the geographic service 22 area or proposed geographic service area; when determining whether to impose a 23 limitation described under this paragraph, the attorney general shall consider the 24 provisions described under (h), (i), and (j) of this section; this paragraph does not 25 apply if the market of practicing physicians in the geographic service area or proposed 26 geographic service area consists of 40 or fewer individuals; and 27 (8) the authorized third party shall comply with the provisions of (f) of 28 this section. 29 (f) A person acting or proposing to act as an authorized third party under this 30 section shall, 31 (1) before engaging in collective negotiations with a health benefit
01 plan, 02 (A) file with the attorney general the information that identifies 03 the authorized third party, the physicians represented by the third party, the 04 authorized third party's plan of operation, and the authorized third party's 05 procedures to ensure compliance with this section; 06 (B) furnish to the attorney general, for the attorney general's 07 approval, a brief report that identifies the proposed subject matter of the 08 negotiations or discussions with a health benefit plan and that contains an 09 explanation of the efficiencies or benefits that are expected to be achieved 10 through the collective negotiations; the attorney general shall review whether 11 the group of physicians represented by the authorized third party is appropriate 12 to represent the interests involved in the negotiations; the attorney general may 13 not approve the report if the group of physicians is not appropriate to represent 14 the interests involved in the negotiations or if the proposed negotiations exceed 15 the authority granted in this chapter and, if the group is not appropriate or the 16 negotiations exceed the granted authority, shall enter an order prohibiting the 17 collective negotiations from proceeding; the authorized third party shall 18 provide supplemental information to the attorney general as new information 19 becomes available that indicates that the subject matter of negotiations with the 20 health benefit plan has changed or will change; 21 (2) within 14 days after receiving a health benefit plan's decision to 22 decline to negotiate or to terminate negotiations, or within 14 days after requesting 23 negotiations with a health benefit plan that fails to respond within that time, report to 24 the attorney general that negotiations have ended or have been declined; 25 (3) before reporting the results of negotiations with a health benefit 26 plan and before giving physicians an evaluation of any offer made by a health benefit 27 plan, provide to the attorney general, for the attorney general's approval, a copy of all 28 communications to be made to physicians related to the negotiations, discussions, and 29 health benefit plan offers. 30 (g) The attorney general shall either approve or disapprove the contract that 31 was the subject of the collective negotiation within 30 days after receiving the reports
01 required under (f) of this section and completing the period for comment and review 02 for interested parties required by this subsection. The review of the contract by the 03 attorney general must allow adequate time for comment and review by interested 04 parties and must include a review of whether the contract would harm consumers or 05 providers who are not physicians. If the contract is disapproved, the attorney general 06 shall furnish a written explanation of any deficiencies along with a statement of 07 specific remedial measures that would correct any identified deficiencies. An 08 authorized third party who fails to obtain the attorney general's approval is considered 09 to be acting outside the authority of this section. 10 (h) The attorney general shall approve a collective negotiation if 11 (1) the competitive and other benefits of the contract terms outweigh 12 any anticompetitive effects; and 13 (2) the contract terms are consistent with other applicable laws and 14 regulations. 15 (i) The competitive and other benefits of joint negotiations or negotiated 16 provider contract terms may include 17 (1) restoration of the competitive balance in the market for health care 18 services; 19 (2) protections for access to quality patient care; 20 (3) promotion of health care infrastructure and medical advancement; 21 or 22 (4) improved communications between health care providers and 23 health care insurers. 24 (j) When weighing the anticompetitive effects of contract terms, the attorney 25 general may consider whether the terms 26 (1) provide for excessive payments; or 27 (2) contribute to the escalation of the cost of providing health care 28 services. 29 (k) This section does not authorize competing physicians to act in concert in 30 response to a report issued by an authorized third party related to the authorized third 31 party's discussion or negotiations with a health benefit plan. The authorized third
01 party shall advise the physicians of the provisions of this subsection and shall warn 02 them of the potential for legal action against those who violate state or federal anti- 03 trust laws by exceeding the authority granted under this section. 04 (l) A contract allowed under this section may not exceed a term of five years. 05 (m) The documents relating to a collective negotiation described under this 06 section that are in the possession of the Department of Law are confidential and not 07 open to public inspection. 08 (n) Nothing in this section shall be construed as exempting from the 09 application of the antitrust laws the conduct of providers or negotiations or agreements 10 between providers and a health benefit plan if the purpose or effect of the conduct, 11 negotiations, or agreements would be, directly or indirectly, to exclude, limit the 12 participation or reimbursement of, or otherwise limit the scope of services to be 13 provided by separate or competing classes of providers who practice or seek to 14 practice within the scope of the occupational licenses held by the providers. 15 (o) A contract entered into under this section must be consistent with 16 AS 21.36.090(d). 17 (p) Nothing in this section shall be construed to make any conduct by 18 providers unlawful if the conduct was lawful before the effective date of this Act. 19 (q) In this section, 20 (1) "covered lives" means the total number of individuals who are 21 entitled to benefits under the health benefit plan; 22 (2) "geographic service area" means the geographic area of the 23 physicians seeking to jointly negotiate; 24 (3) "provider" has the meaning given in AS 21.36.090(d). 25 Sec. 23.50.030. Fee for registration of authorized third parties. (a) The 26 attorney general shall adopt regulations that establish the amount and manner of 27 payment of a registration fee for authorized third parties. The attorney general shall 28 establish the fee level so that the total amount of fees collected from authorized third 29 parties approximately equals the actual regulatory costs for the oversight of joint 30 negotiations between physicians and health benefit plans. The attorney general shall 31 annually review the fee level to determine whether the regulatory costs are
01 approximately equal to fee collections. If the review indicates that the fee collections 02 and regulatory costs are not approximately equal, the attorney general shall calculate 03 fee adjustments and adopt regulations under this subsection to implement the 04 adjustments. In January of each year, the attorney general shall report on the fee level 05 and revisions for the previous year under this subsection to the office of management 06 and budget. 07 (b) In this section, "regulatory costs" means costs of the Department of Law 08 that are attributable to oversight of joint negotiations between physicians and health 09 benefit plans. 10 Sec. 23.50.040. Regulations. The attorney general may adopt regulations 11 necessary to implement this chapter. 12 Sec. 23.50.099. Definitions. In this chapter, 13 (1) "authorized third party" means a person authorized by the 14 physicians to negotiate on their behalf with a health benefit plan under this chapter; 15 (2) "health benefit plan" has the meaning given in AS 21.54.500. 16 * Sec. 2. AS 45.50.572 is amended by adding a new subsection to read: 17 (k) AS 45.50.562 - 45.50.596 do not forbid the existence or operation of 18 organizations of physicians acting in accordance with AS 23.50, or forbid or restrain 19 members of those organizations from lawfully carrying out the legitimate objectives of 20 them; nor are these organizations or members illegal combinations or conspiracies in 21 restraint of trade under the provisions of AS 45.50.562 - 45.50.596. 22 * Sec. 3. AS 23.50.010, 23.50.020, 23.50.030, 23.50.040, 23.50.099; and AS 45.50.572(k) 23 are repealed July 1, 2006.