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