HCS CSSB 37(JUD) am H: "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 HOUSE CS FOR CS FOR SENATE BILL NO. 37(JUD) am H 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 when 08 the imbalances in bargaining capacity described in this section exist. 09 Sec. 23.50.020. Collective action by competing physicians. (a) Competing 10 physicians may meet and communicate in order to collectively negotiate with a health 11 benefit plan concerning any of the contract terms and conditions described in this 12 subsection, but may not negotiate the exclusion of providers who are non-physicians 13 from direct reimbursement by a health benefit plan, and may not negotiate the setting 14 in which providers who are non-physicians deliver services. Competing physicians 15 may not engage in a boycott related to these terms and conditions. Competing 16 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) An authorized third party that intends to negotiate with a health benefit 31 plan the items identified under (a) of this section shall provide the attorney general
01 with written notice of the intended negotiations before the negotiations begin. 02 (c) In exercising the collective rights granted by (a) of this section, 03 (1) physicians may communicate with each other with respect to the 04 contractual terms and conditions to be negotiated with a health benefit plan; 05 (2) physicians may communicate with an authorized third party 06 regarding the terms and conditions of contracts allowed under this section; 07 (3) the authorized third party is the sole party authorized to negotiate 08 with a health benefit plan on behalf of a defined group of physicians; 09 (4) physicians can be bound by the terms and conditions negotiated by 10 the authorized third party that represents their interests; 11 (5) a health benefit plan communicating or negotiating with the 12 authorized third party may contract with, or offer different contract terms and 13 conditions to, individual competing physicians; 14 (6) an authorized third party may not represent more than 30 percent of 15 the market of practicing physicians for the provision of services in the geographic 16 service area or proposed geographic service area, if the health benefit plan has less 17 than a five percent market share as determined by the number of covered lives as 18 reported by the director of insurance for the most recently completed calendar year or 19 by the actual number of consumers of prepaid comprehensive health services; in this 20 paragraph, "covered lives" means the total number of individuals who are entitled to 21 benefits under the health benefit plan; 22 (7) the attorney general may limit the percentage of practicing 23 physicians represented by an authorized third party; however, the limitation may not 24 be less than 30 percent of the market of practicing physicians in the geographic service 25 area or proposed geographic service area; when determining whether to impose a 26 limitation described under this paragraph, the attorney general shall consider the 27 provisions described under (f) - (h) of this section; this paragraph does not apply if the 28 market of practicing physicians in the geographic service area or proposed geographic 29 service area consists of 40 or fewer individuals; and 30 (8) the authorized third party shall comply with the provisions of (d) of 31 this section.
01 (d) A person acting or proposing to act as an authorized third party under this 02 section shall, 03 (1) before engaging in collective negotiations with a health benefit 04 plan, 05 (A) file with the attorney general the information that identifies 06 the authorized third party, the physicians represented by the third party, the 07 authorized third party's plan of operation, and the authorized third party's 08 procedures to ensure compliance with this section; 09 (B) furnish to the attorney general, for the attorney general's 10 approval, a brief report that identifies the proposed subject matter of the 11 negotiations or discussions with a health benefit plan and that contains an 12 explanation of the efficiencies or benefits that are expected to be achieved 13 through the collective negotiations; the attorney general shall review whether 14 the group of physicians represented by the authorized third party is appropriate 15 to represent the interests involved in the negotiations; the attorney general may 16 not approve the report if the group of physicians is not appropriate to represent 17 the interests involved in the negotiations or if the proposed negotiations exceed 18 the authority granted in this chapter and, if the group is not appropriate or the 19 negotiations exceed the granted authority, shall enter an order prohibiting the 20 collective negotiations from proceeding; the authorized third party shall 21 provide supplemental information to the attorney general as new information 22 becomes available that indicates that the subject matter of negotiations with the 23 health benefit plan has changed or will change; 24 (2) within 14 days after receiving a health benefit plan's decision to 25 decline to negotiate or to terminate negotiations, or within 14 days after requesting 26 negotiations with a health benefit plan that fails to respond within that time, report to 27 the attorney general that negotiations have ended or have been declined; 28 (3) during the negotiation process, provide the attorney general upon 29 the attorney general's request with a copy of all written communications that are 30 between physicians and the health benefit plan, that are relevant to the negotiations, 31 and that are in the possession of the authorized third party;
01 (4) before reporting the results of negotiations with a health benefit 02 plan and before giving physicians an evaluation of any offer made by a health benefit 03 plan, provide to the attorney general, for the attorney general's approval, a copy of all 04 communications to be made to physicians related to the negotiations, discussions, and 05 health benefit plan offers. 06 (e) The attorney general shall either approve or disapprove the contract that 07 was the subject of the collective negotiation within 60 days after receiving the reports 08 required under (d) of this section. If the contract is disapproved, the attorney general 09 shall furnish a written explanation of any deficiencies along with a statement of 10 specific remedial measures that would correct any identified deficiencies. An 11 authorized third party who fails to obtain the attorney general's approval is considered 12 to be acting outside the authority of this section. 13 (f) The attorney general shall approve a collective negotiation contract if 14 (1) the competitive and other benefits of the contract terms outweigh 15 any anticompetitive effects; and 16 (2) the contract terms are consistent with other applicable laws and 17 regulations. 18 (g) The competitive and other benefits of joint negotiations or negotiated 19 provider contract terms must include 20 (1) restoration of the competitive balance in the market for health care 21 services; 22 (2) protections for access to quality patient care; 23 (3) promotion of health care infrastructure and medical advancement; 24 or 25 (4) improved communications between health care providers and 26 health care insurers. 27 (h) When weighing the anticompetitive effects of contract terms, the attorney 28 general shall consider whether the terms 29 (1) provide for excessive payments; or 30 (2) contribute to the escalation of the cost of providing health care 31 services.
01 (i) This section does not authorize competing physicians to act in concert in 02 response to a report issued by an authorized third party related to the authorized third 03 party's discussion or negotiations with a health benefit plan. The authorized third 04 party shall advise the physicians of the provisions of this subsection and shall warn 05 them of the potential for legal action against those who violate state or federal anti- 06 trust laws by exceeding the authority granted under this section. 07 (j) A contract allowed under this section may not exceed a term of five years. 08 (k) The documents relating to a collective negotiation described under this 09 section that are in the possession of the Department of Law are confidential and not 10 open to public inspection. 11 (l) Nothing in this section shall be construed as exempting from the 12 application of the antitrust laws the conduct of providers or negotiations or agreements 13 between providers and a health benefit plan if the purpose or effect of the conduct, 14 negotiations, or agreements would be, directly or indirectly, to exclude, limit the 15 participation or reimbursement of, or otherwise limit the scope of services to be 16 provided by separate or competing classes of providers who practice or seek to 17 practice within the scope of the occupational licenses held by the providers. 18 (m) A contract entered into under this section must be consistent with 19 AS 21.36.090(d). 20 (n) Nothing in this section shall be construed to make any conduct by 21 providers unlawful if the conduct was lawful before the effective date of this Act. 22 (o) In this section, 23 (1) "geographic service area" means the geographic area of the 24 physicians seeking to jointly negotiate; 25 (2) "provider" has the meaning given in AS 21.36.090(d). 26 Sec. 23.50.030. Fee for registration of authorized third parties. (a) The 27 attorney general shall adopt regulations that establish the amount and manner of 28 payment of a registration fee for authorized third parties. The attorney general shall 29 establish the fee level so that the total amount of fees collected from authorized third 30 parties approximately equals the actual regulatory costs for the oversight of joint 31 negotiations between physicians and health benefit plans. The attorney general shall
01 annually review the fee level to determine whether the regulatory costs are 02 approximately equal to fee collections. If the review indicates that the fee collections 03 and regulatory costs are not approximately equal, the attorney general shall calculate 04 fee adjustments and adopt regulations under this subsection to implement the 05 adjustments. In January of each year, the attorney general shall report on the fee level 06 and revisions for the previous year under this subsection to the office of management 07 and budget. 08 (b) In this section, "regulatory costs" means costs of the Department of Law 09 that are attributable to oversight of joint negotiations between physicians and health 10 benefit plans. 11 Sec. 23.50.040. Regulations. The attorney general 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) "health benefit plan" means a health care insurer as defined in 17 AS 21.54.500, but does not include a self-insured health benefit plan. 18 * Sec. 2. AS 45.50.572 is amended by adding a new subsection to read: 19 (k) AS 45.50.562 - 45.50.596 do not forbid the existence or operation of 20 organizations of physicians acting in accordance with AS 23.50, or forbid or restrain 21 members of those organizations from lawfully carrying out the legitimate objectives of 22 them; nor are these organizations or members illegal combinations or conspiracies in 23 restraint of trade under the provisions of AS 45.50.562 - 45.50.596.