1Amending the act of July 19, 1979 (P.L.130, No.48), entitled "An
2act relating to health care; prescribing the powers and
3duties of the Department of Health; establishing and
4providing the powers and duties of the State Health
5Coordinating Council, health systems agencies and Health Care
6Policy Board in the Department of Health, and State Health
7Facility Hearing Board in the Department of Justice;
8providing for certification of need of health care providers
9and prescribing penalties," further providing for
10definitions, for licensure and for issuance of license; and
11providing for confidentiality.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. Section 802.1 of the act of July 19, 1979
15(P.L.130, No.48), known as the Health Care Facilities Act, is
16amended by adding definitions to read:

17Section 802.1. Definitions.

18The following words and phrases when used in this chapter
19shall have, unless the context clearly indicates otherwise, the
20meanings given them in this section:

1* * *

2"Default provider agreement." An agreement between a
3hospital that is part of an integrated delivery network and a
4willing health insurance carrier to provide health care
5services, which agreement is imposed upon the parties in the
6event that they fail to enter into a mutually agreeable
7contract.

8* * *

9"Health insurance carrier." An entity licensed in this
10Commonwealth to issue health insurance, subscriber contracts,
11certifications or plans that provide medical or health care
12coverage by a health care facility or licensed health care
13provider that is offered or governed under this act or any of
14the following:

15(1) The act of December 29, 1972 (P.L.1701, No.364),
16known as the "Health Maintenance Organization Act."

17(2) The act of May 18, 1976 (P.L.123, No.54), known as
18the "Individual Accident and Sickness Insurance Minimum
19Standards Act."

20(3) 40 Pa.C.S. Chs. 61 (relating to hospital plan
21corporations) and 63 (relating to professional health
22services plan corporations).

23* * *

24"Integrated delivery network." One or more entities with
25common ownership, operation or control, which include both of
26the following:

27(1) One or more hospitals, one or more physician
28practices and/or one or more health care providers offering
29health care services.

30(2) One or more entities operating as a health insurance

1carrier offering health insurance, administering health
2benefits, operating a health maintenance organization and/or
3offering other health care benefits and coverage to employers
4and/or individuals in this Commonwealth.

5Section 2. Section 806 of the act is amended by adding a
6subsection to read:

7Section 806. Licensure.

8* * *

9(j) Hospitals operating as part of an integrated delivery
10network.--

11(1) In addition to complying with the standards and
12regulations promulgated under this section, hospitals
13operating as part of an integrated delivery network or any
14entity directly or indirectly owned, operated or controlled
15as part of these entities shall contract with any health
16insurance carrier that is willing to enter into a contract.

17(2) When contracting with health insurance carriers,
18hospitals operating as part of an integrated delivery network
19shall be:

20(i) prohibited from using contractual provisions and
21engaging in business practices that impede the
22availability of health care and that restrict access to
23facilities based solely on the type of insurance coverage
24offered by a health insurance carrier;

25(ii) prohibited from incorporating contractual
26provisions that limit or preclude the use of tiered
27networks by health insurance carriers;

28(iii) prohibited from using any portion of the
29reimbursement rate to subsidize a health insurance
30carrier operating as part of the same integrated delivery

1network;

2(iv) prohibited from incorporating a termination
3provision with a health insurance carrier for reasons
4other than a willful breach of contract; and

5(v) permitted to contract for its services at
6reimbursement rates that are based upon sound actuarial
7data.

8(3) Failure of any hospital operating as part of an
9integrated delivery network and a willing health insurance
10carrier to maintain a mutually agreeable contract shall
11result in the parties entering into a default provider
12agreement while they submit to mandatory binding arbitration.
13The default provider agreement shall set forth payment terms,
14while all other contractual terms of the previously executed
15contract shall remain in effect until the arbitration process
16is completed. The arbitrator shall set all terms of the new
17contract.

18(4) Failure of any newly affiliated hospital with an
19existing integrated delivery network or failure of any
20hospital operating as part of a newly formed integrated
21delivery network and a willing health insurance carrier to
22enter into a mutually agreeable contract within 90 days of
23the affiliation or formation shall result in the parties
24submitting to mandatory binding arbitration to establish a
25contract. The arbitrator shall set all terms of the new
26contract.

27(5) A mutually agreeable arbitrator shall be chosen by
28the parties from the American Arbitration Association's
29National Healthcare Panel of arbitrators experienced in
30handling payor-provider disputes.

1(6) All costs associated with the arbitration shall be
2split equally between the parties.

3(7) The arbitrator shall conduct the arbitration
4pursuant to the American Arbitration Association's Healthcare
5Payor Provider Arbitration Rules.

6(8) Contract terms and conditions shall be established
7as follows:

8(i) Each party shall submit best and final contract
9terms to the arbitrator.

10(ii) The arbitrator may request the production of
11documents, data and other information.

12(iii) Payment terms and all other contractual
13provisions shall be set by the arbitrator.

14(9) The default provider agreement shall remain in
15effect until the hospital operating as part of an integrated
16delivery network and a willing health insurance carrier
17complete the arbitration process.

18(10) Payment terms under the default provider agreement
19will be set according to an amount equal to the greatest of
20the following three possible amounts:

21(i) The amount the health insurance carrier
22negotiated with other in-network hospitals for the same
23service.

24(ii) The amount calculated by the same method the
25health insurance carrier uses to determine payments for
26out-of-network services, such as the usual, customary and
27reasonable charge.

28(iii) The amount that would be paid under Medicare
29for the same services.

30(11) Copies of all contracts between hospitals operating

1as part of an integrated delivery network and all health
2insurance carriers shall be provided to the department and
3the Insurance Department.

4Section 3. Section 808(a) of the act, amended December 22,
52011 (P.L.563, No.122), is amended and the section is amended by
6adding subsections to read:

7Section 808. Issuance of license.

8(a) Standards.--The department shall issue a license to a
9health care provider when it is satisfied that the following
10standards have been met:

11(1) that the health care provider is a responsible
12person;

13(2) that the place to be used as a health care facility
14is adequately constructed, equipped, maintained and operated
15to safely and efficiently render the services offered;

16(3) that the health care facility provides safe and
17efficient services which are adequate for the care, treatment
18and comfort of the patients or residents of such facility;

19(4) that there is substantial compliance with the rules
20and regulations adopted by the department pursuant to this
21act;

22(5) that a certificate of need has been issued if one is
23necessary; [and]

24(6) that, in the case of abortion facilities, such
25facility is in compliance with the requirements of 18 Pa.C.S.
26Ch. 32 (relating to abortion) and such regulations
27promulgated thereunder[.]; and

28(7) that, in the case of a hospital operating as part of 
29an integrated delivery network, such facility:

30(i) has contracts with all willing health insurance

1carriers;

2(ii) does not place restrictive covenants in its 
3employment contracts that restrain any health care 
4practitioner from engaging in his lawful profession; and

5(iii) has submitted an attestation statement to the
6department and the Insurance Department certifying that
7no portion of any reimbursement rate with a health
8insurance carrier is subsidizing the health insurance
9carrier operating as part of the same integrated delivery
10network.

11* * *

12(d) Methodology records.--Every hospital submitting an
13attestation statement in accordance with this section must keep
14all books, records, accounts, papers, documents and any or all
15computer or other recordings relating to its methodology for
16developing reimbursement rates for every health insurance
17carrier in such manner and for such time periods as the
18department, in its discretion, may require in order that its
19authorized representatives may readily verify that no portion of
20any reimbursement rate is subsidizing the health insurance
21carrier operating as part of the same integrated delivery
22network.

23(e) Survey.--The department or any of its surveyors may
24conduct a survey under this section of any hospital operating as
25part of an integrated delivery network as often as the
26secretary, in his sole discretion, deems appropriate.

27(f) Survey expenses.--When conducting a survey under this 
28section, the department may retain attorneys, independent 
29actuaries, independent certified public accountants or other 
30professionals and specialists as surveyors. All expenses
 

1incurred in and about the survey of any hospital, including 
2compensation of department or Insurance Department employees 
3assisting in the survey and any other professionals or 
4specialists retained in accordance with this section shall be 
5charged to and paid by the hospital surveyed in such a manner as 
6the secretary shall by regulation provide.

7Section 4. The act is amended by adding a section to read:

8Section 902.2. Confidentiality.

9(a) Received materials.--Any insurance contracts, documents,
10materials or information received by the department or Insurance
11Department from a hospital for the purpose of compliance with
12this act and any regulations developed pursuant to this act
13shall be confidential.

14(b) Access.--The department may use the information under
15section 806 and any regulations developed pursuant to this act
16for the sole purpose of a licensure or corrective action against
17a health care facility.

18(c) Right-to-know requests.--Any insurance contracts,
19documents, materials or information made confidential under this
20act shall not be subject to requests under the act of February
2114, 2008 (P.L.6, No.3), known as the "Right-to-Know Law."

22Section 5. This act shall take effect in 90 days.