1Amending Title 40 (Insurance) of the Pennsylvania Consolidated
2Statutes, in hospital plan corporations, further providing
3for rates and contracts; providing for health systems, for
4maintenance of contractual obligations with health insurance
5carriers and for continuity of care; and imposing duties on
6the Insurance Department and Insurance Commissioner.

7The General Assembly of the Commonwealth of Pennsylvania
8hereby enacts as follows:

9Section 1. Section 6124(c) of Title 40 of the Pennsylvania
10Consolidated Statutes is amended to read:

11§ 6124. Rates and contracts.

12* * *

13(c) [Maintenance of contractual relationships.--

14(1) Declaration of necessity.--It is hereby found that
15many subscribers to nonprofit hospital plans make payments
16over long periods of time prior to becoming entitled to
17benefits under such a plan and that it is important in the
18public interest that the reasonable expectations of such
19subscribers as to coverage should be fulfilled if possible.

1It is hereby declared to be essential for the maintenance of
2the health of the residents of this Commonwealth that
3subscribers to nonprofit hospital plans be assured receipt of
4the hospitalization and related health benefits prepaid by
5them through payment of the rates approved under this chapter
6and charged by a hospital plan corporation and that to
7accomplish this essential purpose termination of contracts
8between hospital plan corporations and hospitals entered into
9pursuant to section 6121 (relating to eligible hospitals) and
10this section be subject to prior approval by the department
11as provided in this subsection.

12(2) Notification period.--No contract between a hospital
13plan corporation and any hospital providing for the rendering
14of hospitalization to subscribers to the hospital plan shall
15be terminated unless the party seeking such termination gives
1690 days advance written notice to the other party to the
17contract and to the department of the proposed termination.

18(3) Hearing period.--Whenever a termination subject to
19paragraph (2) involves contracts with hospitals having more
20than 5% of the beds in the area served by a hospital plan
21corporation, the department shall hold public hearings on at
22least 15 days notice for the purpose of investigating the
23reasons for the termination. Pending completion of said
24investigation by the department, termination of the hospital
25contracts shall be suspended for a period not to exceed six
26months from the expiration of the period provided for in
27paragraph (2). All terms and conditions of the contract
28between the hospital plan corporation and the hospital or
29hospitals shall continue in full force and effect during said
30investigation by the department. Based on the record made

1during the hearings, the department shall make specific
2findings as to the facts of the dispute and shall either
3approve termination of the contracts or recommend such terms
4for continuation of the contract as are in the public
5interest, based upon the facts, the right of a hospital to be
6paid its costs for hospitalization services to subscribers
7and the need of subscribers for efficient, reliable
8hospitalization at a reasonable cost.

9(4) Negotiation period.--If the department recommends
10terms for continuation of the contract, the hospital plan
11corporation and the hospitals involved shall renew their
12negotiations in order to determine whether a new agreement
13can be reached substantially on the basis of the terms for
14continuation recommended by the department and pending such
15negotiations, the termination of the hospital contracts shall
16be suspended for a further period not to exceed 90 days from
17the date of the decision of the department. If the hospital
18plan corporation and the hospitals are unable to consummate a
19new contract within said further period of 90 days, they
20shall so advise the department. The department shall in that
21event approve termination of the contracts effective at the
22end of a further period of 30 days and shall prescribe the
23form and extent of notice which the hospital plan corporation
24shall use in advising its subscribers that hospitalization in
25the hospitals involved is not covered by a contract between
26the hospital plan corporation and such hospitals.

27(5) Retroactivity.--Upon the settlement of any dispute
28between a hospital plan corporation and any hospital pursuant
29to paragraphs (2) and (4), the terms and conditions of any
30new contract shall be retroactive to the date of expiration

1of the contract previously in effect between the parties.]

2(Reserved).

3Section 2. Title 40 is amended by adding an article to read:

4ARTICLE C

5(RESERVED)

6CHAPTER 71

7HEALTH SYSTEMS

8Subchapter

9A. Preliminary Provisions

10B. Regulation Generally

11Subchapter A

12Preliminary Provisions

13Sec.

147101. Definitions.

15§ 7101. Definitions.

16The following words and phrases when used in this article
17shall have the meanings given to them in this section unless the
18context clearly indicates otherwise:

19"Health care provider." A person, corporation, facility or
20institution licensed or otherwise authorized by the Commonwealth
21to provide health care services, including, but not limited to,
22a physician, coordinated care organization, hospital, health
23care facility, dentist, nurse, optometrist, podiatrist, physical
24therapist, psychologist, chiropractor or pharmacist and an
25officer, employee or agent of the person acting in the course
26and scope of employment or agency related to health care
27services.

28"Health care service." The term includes:

29(1) hospitalization; and

30(2) care or treatment rendered by an individual who is

1employed by a hospital or a physician practice owned by a
2hospital.

3"Health insurance carrier." An entity that offers or issues
4a health insurance plan and is subject to any of the following:

5(1) the act of May 17, 1921 (P.L.682, No.284), known as
6The Insurance Company Law of 1921;

7(2) the act of December 29, 1972 (P.L.1701, No.364),
8known as the Health Maintenance Organization Act; or

9(3) Chapter 61 (relating to hospital plan corporations)
10or Chapter 63 (relating to professional health services plan
11corporations).

12"Health insurance plan." A policy, contract, certificate or
13agreement offered or issued by a carrier to provide, deliver,
14arrange for, pay for or reimburse the costs of health care
15services. The term does not include:

16(1) coverage only for accident or disability income
17insurance or a combination thereof;

18(2) coverage issued as a supplement to liability
19insurance;

20(3) liability insurance, including general liability
21insurance and automobile liability insurance;

22(4) workers' compensation or similar insurance;

23(5) automobile medical payment insurance;

24(6) credit-only insurance;

25(7) coverage for on-site medical clinics; or

26(8) other similar insurance coverage specified in
27Federal regulations issued under the Health Insurance
28Portability and Accountability Act of 1996 (Public Law 104-
29191, 110 Stat. 1936) under which benefits for medical care
30are secondary or incidental to other insurance benefits.

1"Health system." A network of health care providers that by
2ownership, contract or agreement is controlled by a common
3entity and consists of:

4(1) at least one hospital; and

5(2) at least one other health care provider.

6"Hospital." An entity that is:

7(1) licensed as a hospital under the act of July 19,
81979 (P.L.130, No.48), known as the Health Care Facilities
9Act; and

10(2) either of the following:

11(i) claiming tax exempt status under the act of
12November 26, 1997 (P.L.508, No.55), known as the
13Institutions of Purely Public Charity Act; or

14(ii) has received funds under the act of February 9,
151999 (P.L.1, No.1), known as the Capital Facilities Debt
16Enabling Act.

17Subchapter B

18Regulation Generally

19Sec.

207111. Maintenance of contractual relationships with health
21insurance carriers.

227112. Continuity of care.

23§ 7111. Maintenance of contractual relationships with health
24insurance carriers.

25(a) Findings.--It is found that:

26(1) many subscribers to health insurance plans make
27payments over long periods of time prior to becoming entitled
28to benefits under the plans; and

29(2) it is in the public interest that the reasonable
30expectations of the subscribers as to coverage should be

1fulfilled if possible.

2(b) Declarations.--It is declared to be essential for the
3maintenance of the health of the residents of this Commonwealth
4that:

5(1) subscribers to a health insurance plan be assured
6receipt of health care services prepaid by them through
7payment of premiums charged by hospital insurers; and

8(2) to accomplish this essential purpose termination or
9expiration without renewal of a contract between a health
10insurance carrier and health system be subject to prior
11approval by the department as provided in this section.

12(c) Notification period.--A contract between a health
13insurance carrier and health system providing for the rendering
14of a health care service to a subscriber to the health insurance
15plan may not be terminated or left to expire by the health
16system unless the health system seeking the termination or
17expiration gives 90 days' advance written notice to:

18(1) the health insurance carrier that is party to the
19contract; and

20(2) the department of the proposed termination or
21expiration.

22(d) Penalty.--The failure by a health system to provide the
23written notice under subsection (c) to a health insurance
24carrier or the department shall result in the automatic renewal
25of the contract on the existing terms and conditions in force
26under the terms of the contract for a period of one year
27following the proposed termination date or the date of
28expiration, unless the health insurance carrier declines to be a
29party to the renewed contract.

30(e) Investigation period.--Whenever a termination or

1expiration subject to subsection (c) involves a contract with a
2health system having more than 5% of the beds in an area served
3by a health insurance carrier, the department, in conjunction
4with the Department of Health, shall hold a public hearing after
5providing at least 15 days' notice to each party to the
6contract. The hearing shall investigate the reasons for the
7termination or the refusal to renew and the effects the
8termination or refusal to renew would cause on the public health
9of the area served by the health insurance carrier.

10(f) Suspension.--The termination or expiration of the health
11care service contracts shall be suspended for a period not to
12exceed six months from the termination or expiration of the
13period provided under subsection (c), pending completion of the
14investigation by the department.

15(g) Contracts.--The terms and conditions of a contract
16between the health insurance carrier and health system shall
17continue in full force and effect during the investigation by
18the department.

19(h) Duties of department.--Based on the record made during
20the hearings, the department shall make specific findings as to
21the facts of the dispute and shall approve the termination of
22the contract, permit the contract to expire or recommend the
23terms for continuation of the contract as are in the public
24interest, based upon:

25(1) the facts;

26(2) the right of a health system to be paid its costs
27for health care services to subscribers; and

28(3) the need of subscribers for efficient, reliable
29health care services at a reasonable cost.

30(i) Negotiation period.--The following apply:

1(1) If the department recommends terms for continuation
2of the contract, the parties to the contract shall renew
3negotiations in order to determine whether a new agreement
4may be reached substantially on the basis of the terms for
5continuation recommended by the department.

6(2) If a new agreement is reached, the terms and
7conditions of the new contract shall be retroactive to the
8date of the termination or expiration of the contract
9previously in effect between the parties. If an agreement is
10not reached after a period of 30 days, the parties shall
11notify the Insurance Commissioner. Within 15 days of
12receiving the notification, the Insurance Commissioner shall
13issue an order requiring the parties to submit to mediation
14conducted in accordance with subsection (j).

15(3) Termination or expiration of the health care service
16contracts is suspended pending completion of the negotiation
17period under this subsection. The terms and conditions of the
18contract between the health insurance carrier and health
19system shall continue in full force and effect during the
20negotiation period.

21(j) Mediation period.--The following apply:

22(1) Within 15 days of receipt of the notice under
23subsection (i), the Insurance Commissioner shall appoint an
24independent mediator who is familiar with health care
25delivery, provider reimbursement and health insurance to
26conduct mediation between the parties to the contract. The
27department shall provide staff and administrative support to
28the mediator as necessary for the mediator to carry out the
29mediation responsibilities under this subsection. The
30mediator may engage experts to assist the mediator. The cost

1of an expert engaged by the mediator shall be paid equally by
2the parties to the mediation. The mediator may charge the
3costs to either of the parties at the conclusion of the
4mediation, if the mediator determines the charging of costs
5is appropriate. The mediation shall not be subject to the act
6of February 14, 2008 (P.L.6, No.3), known as the Right-to-
7Know Law, or to 65 Pa.C.S. Ch. 7 (relating to open meetings).

8(2) If a new agreement is reached, the terms and
9conditions of the new contract shall be retroactive to the
10date of the termination or expiration of the contract
11previously in effect between the parties. If, after a period
12of 30 days, an agreement is not reached, the parties shall
13notify the Secretary of Health and the Insurance Commissioner
14that an agreement has not been reached by the parties. Upon
15receiving the notice, if the secretary determines that
16termination of the contract or permitting the contract to
17expire would substantially disrupt the delivery of health
18care services in the area served by the health insurance
19carrier and that the continuation of the contract is in the
20public interest, the secretary shall notify the Insurance
21Commissioner and request the department implement binding
22arbitration under subsection (k).

23(3) Termination or expiration of the health care service
24contracts is suspended pending completion of the mediation
25period under this subsection. The terms and conditions of the
26contract between the health insurance carrier and health
27system shall continue in full force and effect during the
28mediation period.

29(k) Fact finding period.--The following apply:

30(1) Within 15 days of receipt of the notice from the

1Secretary of Health under subsection (j), the Insurance
2Commissioner shall issue an order requiring the parties
3submit to binding arbitration conducted by the department.
4The order shall appoint the mediator under subsection (j) as
5the finder of fact.

6(2) The finder of fact may:

7(i) direct the production of information or data not
8otherwise privileged or made confidential by law from a
9party to the arbitration.

10(ii) establish rules of confidentiality, exchange
11and verification of information and other procedures to
12ensure fairness of the process for the parties and to
13protect appropriate trade secret or confidential business
14information.

15(3) The finding of fact shall not be subject to the
16Right-to-Know Law or to 65 Pa.C.S. Ch. 7.

17(4) A hearing shall commence within 20 days after
18appointment of the finder of fact and may not exceed two days
19of presentation and testimony by each party.

20(5) The finder of fact shall report the findings to the
21Insurance Commissioner within five days of the conclusion of
22the presentations and testimony to the finder of fact.

23(6) With respect to a presentation and testimony to the
24finder of fact, a party shall bear its own costs.

25(l) Arbitration period.--The following apply:

26(1) Within 15 days of receipt of the report under
27subsection (k), the Insurance Commissioner shall issue an
28order imposing contract terms on the health insurance carrier
29and health system or extending a contract existing between
30the health insurance carrier and health system for a period

1no longer than 18 months. The order shall be a determination
2of public policy and public interest and shall not be
3considered an adjudication under 2 Pa.C.S. Ch. 5 Subch. A
4(relating to practice and procedure of Commonwealth agencies)
5and Ch. 7 Subch. A (relating to judicial review of
6Commonwealth agency action) and shall not be appealable to a
7court of law. In reaching the decision, the Insurance
8Commissioner shall consider the following:

9(i) The terms of any current health care service
10contract between the parties.

11(ii) Historic contract reimbursement rates for the
12geographic area served by any party to the arbitration,
13including weighted average rates of health care providers
14in the area for all payers.

15(iii) Inflation rates.

16(iv) Average reimbursement rates for similarly
17situated health care providers.

18(v) Costs incurred by health care providers in the
19provision of health care services to patients.

20(vi) Actuarial impacts of any proposed contract or
21reimbursement rate on insurance rates.

22(vii) Whether a health care provider is placed at
23risk of providing additional care without additional
24compensation.

25(viii) Expected patient volume under the contract.

26(ix) Alternative health care providers'
27accessibility to individuals.

28(x) Any other factors as the Insurance Commissioner
29deems appropriate.

30(2) Notwithstanding the provisions of paragraph (1), the

1Insurance Commissioner's order may not impose contract terms
2or conditions on the health insurance carrier and health
3system that are more favorable to the health insurance
4carrier than the contract terms or conditions the health
5system negotiated with other health insurance carriers.

6(m) Retroactivity.--Upon the settlement of a dispute between
7a health insurance carrier and health system under this section,
8the terms and conditions of the new health care service contract
9shall be retroactive to the date of expiration or termination of
10the contract previously in effect between the parties. The
11provisions of this subsection may not impair or supersede rights
12that accrue:

13(1) to a person who is not a party to the new contract;
14and

15(2) after the expiration or termination of the previous
16contract and before the new contract takes effect.

17§ 7112. Continuity of care.

18A health system or health care provider employed by a health
19system may not refuse to continue treating an existing patient
20based solely on the health insurance plan of the patient.

21Section 3. The addition of 40 Pa.C.S. § 7111 shall apply to
22a termination or expiration, occurring on or after June 1, 2013,
23of a contract between a health system and health insurance
24carrier.

25Section 4. This act shall take effect immediately.