AN ACT

 

1Requiring physician practices operating as part of an integrated
2delivery network to meet certain requirements to ensure
3patient access and consumer choice; and imposing powers and
4duties on the Insurance Department.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1. Short title.

8This act shall be known and may be cited as the Patient
9Access and Consumer Choice Act.

10Section 2. Legislative findings.

11 The General Assembly finds and declares as follows:

12(1) Beginning in the 1990s, a new trend in hospital
13mergers and consolidations began and public sources currently
14estimate that there have been over 300 such hospital mergers
15since 2007.

16(2) These hospitals consolidate and merge by either
17affiliating with other independent hospitals or purchasing
18independent physician practices.

19(3) Hospital and physician consolidation has the

1potential to increase the cost of health care to consumers by
2limiting competition and thereby giving hospitals and
3physician practices greater negotiating strength resulting in
4higher prices for patients and little incentive to improve
5the quality of care delivered.

6(4) Research conducted by government agencies, academics
7and others conclude that increasing provider consolidation
8has the potential to increase health care costs.

9(5) The Commonwealth has a duty to protect consumer
10interests.

11(6) Hospitals and physician practices that also operate
12as an integrated delivery network are able to exert
13additional market dominance as they can set rates for both
14payment and reimbursement.

15(7) To ensure that physician practices operating as part
16of an integrated delivery network are not permitted to use
17their market dominance to exert undue pressure on health
18insurance providers or to restrict a patient's access,
19mandatory contracting requirements must be imposed requiring
20that all physician practices operating as part of an
21integrated delivery network contract with any willing health
22insurance provider.

23Section 3.  Definitions.

24"Default provider agreement." An agreement between a
25hospital-owned physician practice that is part of an integrated
26delivery network and a willing health insurance carrier to
27provide health care services, which agreement is imposed upon
28the parties in the event that they fail to enter into a mutually
29agreeable provider contract within the time frames established
30by this act.

1"Department." The Insurance Department of the Commonwealth.

2"Health care services." Any medical-surgical, hospital,
3facility or ancillary service provided to an individual.

4"Health insurance carrier." An entity licensed in this
5Commonwealth to issue health insurance, subscriber contracts,
6certifications or plans that provide medical or health care
7coverage by a health care facility or licensed health care
8provider that is offered or governed under the act of May 17,
91921 (P.L.682, No.284), known as The Insurance Company Law of
101921, including section 630 and Article XXIV thereof, or any of
11the following:

12(1) The act of December 29, 1972 (P.L.1701, No.364),
13known as the Health Maintenance Organization Act.

14(2) The act of May 18, 1976 (P.L.123, No.54), known as
15the Individual Accident and Sickness Insurance Minimum
16Standards Act.

17(3) 40 Pa.C.S. Chs. 61 (relating to hospital plan
18corporations) and 63 (relating to professional health
19services plan corporations).

20"Hospital-owned physician practice."  A physician practice
21that meets both of the following:

22(1) Provides health care services or other professional
23medical services to an individual.

24(2) Is any of the following:

25(i) Owned or operated by a hospital.

26(ii) Under joint control of a hospital.

27(iii) A subsidiary of a hospital.

28"Integrated delivery network." One or more entities with
29common ownership, operation or control, which include both of
30the following:

1(1) One or more hospitals, one or more physician
2practices and/or one or more health care providers offering
3health care services.

4(2) One or more entities operating as a health insurance
5carrier offering health insurance, administering health
6benefits, operating a health maintenance organization and/or
7offering other health care benefits and coverage to employers
8and/or individuals in this Commonwealth.

9"Provider contract." A written agreement meeting both of the
10following:

11(1) Is for the payment or reimbursement of health care
12services provided to any individual by a hospital-owned
13physician practice that is part of an integrated delivery
14network or any other entity directly or indirectly owned,
15operated or controlled by or otherwise affiliated with the
16integrated delivery network.

17(2) Is between both of the following:

18(i) A hospital-owned physician practice that is part
19of an integrated delivery network or any entity directly
20or indirectly owned, operated or controlled by or
21otherwise affiliated with an integrated delivery network.

22(ii) Any health insurance carrier.

23Section 4. Responsibilities.

24(a) General rule.--A hospital-owned physician practice that
25is part of an integrated delivery network shall comply with the
26following responsibilities:

27(1) Assure availability and accessibility of adequate
28health care services to members of a health insurance carrier
29which allows access to quality care and continuity of health
30care services.

1(2) Not engage in either of the following:

2(i) Place restrictive covenants in its employment
3contracts that restrain any individual from engaging in
4the individual's lawful profession.

5(ii) Limit or restrict a consumer's access to care
6or limit or restrict a consumer's access to continuity of
7care solely on the basis of the consumer's health
8insurance carrier.

9(3) Enter into a provider contract with any health
10insurance carrier for health care services.

11(b) Effect of failure to maintain or enter into a mutually
12agreeable provider contract.--

13(1) Failure of any hospital-owned physician practice
14that is part of an integrated delivery network and the
15willing health insurance carrier to maintain a mutually
16agreeable provider contract shall result in the parties
17entering into a default provider agreement for health care
18services while they submit to mandatory binding arbitration.
19The default provider agreement shall set forth payment terms,
20while all other contractual terms of the previously executed
21contract shall remain in effect until the arbitration process
22is completed. The arbitrator shall establish all terms of the
23new provider contract.

24(2) Failure of any newly affiliated hospital-owned
25physician practice that is part of an existing integrated
26delivery network or the failure of any hospital-owned
27physician practice that is part of newly formed integrated
28delivery network and a willing health insurance carrier to
29enter into a mutually agreeable provider contract within 90
30days of affiliation or formation shall result in the parties

1entering into immediate mandatory binding arbitration. The
2arbitrator shall establish all terms of the new provider
3contract.

4(c) Arbitration.--The following shall apply to arbitration
5required under subsection (b)(2):

6(1) A mutually agreeable arbitrator shall be chosen by
7the parties from the American Arbitration Association's
8National Healthcare Panel of arbitrators experienced in
9handling payor-provider disputes.

10(2) All costs associated with the arbitration shall be
11split equally between the parties.

12(3) The arbitrator shall conduct the arbitration
13pursuant to the American Arbitration Association's Healthcare
14Payor Provider Arbitration Rules.

15(4) Contract terms and conditions shall be established
16as follows:

17(i) Each party shall submit best and final contract
18terms to the arbitrator.

19(ii) The arbitrator may request the production of
20documents, data and other information.

21(iii) Payment terms and all other contractual
22provisions shall be established by the arbitrator.

23(d) Term of default provider agreement.--The default
24provider agreement shall remain in effect until the arbitration
25process between the hospital-owned physician practice that is
26part of an integrated delivery network and a willing health
27insurance carrier is completed.

28(e) Payment under the default provider agreement.--The
29reimbursement rate that a health insurance carrier is required
30to pay shall be an amount equal to the greatest of the following

1possible amounts:

2(1) The amount negotiated with in-network providers for
3the same services.

4(2) The amount calculated by the same method the health
5insurance carrier generally uses to determine payments for
6out-of-network services, such as the usual, customary and
7reasonable charge.

8(3) The amount that would be paid under Medicare for the
9same services.

10(f) Prohibition.--A hospital-owned physician practice is
11prohibited from incorporating a termination provision within a
12provider contract with a health insurance carrier that allows
13for termination for anything other than willful breach.

14(g) Copies of contracts.--Copies of all provider contracts
15between a hospital-owned physician practice that is part of an
16integrated delivery network and any health insurance carrier
17shall be provided to the department.

18Section 5.  Confidentiality.

19Any provider contracts, documents, materials or information
20received by the department from a hospital-owned physician
21practice for the purpose of compliance with this act and any
22regulations developed under this act shall be confidential,
23subject to the following:

24(1) The department may use the information obtained
25pursuant to the provisions of this act for the sole purpose
26of compliance with this act.

27(2) Any provider contracts, documents, materials or
28information made confidential under this act shall not be
29subject to requests under the act of February 14, 2008
30(P.L.6, No.3), known as the Right-to-Know Law.

1Section 6.  Enforcement.

2(a) General rule.--The department shall ensure compliance
3with this act and shall investigate potential violations of this
4act based upon information received from health insurance
5carriers, hospital-owned physician practices, enrollees and
6other sources.

7(b) Regulations.--The department shall promulgate such
8regulations as may be necessary to carry out the provisions of
9this act.

10Section 7.  Civil penalties.

11The department may impose a civil penalty of not more than
12$25,000 per day, not to exceed $1,000,000 per calendar year, on
13a hospital-owned physician practice that is part of an
14integrated delivery network for a violation of this act.

15Section 8.  Effective date.

16This act shall take effect in 90 days.