PRINTER'S NO. 2649
No. 1971 Session of 1985
INTRODUCED BY BARBER, MANDERINO, PISTELLA, COHEN, STEWART,
LEVDANSKY, PETRONE, TRELLO, PRESTON, DAWIDA, McHALE, FREEMAN,
WOZNIAK, CARN, JOSEPHS, KUKOVICH AND GRUITZA, DECEMBER 10,
1985
REFERRED TO COMMITTEE ON HEALTH AND WELFARE, DECEMBER 10, 1985
AN ACT
1 Providing for the creation of the Health Care Cost Containment
2 Commission, for its powers and duties, for hospital cost
3 containment through reporting requirements, for the
4 collection and dissemination of data, for hospital efficiency
5 guidelines, utilization controls, public accountability of
6 health care costs, and for health care for the indigent;
7 establishing the Indigent Care Pool and Indigent Care Fund;
8 requiring certain contributions; and making an appropriation.
9 TABLE OF CONTENTS
10 Section 1. Short title.
11 Section 2. Legislative finding and declaration.
12 Section 3. Definitions.
13 Section 4. Pennsylvania Health Care Cost Containment
14 Commission.
15 Section 5. Powers and duties of the commission.
16 Section 6. Data collection.
17 Section 7. Data dissemination and publication.
18 Section 8. Utilization review.
19 Section 9. Health care for the medically indigent.
20 Section 10. Capital cost containment and certificate
1 of need review.
2 Section 11. Augmented preventive services.
3 Section 12. Preferred provider organizations.
4 Section 13. Access to commission data.
5 Section 14. Mandated health benefits.
6 Section 15. Special studies and reports.
7 Section 16. Compliance enforcement.
8 Section 17. Research and demonstration projects.
9 Section 18. Appropriation.
10 Section 19. Effective date.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Short title.
14 This act shall be known and may be cited as the Health Care
15 Cost Reform Act.
16 Section 2. Legislative finding and declaration.
17 The General Assembly finds that there exists in this
18 Commonwealth a major crisis because of the continuing escalation
19 of costs for health care services. Because of the continuing
20 escalation of costs, an increasingly large number of
21 Pennsylvania citizens have no, or severely limited, access to
22 appropriate and timely health care. Increasing costs are also
23 undermining the quality of health care services currently being
24 provided. Further, the continuing escalation is negatively
25 affecting the economy of this Commonwealth, is restricting new
26 economic growth and is impeding the creation of new job
27 opportunities in this Commonwealth.
28 The continuing escalation of health care costs is
29 attributable to a number of interrelated causes, including:
30 (1) Inefficiency in the present configuration of health
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1 care service systems and in their operation.
2 (2) The present system of health care cost payments by
3 third parties.
4 (3) The increasing burden of indigent care which
5 encourages cost shifting.
6 (4) The absence of a concentrated and continuous effort
7 in all segments of the health care industry to contain health
8 care costs.
9 Therefore, it is hereby declared to be the policy of the
10 Commonwealth of Pennsylvania to promote health care cost
11 containment by creating an independent autonomous commission to
12 be known as the Health Care Cost Containment Commission.
13 It is the purpose of this legislation to promote the public
14 interest by encouraging the development of competitive health
15 care services, in which health care costs are contained and to
16 assure that all citizens have reasonable access to quality
17 health care.
18 It is further the intent of this act to facilitate the
19 continuing provision of quality, cost-effective health services
20 throughout the Commonwealth by providing data and information to
21 the purchasers and consumers of health care on both cost and
22 quality of health care services, and to assure access to health
23 care services by the establishment of an Indigent Care Fund.
24 Section 3. Definitions.
25 The following words and phrases when used in this act shall
26 have the meanings given to them in this section unless the
27 context clearly indicates otherwise:
28 "Ambulatory surgical facility." A facility licensed in this
29 Commonwealth, not part of a hospital, which provides surgical
30 treatment to patients not requiring hospitalization. This term
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1 does not include the offices of private physicians or dentists,
2 whether for individual or group practices.
3 "Charge" or "rate." The amount to be billed by a hospital
4 for specific goods or services provided to a patient.
5 "Commission." The Health Care Cost Containment Commission.
6 "Covered services." Any health care services or procedures
7 connected with episodes of illness that require either inpatient
8 hospital care or major ambulatory surgery, including any initial
9 and followup outpatient services associated with the episode of
10 illness before, during or after inpatient hospital care or major
11 ambulatory surgical procedures. The term does not include
12 ambulatory or routine outpatient services connected with
13 episodes of illness that do not require hospitalization or major
14 ambulatory surgery.
15 "Data source." A hospital; ambulatory surgical facility;
16 physician; health maintenance organization as defined in the act
17 of December 29, 1972 (P.L.1701, No.364), known as the Health
18 Maintenance Organization Act; hospital, medical or health
19 service plan with a certificate of authority issued by the
20 Insurance Department, including, but not limited to, hospital
21 plan corporations as defined in 40 Pa.C.S. Ch. 61, and
22 professional health services plan corporations as defined in 40
23 Pa.C.S. Ch. 63; commercial insurer with a certificate of
24 authority issued by the Insurance Department providing health or
25 accident insurance; self-insured employer providing health or
26 accident coverage or benefits for employees employed in the
27 Commonwealth; administrator of a self-insured or partially self-
28 insured health or accident plan providing covered services in
29 the Commonwealth; any health and welfare fund that provides
30 health or accident benefits or insurance pertaining to covered
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1 service in the Commonwealth; the Department of Public Welfare
2 and any other payor for covered services in the Commonwealth
3 other than individual.
4 "Health care facility." A general or special hospital,
5 including tuberculosis and psychiatric hospitals, inpatient and
6 outpatient rehabilitation facilities, skilled nursing
7 facilities, kidney disease treatment centers, including
8 freestanding hemodialysis units, intermediate care facilities
9 and ambulatory surgical facilities, imaging centers, diagnostic
10 centers, freestanding emergency rooms, surgical centers,
11 ambulatory care facilities and hospices, both profit and
12 nonprofit and including those operated by an agency of State or
13 local government.
14 "Health care insurer." Any person, corporation, labor
15 organization or other entity that pays for health care services
16 provided to an individual under a program of health care
17 benefits, including, but not limited to, an insurance company,
18 association or exchange issuing health insurance policies in
19 this Commonwealth; hospital plan corporation, as defined in 40
20 Pa.C.S. Ch. 61; health services plan corporation as defined in
21 40 Pa.C.S. Ch. 63; health maintenance organization; preferred
22 provider organization; fraternal benefit societies; beneficial
23 societies; third-party administrators; and entities self-funding
24 a program of health care benefits.
25 "Health maintenance organization." An organized system which
26 combines the delivery and financing of health care and which
27 provides basic health services to voluntarily enrolled
28 subscribers for a fixed prepaid fee, as defined in the act of
29 December 29, 1972 (P.L.1701, No.364), known as the Health
30 Maintenance Organization Act.
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1 "High variation medical procedure." A medical procedure for
2 which patterns of incidence and frequency vary widely and the
3 patterns of which cannot be explained by differences in the
4 health of the population.
5 "Hospital." An institution, licensed in this Commonwealth,
6 which is a general, tuberculosis, mental, chronic disease or
7 other type of hospital, kidney disease treatment center, or
8 ambulatory surgical facility, whether profit or nonprofit, and
9 including those operated by an agency of State or local
10 government.
11 "Indigent care." The actual costs, as determined by Medicare
12 principles as established in the Federal Medicare Reimbursement
13 Manual (HIN 15), for the provision of free health care, on an
14 inpatient or outpatient basis given to individuals who cannot
15 pay for their care because they are above the medical assistance
16 eligibility levels, and have no health insurance or other
17 financial resources which can cover their health care.
18 "Low-level variation procedure." Any procedure that is not
19 considered a high variation medical procedure.
20 "Major ambulatory surgery." Surgical or medical procedures
21 commonly performed on an inpatient basis in hospitals or
22 ambulatory surgical facilities, which are not of a type commonly
23 performed or which may be safely performed in physicians'
24 offices, and which require a dedicated operating room or suite
25 and generally require a postoperative recovery room or short-
26 term convalescent room.
27 "Medically indigent." The status of a person who is a member
28 of a family unit whose total income is less than two-thirds of
29 the Statewide average weekly wage; whose gross assets, exclusive
30 of the family home and one motor vehicle, do not exceed an
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1 amount equal to two-thirds of the Statewide average annual wage;
2 and who is ineligible for medical assistance under the act of
3 June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code.
4 "Physician." An individual licensed under the laws of this
5 Commonwealth to practice medicine and surgery within the scope
6 of the act of July 20, 1974 (P.L.551, No.190), known as the
7 Medical Practice Act of 1974, or the act of October 5, 1978
8 (P.L.1109, No.261), known as the Osteopathic Medical Practice
9 Act.
10 "Preferred provider organization." Any arrangement between a
11 health care insurer or purchaser and providers of health care
12 services which specifies rates of payment to such providers
13 which differ from their usual and customary charges to the
14 general public and which encourage enrollees to receive health
15 services from such providers.
16 "Provider." A hospital, an ambulatory surgical facility, a
17 medical clinic, a freestanding medical treatment facility, such
18 as a birthing center, emergency facility, dialysis unit, imaging
19 facility or a physician.
20 "Purchaser." All payors for covered services other than
21 individuals.
22 "Raw cost data." Any data collected by the commission that
23 reflects actual charges by providers, actual payment accepted by
24 providers, or discloses discounts or differentials between
25 payments accepted by providers and their billed charges.
26 "Statewide average weekly wage." That amount determined
27 annually by the Department of Labor and Industry under the act
28 of December 5, 1936 (2nd Sp.Sess., 1937 P.L.2897, No.1), known
29 as the Unemployment Compensation Law.
30 Section 4. Pennsylvania Health Care Cost Containment
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1 Commission.
2 (a) Establishment.--The General Assembly hereby establishes
3 an independent and autonomous commission to be known as the
4 Health Care Cost Containment Commission.
5 (b) Composition.--The commission shall consist of 15 voting
6 members, composed of the following:
7 (1) The Secretary of Health.
8 (2) The Secretary of Public Welfare.
9 (3) The Insurance Commissioner.
10 (4) Two representatives of the business community who
11 are purchasers of health care, neither of which is primarily
12 involved in the provision of health care or health insurance,
13 appointed by the Governor from a list of six qualified
14 persons recommended by the Pennsylvania Chamber of Commerce.
15 (5) Two representatives of organized labor who are not
16 primarily involved in providing health care or health care
17 insurance, appointed by the Governor from a list of six
18 qualified persons recommended by the Pennsylvania AFL-CIO.
19 (6) Two representatives of organized consumer
20 organizations which are not primarily involved in the
21 provision of health care or health care insurance; one of
22 which shall be appointed by the Governor from a list of three
23 qualified persons recommended by the Speaker of the House of
24 Representatives, one of which shall be appointed by the
25 Governor from a list of three qualified persons recommended
26 by the President pro tempore of the Senate.
27 (7) One representative of hospitals appointed by the
28 Governor from a list of three qualified hospital
29 representatives recommended by Hospital Association of
30 Pennsylvania.
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1 (8) One representative of physicians appointed by the
2 Governor from a list of three qualified physician
3 representatives recommended jointly by the Pennsylvania
4 Medical Society and the Pennsylvania Osteopathic Medical
5 Society.
6 (9) One representative of the Blue Cross and Blue Shield
7 Plans in Pennsylvania, appointed by the Governor from a list
8 of three qualified persons recommended jointly by the Blue
9 Cross and Blue Shield Plans of Pennsylvania.
10 (10) One representative of commercial insurance
11 carriers, appointed by the Governor from a list of three
12 qualified persons recommended by the Insurance Federation of
13 Pennsylvania, Inc.
14 (11) One representative of the nursing home industry,
15 appointed by the Governor from a list of three qualified
16 persons recommended jointly by the Pennsylvania Health Care
17 Association and the Pennsylvania Association of Non-Profit
18 Homes for the Aging.
19 (12) One representative of the HMO Industry appointed by
20 the Governor from a list of three qualified persons
21 recommended by the Association of Pennsylvania HMO's.
22 (c) Chairperson and vice chairperson.--The members shall
23 annually elect, by a majority vote of the commissioners, a
24 chairperson and a vice chairperson of the commission from among
25 their members, except that the Secretary of Health, the
26 Secretary of Public Welfare and the Insurance Commissioner shall
27 not be eligible to become chairperson.
28 (d) Quorum.--Eight members shall constitute a quorum for the
29 transaction of any business, unless a greater number is required
30 by the bylaws, and the act by the majority of the members
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1 present at any meeting in which there is a quorum shall be
2 deemed to be the act of the commission.
3 (e) Meetings.--
4 (1) The commission shall meet at least once every two
5 months, and may provide for special meetings as it deems
6 necessary. Meeting dates shall be set by a majority vote of
7 the members of the commission or by the call of the
8 chairperson upon seven days' notice to all commission
9 members.
10 (2) All meetings of the commission shall be publicly
11 advertised and open to the public, except that the
12 commission, through its bylaws, may provide for Executive
13 Sessions of the commission which shall not be open to the
14 public. No act of the commission shall be taken in an
15 Executive Session.
16 (3) All action taken by the commission shall be taken in
17 open public session, and action of the commission shall not
18 be taken except upon the affirmative vote of a majority of
19 the members of the commission during meetings at which a
20 quorum is present.
21 (f) Bylaws.--The commission shall adopt bylaws, not
22 inconsistent with this act, and may appoint or elect such
23 officers or committees as it deems advisable.
24 (g) Compensation and expenses.--The members of the
25 commission shall not receive a salary or per diem for serving as
26 members of the commission but shall be reimbursed for actual and
27 necessary expenses incurred in the performance of their duties.
28 Said expenses may include reimbursement of travel and living
29 expenses while engaged in commission business.
30 (h) Terms of commission members.--
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1 (1) The terms of the Secretary of Health, the Secretary
2 of Public Welfare and the Insurance Commissioner shall be
3 concurrent with their holding of public office. The terms of
4 the 12 commission members appointed by the Governor shall be
5 three years, except that of the members first appointed:
6 (i) One each of the representatives of business,
7 organized labor, consumers and the representatives of the
8 Blue Cross and Blue Shield Plans shall serve for a term
9 of not more than one year, to expire on June 30 of the
10 year following their appointment.
11 (ii) Each of the representatives of hospitals,
12 nursing homes, physicians and the commercial insurance
13 carriers shall serve for a term of not more than two
14 years, to expire on June 30 of the second year following
15 their appointment.
16 (iii) One each of the representatives of business,
17 organized labor, consumers and the representative of the
18 HMO Industry shall serve a term of not more than three
19 years, to expire on June 30 of the third year following
20 appointment.
21 (2) No appointed member shall be eligible to serve more
22 than two consecutive terms. Vacancies on the commission shall
23 be filled in the same manner in which they were originally
24 designated under subsection (b), within 60 days of the
25 vacancy.
26 (i) Commencement of operations.--
27 (1) Within 60 days after the effective date of this act,
28 each organization or individual required to submit a list of
29 recommended persons to the Governor under subsection (b),
30 shall submit said list to the Governor.
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1 (2) Within 90 days of the effective date of this act,
2 the Governor shall make all of the appointments called for in
3 subsection (b), and the commission shall begin operations
4 immediately following these appointments.
5 (3) Should any organization or individual fail to submit
6 a list of recommended persons required under subsection (b)
7 within the required time outlined in paragraph (1), the
8 Governor shall appoint an acting commissioner until such time
9 as the list of recommended persons is submitted to the
10 Governor by the original organization or individual as
11 required in subsection (b).
12 Section 5. Powers and duties of the commission.
13 (a) General powers.--The commission shall exercise all
14 powers necessary or appropriate to carry out this act,
15 including, but not limited to, the following:
16 (1) To employ an executive director, legal counsel,
17 investigators, and other staff necessary to comply with the
18 provisions of this act and regulations promulgated
19 thereunder, subject to the provisions of the act of August 5,
20 1941 (P.L.752, No.286), known as the Civil Service Act, and
21 to engage professional consultants, as it deems necessary to
22 the performance of its duties.
23 (2) To fix the compensation of all employees, consistent
24 with the standards established by the Executive Board of the
25 Commonwealth, and to prescribe their duties.
26 (3) To make and execute contracts and other instruments,
27 including those for purchase or leasing of equipment and
28 supplies, necessary or convenient to the exercise of the
29 powers of the commission.
30 (4) To conduct examinations, investigations and audits
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1 and to hear testimony and take proof, under oath or
2 affirmations, at public or private hearings, on any matter
3 material to its duties.
4 (5) Do all things necessary to carry out its
5 responsibilities under the provisions of this act.
6 (b) Rules and regulations.--The commission may, in a manner
7 provided by law, promulgate rules and regulations necessary to
8 carry out this act.
9 (c) Audit powers.--The commission shall have the right to
10 independently audit all information required to be submitted by
11 data sources as needed to corroborate the accuracy of the
12 submitted data. Audits shall be performed on a sample and issue-
13 specific basis, as needed by the commission, and shall be
14 coordinated, to the extent practicable, with audits performed by
15 the Commonwealth. All data sources are hereby required to make
16 all books, records of accounts and any other data needed by the
17 auditors available to the commission at a convenient location
18 within 30 days of a written notification by the commission.
19 (d) General duties and functions.--The commission shall, at
20 a minimum, perform the following duties and functions:
21 (1) Develop a computerized system for the collection,
22 analysis and dissemination of data. The commission may
23 contract with a vendor who will provide such data processing
24 services. The commission shall assure that system be capable
25 of processing all data collection required under this act.
26 (2) To establish a Pennsylvania Uniform Claims Form for
27 all data sources which shall be utilized and maintained by
28 all data sources for all services covered by this act.
29 (3) Collect and disseminate data and other information
30 from data sources to which the commission is entitled,
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1 prepared according to formats, time frames and
2 confidentiality provisions as specified in sections 6, 7, 13
3 and 15, or by the commission.
4 (4) Define a methodology to collect and disseminate data
5 reflecting quality and efficiency of medical care pursuant to
6 section 6(c)(21) and (d). In carrying out its duty, the
7 commission shall collect data which can assess quality of and
8 access to health care, including, but not limited to:
9 (i) the incidents of high variation medical practice
10 patterns on a diagnostic basis, by procedure and
11 hospital;
12 (ii) overall occupancy;
13 (iii) occupancy by service;
14 (iv) number of procedures performed in relation to
15 minimum standards for those selected procedures;
16 (v) location of services for all procedures
17 reasonably performed on an outpatient basis;
18 (vi) percentage of physicians on staff accepting
19 medical assistance patients;
20 (vii) percentage of physicians on staff accepting
21 Medicare assignment as full payment;
22 (viii) status of hospital with regard to trauma,
23 capacity and other specified emergency health care
24 services;
25 (ix) status or classification of emergency
26 department according to a national standard chosen by the
27 commission;
28 (x) status of licensure and Joint Accreditation of
29 Hospitals inspections;
30 (xi) twenty, thirty and forty minute geographic
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1 access zones;
2 (xii) mortality rates for specified diagnoses and
3 treatments;
4 (xiii) rates of infection;
5 (xiv) the quality index, as established by the
6 commission and the change in quality index;
7 (xv) morbidity rates;
8 (xvi) incidence of use of specified procedures by
9 diagnosis;
10 (xvii) correlations between volume of procedures and
11 prices charged, average payments accepted and quality
12 outcomes;
13 (xviii) readmission rates;
14 (xiv) rate of incidence for post discharge
15 professional care; and
16 (xx) average length of stay.
17 The commission shall be prohibited from releasing any raw
18 cost data or issuing any reports or studies that are not
19 adjusted to reflect quality and efficiency data.
20 (5) Establish utilization review guidelines as specified
21 in section 8 and certify compliance with these guidelines.
22 (6) Promote competition in the health care and health
23 insurance markets without raising access barriers to care.
24 (7) Establish, operate and monitor a Statewide Indigent
25 Care Pool as specified in section 9.
26 (8) Establish capital cost containment guidelines and
27 review for final approval of certain certificate of need
28 applications, as specified in section 10.
29 (9) To make annual reports to the General Assembly on
30 the rate of increase in the cost of health care in the
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1 Commonwealth, the effectiveness of the commission in carrying
2 out the legislative intent of the act and make
3 recommendations on the need for further health care cost
4 containment legislation. The commission shall also make
5 annual reports to the General Assembly on the quality of
6 health care and access to health care for all citizens of the
7 Commonwealth.
8 (10) To approve hospital billing forms that itemize all
9 charges for services, equipment, supplies and medicine. Each
10 hospital shall submit their billing form to the commission
11 for approval. Such itemized billings shall be written in
12 language that is understandable to the average person and be
13 presented to each patient upon discharge from the hospital or
14 within a reasonable time thereafter.
15 (11) To conduct studies and publish reports thereon
16 analyzing the effects that noninpatient, alternative health
17 care delivery systems have on health care cost. These systems
18 shall include, but not be limited to: HMO's; PPO's; Primary
19 Health Care Facilities; Home Health Care; Attendant Care,
20 Ambulatory Surgical Facilities; Free Standing Emergency
21 Centers; Birthing Centers; and Hospice Care. These reports
22 shall be submitted to the General Assembly and shall be made
23 available to the public.
24 Section 6. Data collection.
25 (a) Submission of data.--The commission is hereby authorized
26 to require data sources to submit data, according to uniform
27 submission formats, coding system and other technical
28 specifications necessary to render the incoming data
29 substantially valid, consistent, compatible and manageable using
30 electronic data processing methods.
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1 (b) Pennsylvania Uniform Claims Form.--The commission shall
2 furnish a Pennsylvania Uniform Claims Form format to all data
3 sources which shall be utilized and maintained by all data
4 sources for all services covered by this act. The Pennsylvania
5 Uniform Claims Form shall consist of the Uniform Hospital
6 Billing Form UB-82/HCFA-1450, or its successors, as developed by
7 the National Uniform Billing Committee, with additional fields
8 as necessary to provide all of the data set forth in subsections
9 (c) and (d). Any reserve field available to accommodate
10 additional data after inclusion of subsection (c) data elements
11 may be utilized to accommodate only additional data designated
12 in accordance with subsection (d). Additional fields necessary
13 for the collection of data required under subsections (c) or (d)
14 shall be added in the manner provided for in subsection (e).
15 (c) Data elements.--For each covered service performed in
16 Pennsylvania, the commission shall be required to collect the
17 following data elements:
18 (1) uniform patient identifier, continuous across
19 multiple episodes and providers;
20 (2) patient date of birth;
21 (3) patient sex;
22 (4) patient ZIP Code number;
23 (5) date of admission;
24 (6) date of discharge;
25 (7) principal and up to four secondary diagnoses by
26 standard code;
27 (8) principal procedure by commission specified standard
28 code and date;
29 (9) up to three secondary procedures by commission
30 specified standard codes and dates.
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1 (10) uniform hospital or facility identifier, continuous
2 across episodes, patients and providers;
3 (11) uniform identifier of admitting physician, by
4 unique physician identification number established by the
5 commission, continuous across episodes, patients and
6 providers;
7 (12) uniform identifier of consulting physicians, by
8 unique physician identification number established by the
9 commission, continuous across episodes, patients and
10 providers;
11 (13) Total charges of providers, segregated into major
12 categories, including, but not limited to, room and board,
13 radiology, laboratory, operating room, drugs, medical
14 supplies and other goods and services according to guidelines
15 specified by the commission;
16 (14) Actual payments to hospital or facility;
17 (15) charges of each physician rendering service
18 relating to an incident of hospitalization or treatment in a
19 freestanding short procedure care unit;
20 (16) actual payments to each physician or professional
21 rendering service;
22 (17) uniform identifier of primary payor;
23 (18) ZIP Code number of facility where health care
24 service is rendered;
25 (19) uniform identifier for payor group contract number;
26 (20) patient discharge status; and
27 (21) quality and efficiency of medical care pursuant to
28 sections 5(d)(4) and 6(d).
29 All raw cost data required under this section shall be submitted
30 by data sources after being adjusted by stratifying variables.
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1 The commission shall determine appropriate formulas which each
2 data source shall use in adjusting raw cost data submitted to
3 the commission. The stratifying variables for which the
4 commission shall provide appropriate formulas for raw cost data
5 adjustment shall include, but not be limited to, indigent care
6 load; percent of minority patients; direct and indirect teaching
7 costs; case mix; geographic location as a proxy for wage
8 differentials; and sole-community provider status.
9 (d) Quality and efficiency data elements.--In carrying out
10 its duty to collect data on quality and efficiency of medical
11 care under sections 5(d)(4) and 6(c)(21), the commission shall
12 define a methodology to measure quality and efficiency of
13 medical care which may include additional data elements to be
14 specified by the commission sufficient to carry out its
15 responsibilities under sections 5(d)(4), 6, 7, 13 and 15. The
16 commission may adopt a nationally recognized methodology of
17 quantifying and collecting data on quality and efficiency until
18 such time as the commission has the capability of developing its
19 own methodology and standard data elements. The commission shall
20 add to the available existing reserve field of the Pennsylvania
21 Uniform Claims Form data elements providing information on each
22 episode of illness sufficient to permit analysis of the quality
23 and efficiency of medical services rendered in the manner
24 provided in subsection (e).
25 (e) Reserve field additions and other data elements.--The
26 commission may increase the reserve field of the Pennsylvania
27 Uniform Claims Form and additional data elements may be added to
28 or deleted from the Pennsylvania Uniform Claims Form only by a
29 majority vote of the commission, and only pursuant to the
30 following procedure:
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1 (1) Commission staff shall prepare a cost-benefit
2 analysis of the proposed addition or deletion which shall
3 include the cost to data sources of any proposed additions.
4 (2) The commission shall circulate notice of the
5 proposed addition or deletion, along with a copy of the cost-
6 benefit analysis, among data sources and provide for a 60-day
7 comment period.
8 (3) The commission may hold additional hearings or
9 request such other reports as it deems necessary to make a
10 final determination on the proposed addition or deletion.
11 Section 7. Data dissemination and publication.
12 Subject to the confidentiality provisions and raw cost data
13 limitations contained in sections 5, 6 and 13, the commission
14 shall issue publications which shall include:
15 (1) Publication. The commission shall utilize the data
16 provided under section 6, as well as other data, records and
17 matters of record available to it, to develop and publish
18 periodic reports on:
19 (i) Comparable practice patterns among individual
20 hospitals or according to appropriate regions or
21 subregions within this Commonwealth, concerning
22 population based admission rates, total lengths of stay
23 and preoperation and postoperation lengths of stay.
24 (ii) Comparisons among individual hospitals, or
25 appropriate regions or subregions, of room and board
26 charges, ancillary charges, total hospital stay charges
27 and charges for inpatient versus outpatient procedures.
28 (iii) Statewide, regional or subregional comparisons
29 between and among the types and frequencies of
30 hospitalizations and treatments, adjusted for severity
19850H1971B2649 - 20 -
1 and stage of illness.
2 (2) High variation procedures. The commission shall
3 issue an annual report identifying those providers where the
4 existence of high variation medical procedures indicate
5 excessive utilization of the health services they provide.
6 The commission shall make a copy of the report available to
7 the appropriate licensing authorities for action consistent
8 with the purposes of this act. Physicians shall be identified
9 by their medical license number only.
10 Section 8. Utilization review.
11 (a) Review guidelines.--The commission is hereby instructed
12 to establish utilization review guidelines to govern utilization
13 review activities in and by providers. All providers shall
14 establish or be part of a utilization review program which meet
15 these guidelines. The guidelines shall require such programs to
16 include, but not be limited to, the following:
17 (1) Preadmission testing for all elective admissions
18 except for those with demonstrably low variation.
19 (2) Utilization review for all hospital admissions,
20 except for those with demonstrably low variation which shall
21 include the following:
22 (i) preadmission review for all elective admissions;
23 (ii) review of all emergency admissions within 48
24 hours thereof;
25 (iii) concurrent review for all inpatient
26 admissions;
27 (iv) retrospective review for all inpatient
28 admissions; and
29 (v) discharge planning review.
30 (3) Mandatory second surgical opinions for all elective
19850H1971B2649 - 21 -
1 surgery identified as a high variation medical procedure.
2 (b) Reports.--The commission shall require all health care
3 insurers to report to the commission and to their subscribers on
4 an annual basis on savings generated through their utilization
5 review programs and on the accuracy of their bills.
6 (c) Departmental utilization review standards.--The
7 commission shall require the Department of Public Welfare to
8 maintain the utilization review standards set forth in this
9 section, for its medical assistance program.
10 (d) Guideline review.--The commission shall review all
11 proposed guidelines on utilization review prior to their final
12 publication in the Pennsylvania Bulletin.
13 (e) Liability to health care provider.--No patient or health
14 care insurer shall be liable to a hospital or any other health
15 care provider for health care services finally adjudged
16 unnecessary by the utilization review program promulgated
17 hereunder, provided the patient has acted in good faith. Once a
18 cost has been disallowed, the provider may not rebill that
19 charge to another patient or payor.
20 Section 9. Health care for the medically indigent.
21 (a) Right to health care.--Every person in this Commonwealth
22 shall have the right to receive timely and appropriate health
23 care services from any hospital operating in this Commonwealth.
24 As a continuing condition of licensure, each hospital shall
25 offer and provide its full range of health care services to
26 every person in this Commonwealth regardless of financial status
27 or ability to pay. Hospitals may transfer patients only in
28 instances where the hospital lacks the staff or facilities to
29 properly render definitive treatment.
30 (b) Indigent Care Pool.--To reduce the undue burden on the
19850H1971B2649 - 22 -
1 several hospitals that disproportionately treat medically
2 indigent people on a compensated basis, and to contain the long-
3 term costs generated by untreated or delayed treatment of
4 illness and disease, there is hereby created an Indigent Care
5 Pool, to be contributed to by charges assessed by the commission
6 on health care providers and health care insurers, to help fund
7 the delivery of timely and appropriate inpatient, outpatient and
8 preventative health care services to the medically indigent. The
9 commission shall administer the collection of all moneys in the
10 Indigent Care Pool and all moneys collected by the commission
11 shall be deposited and held in a separate account in the State
12 Treasury which is hereby established and which shall be known as
13 the Indigent Care Fund (herein referred to as the "fund"). The
14 fund shall be administered by the commission and all moneys in
15 the fund are hereby appropriated to the commission on a
16 continuing basis to carry out the purposes of this section.
17 (c) Contributions to Indigent Care Fund.--Within 30 days
18 following the end of its fiscal year, each provider, except
19 physicians, in this Commonwealth shall contribute to the
20 Indigent Care Pool 1% of its gross operating revenue for the
21 past fiscal year, subject to the credit provided in subsection
22 (d)(1). In addition, within 30 days following the end of its
23 fiscal year, every health care insurer in this Commonwealth
24 shall contribute 0.6% of its gross health care and accident
25 premiums for the past fiscal year, subject to the credit
26 provided in subsection (d)(2).
27 (d) Credits.--
28 (1) Providers which expend more than 3% of their gross
29 operating budget on providing health care to the medically
30 indigent shall be entitled to the following credit against
19850H1971B2649 - 23 -
1 the contribution required in subsection (c). For every dollar
2 of indigent care provided to the medically indigent by a
3 provider, in excess of 3% of its budget, the provider shall
4 receive a credit of $1 toward its contribution to the
5 Indigent Care Pool.
6 (2) Health care insurers which make health care coverage
7 available to individuals on a nongroup basis and which
8 provide for at least one period in each calendar year when
9 any or all such individuals may obtain health care coverage
10 without regard to health status or medical underwriting shall
11 be entitled to the following credit against the contribution
12 required in subsection (c). For every dollar in losses
13 incurred in providing such coverage in excess of 100% of the
14 premium or subscription income earned on such coverage, the
15 insurer or service plan corporation shall receive a credit of
16 $1 toward its contribution to the Indigent Care Pool.
17 (e) Distribution.--The commission shall administer
18 distribution of all moneys in the Indigent Care Pool.
19 Distribution of moneys from the fund shall be made to providers
20 upon application as provided in subsection (f). The commission
21 shall establish a formula for distribution of funds back to
22 providers on the basis of their relative indigent care burden.
23 The commission shall review the providers total financial
24 resources when reviewing an application for distribution from
25 the fund, including the affiliated or related corporations and
26 endowment or other trust fund moneys available to the provider.
27 Providers shall be required to use funds received from the fund
28 to meet their indigent care needs and shall be expected to
29 reduce charges consistent with the level of funds received
30 unless otherwise authorized by the commission. The commission
19850H1971B2649 - 24 -
1 may require further financial disclosure by providers, as a
2 condition of approval of any provider application.
3 (f) Application.--The commission shall establish an
4 application form to be used by providers seeking distributions
5 from the fund. Such application form shall include such
6 instruction as the commission deems necessary and reasonable in
7 carrying out its responsibilities under subsection (e).
8 Providers may submit applications for reimbursement from the
9 fund on a quarterly basis. The first application may be
10 submitted six months after the fund has been established.
11 (g) Eligibility.--Before a provider can be eligible to
12 receive any funds from the fund, it must provide the commission
13 with appropriate certification that for the past fiscal year, it
14 has met all of its obligations under the Hill-Burton Act (60
15 Stat. 1040, 42 U.S.C. 291 et seq.) and under this act.
16 (h) Rules and regulations.--The commission shall promulgate
17 such rules and regulations as are necessary to carry out this
18 section.
19 (i) Determination of eligibility.--The provider shall be
20 responsible for determination and verification of eligibility of
21 each recipient of care.
22 (j) Reimbursement limit.--Reimbursements to providers shall
23 be limited to the aggregate level of funding which will be
24 available from the fund for the care of the medically indigent.
25 (k) Signed application.--Every provider shall require that a
26 medically indigent person who is to be considered eligible for
27 assistance under this act shall submit a signed application
28 therefor to the provider.
29 (l) Inpatient limitation.--The commission shall not
30 reimburse inpatient services which can be performed less
19850H1971B2649 - 25 -
1 expensively in an accessible outpatient setting.
2 (m) Other available funds.--All other means of payment shall
3 be exhausted before funds are utilized for reimbursement under
4 this act. The fund shall be the payor of last resort.
5 (n) Preadmission deposit prohibited.--No provider may
6 require a preadmission deposit from any medically indigent
7 patients or medical assistance patients as a condition for
8 offering any of its health care services. Further, a provider
9 may transfer medically indigent patients or medical assistance
10 patients only in instances where the provider lacks the staff or
11 facilities to properly render definitive medical treatment.
12 (o) Penalty.--Providers who violate subsection (n) shall be
13 ineligible for payment from the fund, and shall be subject to
14 the loss of their license.
15 Section 10. Capital cost containment and certificate of need
16 review.
17 (a) Certificate of need.--The commission shall require all
18 health care facilities, as defined in this act, to acquire a
19 certificate of need or an amended certificate of need from the
20 Department of Health for any capital expenditure which would
21 require a certificate of need under the act of July 19, 1979
22 (P.L.130, No.48), known as the Health Care Facilities Act.
23 (b) Review.--Notwithstanding Chapter 7 of the Health Care
24 Facilities Act, the commission shall review for final approval
25 or disapproval all certificate of need or amended certificate of
26 need applications that are approved by the Department of Health
27 under the Health Care Facilities Act. Final review and formal
28 commission action shall take place within 60 days following the
29 date the Department of Health issues its approval under the
30 Health Care Facilities Act.
19850H1971B2649 - 26 -
1 Section 11. Augmented preventive services.
2 (a) Studies, reports, etc.--The commission shall conduct
3 studies and publish reports thereon analyzing the effects which
4 specific augmented preventive services would have on health care
5 cost containment. Such reports shall be issued and delivered by
6 September 30 of each year to the Governor, to the Chairman of
7 the Senate Appropriations Committee and to the Chairman of the
8 House Appropriations Committee, so that these reports may be
9 considered in the development of the budget for the
10 Commonwealth. Each report shall contain the recommendation by
11 the commission as to whether the augmented preventive service
12 can be provided to sufficient numbers of the population of this
13 Commonwealth on a cost-effective basis.
14 (b) Augmented preventive services.--Augmented preventive
15 services include, but are not limited to, prenatal care;
16 hypertension screening and treatments; cancer screening; early
17 detection and intervention in child developmental delays;
18 diabetes education; accident prevention; alcohol and drug
19 control or cessation for abusers; hemophilia treatment; expanded
20 ambulatory services; program to aid elderly people in
21 independent living; weight control; cessation of smoking;
22 occupational disease election and prevention; and environmental
23 disease detection and prevention. Augmented preventive services
24 may be targeted for different age, sex or other medically
25 relevant population groups.
26 Section 12. Preferred provider organizations.
27 (a) Rights of health care provider or purchaser.--Upon
28 compliance with the provisions of this act and notwithstanding
29 any other provision of law to the contrary, the General Assembly
30 hereby affirms the right of any health care insurer or purchaser
19850H1971B2649 - 27 -
1 to:
2 (1) Enter into agreements with providers relating to
3 health care services which may be rendered to persons for
4 whom the insurer or purchaser is providing health care
5 coverage, including agreements relating to the amounts to be
6 charged by the provider for services rendered.
7 (2) Issue or administer policies or subscriber contracts
8 in this Commonwealth which include incentives for the covered
9 person to use the services of a provider who has entered into
10 an agreement with the insurer or purchaser.
11 (3) Issue or administer policies or subscriber contracts
12 in this Commonwealth that provide for reimbursement for
13 services only if the services have been rendered by a
14 provider who has entered into an agreement with the insurer
15 or purchaser.
16 (b) Duties of the commission.--Prior to the commencement of
17 operations of any preferred provider organization, the
18 commission shall determine and certify that:
19 (1) Any preferred provider organization which assumes
20 financial risk is either licensed as an insurer in this
21 Commonwealth or has adequate working capital and reserves.
22 (2) Enrollee literature adequately discloses provisions,
23 limitations and conditions of benefits available.
24 (3) Arrangements and provisions for preferred provider
25 organizations which assume financial risk which may lead to
26 undertreatment or poor quality care are adequately addressed
27 by quality and utilization controls and by a formal grievance
28 system.
29 (c) Filing requirements.--No preferred provider organization
30 which assumes financial risk may commence operations until it
19850H1971B2649 - 28 -
1 has reported to the commission such information as the
2 commission requires in accordance with the duties required in
3 section 12(d). Preferred provider organizations may not exclude
4 from participation, or otherwise penalize, any health care
5 provider in compliance with this act unless the commission finds
6 that such exclusion would not lead to substantially diminished
7 access to health care in the appropriate region or subregion.
8 The commission shall promulgate regulations which will prohibit
9 market segmentation and unreasonable profiteering in the health
10 care industry.
11 (d) Notification of deficiencies.--If, after 60 days, the
12 commission has not informed the preferred provider organization
13 of deficiencies, the preferred provider organization may
14 commence operations unless and until such time as the commission
15 has identified significant deficiencies and such deficiencies
16 have not subsequently been corrected within 60 days of
17 notification.
18 (e) Appeal procedure.--Any disapproval or order to cease
19 operations issued in accordance with this section shall be
20 subject to appeal in accordance with Title 2 of the Pennsylvania
21 Consolidated Statutes (relating to administrative law and
22 procedure).
23 (f) Continued operation of provider organization.--Within
24 120 days of the effective date of this act, any preferred
25 provider organization which assumes financial risk currently
26 operating on the effective date shall file the information
27 required by the commissioner under subsection (b), and may
28 continued to operate subject to the terms of this section.
29 Section 13. Access to commission data.
30 (a) Public access and limitations.--The information and data
19850H1971B2649 - 29 -
1 received by the commission shall be utilized by the commission
2 for the benefit of the public. Subject to the specific
3 limitations set forth in this section, the commission shall make
4 determinations on requests for information in favor of access.
5 (b) Limitations on access.--Unless specifically provided for
6 in this act, neither the commission nor any contracting system
7 vendor shall release and no data source, person, member of the
8 public or other user of any data of the commission shall gain
9 access to:
10 (1) any data of the commission which could reasonably be
11 excepted to reveal the identity of an individual patient;
12 (2) any data of the commission relating to provider
13 effective prices or actual payments to any identified
14 provider made by any person other than the person requesting
15 access to the data;
16 (3) any data disclosing discounts or differentials
17 between payments accepted by providers for services and their
18 billed charges obtained by identified purchasers from
19 identified providers unless comparable data on all other
20 purchaser data sources is also released and the commission
21 determines that the release of such information is not
22 prejudicial or inequitable to any individual purchaser or
23 provider or group thereof. In making such determination the
24 commission shall consider that it is primarily concerned with
25 the analysis and dissemination of provider effective prices,
26 not with discounts;
27 (4) any raw data of the commission, except as permitted
28 in section 17;
29 (5) any data which would identify costs of health care
30 in the absence of equivalent data on the same provider or
19850H1971B2649 - 30 -
1 population which identifies quality and efficiency as
2 contained in section 5(d)(4) or section 6(c) and (d); or
3 (6) any data which would be used to exclude or limit
4 health insurance coverage of populations which require a high
5 volume of services or high cost services to protect their
6 health.
7 (c) Public inspection of records.--All reports prepared by
8 the commission shall be public records, and shall be available
9 to the public for a reasonable fee, not to exceed the cost of
10 duplication. The commission shall, on a monthly basis, prepare,
11 post in its offices, and make available to interested parties, a
12 list of all special studies and reports requested or published,
13 as well as the dates they will be available for public
14 inspection and duplication.
15 (d) Unauthorized use of data.--Any person who knowingly
16 releases commission data violating the patient confidentiality,
17 actual payments, discount data or raw data safeguards set forth
18 in this section to an unauthorized person commits a misdemeanor
19 of the second degree and, upon conviction, shall be sentenced to
20 pay a fine of $5,000, or to undergo imprisonment for not more
21 than two years, or to both. An unauthorized person who knowingly
22 receives or possesses such data commits a misdemeanor of the
23 second degree.
24 (e) Unauthorized access to data.--Should any person
25 inadvertently or by commission error gain access to data that
26 violates the safeguards set forth in this section, the data must
27 immediately be returned, without duplication, to the commission
28 with proper notification.
29 Section 14. Mandated health benefits.
30 In relation to current law or proposed legislation the
19850H1971B2649 - 31 -
1 commission shall, upon the request of the appropriate committee
2 chairman in the Senate and in the House of Representatives, or
3 upon the request of the Secretary of Health, provide a cost-
4 benefit analysis of the proposed mandated health insurance
5 benefit. As part of its cost-benefit analysis of existing or
6 proposed mandated health insurance benefits, the commission
7 shall advise of the existence of the least costly health
8 delivery system for the services in question.
9 Section 15. Special studies and reports.
10 (a) Special studies.--The commission shall have authority to
11 publish special studies under contract with private
12 organizations or public agencies, but such studies shall be
13 derived only from data available to the commission at the time
14 the studies are requested. The commission shall develop and
15 implement safeguards to maintain individual patient
16 confidentiality, individual payment confidentiality and
17 confidentiality of discount data or differentials between
18 payments accepted by providers for services and their billed
19 charges, and all other access and raw data limitations provided
20 for in sections 5, 6 and 13 shall be maintained. Any special
21 study undertaken by the commission under contract shall become
22 public documents as provided for in section 13(a)(2).
23 (b) Special reports.--
24 (1) The commission shall study and make a report, within
25 18 months from the effective date of this act, on the special
26 medical needs of:
27 (i) Senior citizens, particularly low-income senior
28 citizens, senior citizens who are members of minority
29 groups and senior citizens residing in low-income urban
30 or rural areas.
19850H1971B2649 - 32 -
1 (ii) Low-income rural and urban areas.
2 (iii) Minority communities.
3 (iv) Women.
4 (v) Children.
5 (vi) Workers.
6 (vii) Veterans.
7 The report shall include information on the current
8 availability of services to these targeted parts of the
9 population, and whether access to such services has increased
10 or decreased over the past ten years, and specific
11 recommendations for the improvement of their primary care and
12 health delivery systems, including disease prevention and
13 comprehensive health care services. The commission shall also
14 study and report on the effects of using prepaid, capitated
15 or HMO health delivery systems as ways to promote the
16 delivery of primary health care services to the underserved
17 segments of the population enumerated above.
18 (2) The commission shall study and report on the short
19 and long-term fiscal and programmatic impact on the health
20 care consumer of changes in ownership of hospitals from
21 nonprofit to profit, whether through purchase, merger or the
22 like.
23 Section 16. Compliance enforcement.
24 The commission shall have standing to bring an action in law
25 or in equity through private counsel in any court of common
26 pleas to enforce compliance with any provision of this act or
27 any requirement or appropriate request of the commission made
28 pursuant to this act. In addition, the Attorney General is
29 authorized and shall bring any such enforcement action in aid of
30 the commission in any court of common pleas at the request of
19850H1971B2649 - 33 -
1 the commission in the name of the Commonwealth.
2 Section 17. Research and demonstration projects.
3 (a) Project assistance by commission.--The commission shall
4 actively encourage research and demonstrations to design and
5 test improved methods of assessing provider quality and
6 efficiency. To that end, provided that no data submission
7 requirements in a mandated demonstration may exceed the current
8 reserve field on the Pennsylvania Uniform Claims Form, the
9 commission may:
10 (1) Authorize contractors engaged in health services
11 research approved by the commission to have access to the
12 commission's raw data files, providing such entities assume
13 any contractual obligations imposed by the commission to
14 assure patient identity confidentiality.
15 (2) Place data sources participating in research and
16 demonstrations on different data submission requirements from
17 other data sources in this Commonwealth.
18 (3) Require data source participation in research and
19 demonstration projects when this is the only testing method
20 the commission determines is promising.
21 (b) State-owned hospitals.--The commission shall research
22 and develop hospital quality, efficiency and cost containment
23 procedures, techniques and models and shall test these
24 procedures, techniques and models at various hospitals owned by
25 the Commonwealth. The State-owned hospitals shall cooperate with
26 the commission and shall fairly test the commission's hospital
27 efficiency and cost containment procedures, techniques and
28 models provided that such testing does not endanger patient
29 health.
30 Section 18. Appropriation.
19850H1971B2649 - 34 -
1 The sum of $2,250,000, or as much thereof as may be
2 necessary, is hereby appropriated to the Health Care Cost
3 Containment Commission for the fiscal year July 1, 1985, to June
4 30, 1986, to carry out the provisions of this act.
5 Section 19. Effective date.
6 This act shall take effect in 60 days.
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