THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DeLUCA, FRANKEL, MICOZZIE, VULAKOVICH, DERMODY, MARKOSEK, BARBIN, B. BOYLE, BRENNAN, BRIGGS, CALTAGIRONE, COHEN, CONKLIN, D. COSTA, P. COSTA, CURRY, DALEY, DAVIS, DEASY, DePASQUALE, DeWEESE, J. EVANS, FABRIZIO, FREEMAN, GALLOWAY, GEORGE, GIBBONS, HALUSKA, HANNA, HARHAI, HARKINS, HORNAMAN, JOSEPHS, KIRKLAND, KORTZ, KOTIK, KULA, LONGIETTI, MAHONEY, MARSHALL, MATZIE, MIRABITO, MUNDY, MUSTIO, M. O'BRIEN, PASHINSKI, PRESTON, PYLE, READSHAW, SAINATO, SANTARSIERO, SANTONI, M. SMITH, SONNEY, STABACK, STURLA, THOMAS, WATERS, WHITE, WILLIAMS AND YOUNGBLOOD, OCTOBER 13, 2011

REFERRED TO COMMITTEE ON INSURANCE, OCTOBER 13, 2011  

AN ACT

Amending Title 40 (Insurance) of the Pennsylvania Consolidated

Statutes, further providing for rates and contracts.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 6124(c) of Title 40 of the Pennsylvania

Consolidated Statutes is amended to read:

§ 6124.  Rates and contracts.

* * *

(c)  Maintenance of contractual relationships.--

(1)  Declaration of necessity.--

(i)  It is hereby found that many subscribers to

nonprofit hospital plans make payments over long periods

of time prior to becoming entitled to benefits under such

a plan and that it is important in the public interest

that the reasonable expectations of such subscribers as

to coverage should be fulfilled if possible. It is hereby

declared to be essential for the maintenance of the

health of the residents of this Commonwealth that

subscribers to nonprofit hospital plans be assured

receipt of the hospitalization and related health

benefits prepaid by them through payment of the rates

approved under this chapter and charged by a hospital

plan corporation and that to accomplish this essential

purpose termination of contracts between hospital plan

corporations and hospitals entered into pursuant to

section 6121 (relating to eligible hospitals) and this

section be subject to prior approval by the department as

provided in this subsection.

(ii)  It is further found that providing meaningful

health care choices to the residents of this Commonwealth

is essential to the provision of and accessibility to

quality health care at an affordable price. It is hereby

declared to be equally essential for the maintenance of

the health of the residents of this Commonwealth that

subscribers to nonprofit hospital plans be assured

continued receipt of adequate hospitalization and related

health benefits upon the expiration of contracts between

hospital plan corporations and hospitals entered into

pursuant to section 6121 (relating to eligible hospitals)

and this section be subject to prior approval by the

department as provided in this subsection.

(2)  Notification period.--

(i)  No contract between a hospital plan corporation

and any hospital providing for the rendering of

hospitalization to subscribers to the hospital plan shall

be terminated unless the party seeking such termination

gives 90 days advance written notice to the other party

to the contract and to the department of the proposed

termination.

(ii)  A hospital plan corporation that has entered

into a contract with a hospital providing for the

rendering of hospitalization to subscribers to the

hospital plan corporation shall give the department at

least 90 days' advance written notice of the expiration

date provided for in the contract.

(3)  Hearing period.--Whenever a termination or

expiration subject to paragraph (2) involves contracts with

hospitals having more than 5% of the beds in the area served

by a hospital plan corporation, the department shall hold

public hearings on at least 15 days notice for the purpose of

investigating the reasons for the termination or whether the

pending expiration is in the public interest. Pending

completion of said investigation by the department,

termination or expiration of the hospital contracts shall be

suspended for a period not to exceed six months from the

expiration of the period provided for in paragraph (2). All

terms and conditions of the [contract] contracts between the

hospital plan corporation and the hospital or hospitals shall

continue in full force and effect during said investigation

by the department. Based on the record made during the

hearings, the department shall make specific findings [as to

the] of facts [of the dispute] and shall either approve

termination or expiration of the contracts or recommend such

terms for continuation of the [contract] contracts as are in

the public interest, based upon the facts, the right of a

hospital to be paid its costs for hospitalization services to

subscribers [and], the need of subscribers for efficient,

reliable hospitalization at a reasonable cost and the

adequacy of the alternative health system networks that would

be accessible to subscribers in the event the contracts are

permitted to terminate or expire. The Department of Health

shall determine whether the alternative health system

networks are adequate under the requirements of the act of

December 29, 1972 (P.L.1701, No.364), known as the Health

Maintenance Organization Act, and the regulations promulgated

under that act.

(4)  Negotiation period.--If the department recommends

terms for continuation of the [contract] contracts, the

hospital plan corporation and the hospitals involved shall

renew their negotiations in order to determine whether a new

agreement can be reached substantially on the basis of the

terms for continuation recommended by the department and

pending such negotiations, the termination or expiration of

the hospital contracts shall be suspended for a further

period not to exceed 90 days from the date of the decision of

the department. If the hospital plan corporation and the

hospitals are unable to consummate [a new contract] new

contracts within said further period of 90 days, they shall

so advise the department[. The department shall in that

event], and the contracts in effect prior to the giving of

notice provided under paragraph (2) shall remain in full

force and effect for a term equal to the initial or any

subsequent renewal term, whichever is longer, provided for in

the contracts. If the department recommends that the

contracts be permitted to be terminated or to expire, the

department shall approve termination or expiration of the

contracts effective at the end of a further period of 30 days

and shall prescribe the form and extent of notice which the

hospital plan corporation shall use in advising its

subscribers that hospitalization in the hospitals involved is

not covered by a contract between the hospital plan

corporation and such hospitals.

(5)  Retroactivity.--Upon the settlement of any dispute

between a hospital plan corporation and any hospital pursuant

to paragraphs (2) and (4), the terms and conditions of any

new contract shall be retroactive to the date of termination

or expiration of the contract previously in effect between

the parties.

Section 2.  This act shall take effect in 60 days.