PRINTER'S NO. 305
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
310
Session of
2019
INTRODUCED BY COSTA, FONTANA, FARNESE, L. WILLIAMS AND BROOKS,
FEBRUARY 26, 2019
REFERRED TO BANKING AND INSURANCE, FEBRUARY 26, 2019
AN ACT
Amending the act of July 19, 1979 (P.L.130, No.48), entitled "An
act relating to health care; prescribing the powers and
duties of the Department of Health; establishing and
providing the powers and duties of the State Health
Coordinating Council, health systems agencies and Health Care
Policy Board in the Department of Health, and State Health
Facility Hearing Board in the Department of Justice;
providing for certification of need of health care providers
and prescribing penalties," in preliminary provisions,
further providing for definitions; providing for organization
and powers and duties of the Health Care Competition
Oversight Board; in licensing of health care facilities,
further providing for definitions, for licensure and for
issuance of license; in general provisions, repeals and
effective date, providing for confidentiality; and making
editorial changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 103 of the act of July 19, 1979 (P.L.130,
No.48), known as the Health Care Facilities Act, is amended by
adding a definition to read:
Section 103. Definitions.
The following words and phrases when used in this act shall
have, unless the context clearly indicates otherwise, the
meanings given to them in this section:
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* * *
"Competition oversight board." The Health Care Competition
Oversight Board.
* * *
Section 2. Chapter 3 heading of the act is amended to read:
CHAPTER 3
ORGANIZATION AND POWERS AND DUTIES OF THE
HEALTH CARE [POLICY] COMPETITION OVERSIGHT BOARD
Section 3. The act is amended by adding sections to read:
Section 301.1. Health Care Competition Oversight Board.
(a) The Health Care Competition Oversight Board is
established. The membership of the competition oversight board
shall be as follows:
(1) The Secretary of Health, who shall serve ex officio
and act as cochair.
(2) The Insurance Commissioner, who shall serve ex
officio and act as cochair.
(3) The Attorney General, who shall serve ex officio.
(4) Two physicians, one of whom shall be from a
physician practice organization operating as part of an
integrated delivery network.
(5) Three representatives of hospitals, one of whom
shall be from a hospital operating as part of an integrated
delivery network.
(6) One person with demonstrated expertise in health
care delivery, health care management at a senior level or
health care finance and administration, including payment
methodologies.
(7) One representative of a Blue Cross or Blue Shield
plan.
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(8) Two representatives of commercial insurance
carriers.
(9) One person with demonstrated expertise in health
care consumer advocacy.
(10) One person with demonstrated expertise as a
purchaser of health insurance representing business
management or health benefits administration.
(11) One representative of organized labor.
(12) One health care competition economist.
(b) Thirteen members of the competition oversight board
listed under subsection (a) shall be appointed by the Governor
and confirmed by a majority vote of the Senate. The Governor
shall make all appointments to the competition oversight board
within 90 days of the effective date of this section, and the
operations of the competition oversight board shall begin
immediately upon confirmation of the members. The secretary and
Insurance Commissioner shall convene the first meeting within 30
days after the confirmation of the members.
(c) The terms of the competition oversight board shall be as
follows:
(1) Of the members first appointed, four shall be
appointed for a term of one year, four for a term of two
years and five for a term of three years. Thereafter,
appointments shall be made for a term of three years.
(2) A vacancy during a term shall be filled for the
unexpired term in the same manner as the predecessor was
appointed.
(3) No appointed member shall serve more than two full
consecutive terms of three years.
(d) A simple majority of the members of the competition
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oversight board shall constitute a quorum for the transaction of
any business. No member may act or attend through a designee or
proxy.
(e) All meetings of the competition oversight board shall be
subject to the act of February 14, 2008 (P.L.6, No.3), known as
the "Right-to-Know Law." The competition oversight board shall
meet at least four times a year and may convene additional
meetings as may be necessary.
(f) The members of the competition oversight board shall not
receive any compensation for serving as members of the board,
but shall be reimbursed at rates established by the executive
board for necessary expenses incurred in the performance of
their duties.
Section 301.2. Powers and duties of competition oversight
board.
The competition oversight board shall exercise all powers
necessary and appropriate to carry out its duties, including the
following:
(1) Monitor the form of the health care delivery and
payment system in this Commonwealth with respect to cost,
quality and accessibility and how consumers are impacted.
(2) Examine the changes occurring to institutional and
structural arrangements through which health care is financed
and delivered and its impact on consumers.
(3) Examine the health care marketplace and the proper
role of competition, antitrust and consumer protection laws
and regulations and how they relate to the provision of high-
quality, cost-effective health care.
(4) Determine the current status and role of competition
in health care and how competition can be enhanced to
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increase consumer welfare and protect patient access to
necessary health care services.
(5) Survey all Federal and State laws pertinent to
health care competition and determine how current laws and
regulations work to foster existing and potential competition
in health care and how these laws impact consumers.
(6) Make recommendations for modifications to existing
laws or regulations or for the creation of new laws or
regulations to achieve effective competition policy in this
Commonwealth that at its core protects patient access to
necessary health care services.
(7) Consult with the Federal Trade Commission and the
Antitrust Division of the Department of Justice, as
appropriate.
Section 301.3. Review of activities.
The department shall prepare and publish on an annual basis a
report of the activities and recommendations of the competition
oversight board. The department's report shall be submitted to
the Health and Human Services Committee of the Senate, the
Banking and Insurance Committee of the Senate, the Health
Committee of the House of Representatives and the Insurance
Committee of the House of Representatives.
Section 301.4. Study of health care competition.
(a) The Legislative Budget and Finance Committee, in
consultation with health care experts and specialists, shall
conduct a study relative to certain issues related to health
care competition in this Commonwealth, which examines and
identifies all of the following:
(1) The impact of hospital mergers on prices, costs,
quality of care and competition.
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(2) The impact of hospital-physician consolidation on
prices, costs, quality of care and competition.
(3) The impact of health insurer consolidation on
prices, costs, quality of care and competition.
(4) The correlation between health care price growth and
market concentration, both hospital market concentration and
health insurer market concentration.
(5) A retrospective examination of the impact of
hospital mergers on prices paid to hospitals by health
insurers.
(6) The relationship between hospital consolidation and
quality.
(7) The relationship between hospital-physician
consolidation and quality.
(8) An assessment of the hospital market concentration
levels in this Commonwealth.
(9) An assessment of the health insurance market
concentration levels in this Commonwealth.
(b) The Legislative Budget and Finance Committee shall make
a written report of its findings and recommendations to the
competition oversight board, the Health and Human Services
Committee of the Senate, the Banking and Insurance Committee of
the Senate, the Health Committee of the House of Representatives
and the Insurance Committee of the House of Representatives
within one year of the effective date of this section.
Section 301.5. Expiration.
Sections 301.1, 301.2, 301.3 and 301.4 shall expire November
30, 2022.
Section 4. Section 802.1 of the act is amended by adding
definitions to read:
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Section 802.1. Definitions.
The following words and phrases when used in this chapter
shall have, unless the context clearly indicates otherwise, the
meanings given them in this section:
* * *
"Default provider agreement." An agreement between a
hospital that is part of an integrated delivery network and a
willing health insurance carrier to provide health care
services, which agreement is imposed upon the parties in the
event that they fail to enter into a mutually agreeable
contract.
* * *
"Health insurance carrier." An entity licensed in this
Commonwealth to issue health insurance, subscriber contracts,
certifications or plans that provide medical or health care
coverage by a health care facility or licensed health care
provider that is offered or governed under the act of May 17,
1921 (P.L.682, No.284), known as "The Insurance Company Law of
1921," including section 630 and Article XXIV thereof, or any of
the following:
(1) The act of December 29, 1972 (P.L.1701, No.364),
known as the "Health Maintenance Organization Act."
(2) The act of May 18, 1976 (P.L.123, No.54), known as
the "Individual Accident and Sickness Insurance Minimum
Standards Act."
(3) 40 Pa.C.S. Chs. 61 (relating to hospital plan
corporations) and 63 (relating to professional health
services plan corporations).
* * *
"Integrated delivery network." One or more entities with
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common ownership, operation or control, which include both of
the following:
(1) O ne or more hospitals, one or more physician
practices or one or more health care providers, or any
combination thereof, offering health care services.
(2) One or more entities operating as a health insurance
carrier offering health insurance, administering health
benefits, operating a health maintenance organization or
offering other health care benefits and coverage to employers
or individuals in this Commonwealth.
* * *
Section 5. Section 806 of the act is amended by adding a
subsection to read:
Section 806. Licensure.
* * *
(j) Hospitals operating as part of an integrated delivery
network.--
(1) In addition to complying with the standards and
regulations promulgated under this section, hospitals
operating as part of an integrated delivery network or any
entity directly or indirectly owned, operated or controlled
as part of these entities shall contract with any health
insurance carrier that is willing to enter into a contract.
(2) When contracting with health insurance carriers,
hospitals operating as part of an integrated delivery network
shall be:
(i) prohibited from using contractual provisions and
engaging in business practices that impede the
availability of health care and that restrict access to
facilities based solely or in part on the type of
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insurance coverage offered by a health insurance carrier;
(ii) prohibited from incorporating contractual
provisions that limit or preclude the use of tiered
networks by health insurance carriers;
(iii) prohibited from using any portion of the
reimbursement rate to subsidize a health insurance
carrier operating as part of the same integrated delivery
network;
(iv) prohibited from incorporating a termination
provision with a health insurance carrier for reasons
other than a willful breach of contract; and
(v) permitted to contract for its services at
reimbursement rates that are based upon sound actuarial
data.
(3) Failure of any hospital operating as part of an
integrated delivery network and a willing health insurance
carrier to maintain a mutually agreeable contract shall
result in the parties entering into a default provider
agreement while they submit to mandatory binding arbitration.
The default provider agreement shall set forth payment terms,
while all other contractual terms of the previously executed
contract shall remain in effect until the arbitration process
is completed. The arbitrator shall set all terms of the new
contract.
(4) Failure of any newly affiliated hospital with an
existing integrated delivery network or failure of any
hospital operating as part of a newly formed integrated
delivery network and a willing health insurance carrier to
enter into a mutually agreeable contract within 90 days of
the affiliation or formation shall result in the parties
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submitting to mandatory binding arbitration to establish a
contract. The arbitrator shall set all terms of the new
contract.
(5) A mutually agreeable arbitrator shall be chosen by
the parties from the American Arbitration Association's
National Healthcare Panel of arbitrators experienced in
handling payor-provider disputes.
(6) All costs associated with the arbitration shall be
split equally between the parties.
(7) The arbitrator shall conduct the arbitration
pursuant to the American Arbitration Association's Healthcare
Payor Provider Arbitration Rules.
(8) Contract terms and conditions shall be established
as follows:
(i) Each party shall submit best and final contract
terms to the arbitrator.
(ii) The arbitrator may request the production of
documents, data and other information.
(iii) Payment terms and all other contractual
provisions shall be set by the arbitrator.
(9) The default provider agreement shall remain in
effect until the hospital operating as part of an integrated
delivery network and a willing health insurance carrier
complete the arbitration process.
(10) Payment terms under the default provider agreement
will be set according to an amount equal to the greatest of
the following three possible amounts:
(i) The amount the health insurance carrier
negotiated with other in-network hospitals for the same
service.
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(ii) The amount calculated by the same method the
health insurance carrier uses to determine payments for
out-of-network services, such as the usual, customary and
reasonable charge.
(iii) The amount that would be paid under Medicare
for the same services.
(11) Copies of all contracts between hospitals operating
as part of an integrated delivery network and all health
insurance carriers shall be provided to the department and
the Insurance Department.
Section 6. Section 808(a) of the act is amended and the
section is amended by adding subsections to read:
Section 808. Issuance of license.
(a) Standards.--The department shall issue a license to a
health care provider when it is satisfied that the following
standards have been met:
(1) that the health care provider is a responsible
person;
(2) that the place to be used as a health care facility
is adequately constructed, equipped, maintained and operated
to safely and efficiently render the services offered;
(3) that the health care facility provides safe and
efficient services which are adequate for the care, treatment
and comfort of the patients or residents of such facility;
(4) that there is substantial compliance with the rules
and regulations adopted by the department pursuant to this
act;
(5) that a certificate of need has been issued if one is
necessary; [and]
(6) that, in the case of abortion facilities, such
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facility is in compliance with the requirements of 18 Pa.C.S.
Ch. 32 (relating to abortion) and such regulations
promulgated thereunder[.]; and
(7) that, in the case of a hospital operating as part of
an integrated delivery network, such facility:
(i) has contracts with all willing health insurance
carriers;
(ii) does not place restrictive covenants in its
employment contracts that restrain any health care
practitioner from engaging in his lawful profession ; and
(iii) has submitted an attestation statement to the
department and the Insurance Department certifying that
no portion of any reimbursement rate with a health
insurance carrier is subsidizing the health insurance
carrier operating as part of the same integrated delivery
network.
* * *
(d) Methodology records.--Every hospital submitting an
attestation statement in accordance with this section must keep
all books, records, accounts, papers, documents and any or all
computer, digital or other recordings relating to its
methodology for developing reimbursement rates for every health
insurance carrier in such manner and for such time periods as
the department, in its discretion, may require in order that its
authorized representatives may readily verify that no portion of
any reimbursement rate is subsidizing the health insurance
carrier operating as part of the same integrated delivery
network.
(e) Survey.--The department or any of its surveyors may
conduct a survey under this section of any hospital operating as
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part of an integrated delivery network as often as the
secretary, in the secretary's sole discretion, deems
appropriate.
(f) Survey expenses.--When conducting a survey under this
section, the department may retain attorneys, independent
actuaries, independent certified public accountants or other
professionals and specialists as surveyors. All expenses
incurred in and about the survey of any hospital, including
compensation of department or Insurance Department employees
assisting in the survey and any other professionals or
specialists retained in accordance with this section shall be
charged to and paid by the hospital surveyed in such a manner as
the secretary shall by regulation provide.
Section 7. The act is amended by adding a section to read:
Section 902.2. Confidentiality.
(a) Any insurance contracts, documents, materials or
information received by the department or Insurance Department
from a hospital for the purpose of compliance with this act and
any regulations developed pursuant to this act shall be
confidential.
(b) The department may use the information under section 806
and any regulations developed pursuant to this act for the sole
purpose of a licensure or corrective action against a health
care facility.
(c) Any insurance contracts, documents, materials or
information made confidential under this act shall not be
subject to requests under the act of February 14, 2008 (P.L.6,
No.3), known as the "Right-to-Know Law."
Section 8. This act shall take effect in 90 days.
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