PRINTER'S NO. 306
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
311
Session of
2019
INTRODUCED BY COSTA, FONTANA, FARNESE AND L. WILLIAMS,
FEBRUARY 26, 2019
REFERRED TO BANKING AND INSURANCE, FEBRUARY 26, 2019
AN ACT
Requiring physician practices operating as part of an integrated
delivery network to meet certain requirements to ensure
patient access and consumer choice; imposing powers and
duties on the Insurance Department; and imposing penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Patient
Access and Consumer Choice Act.
Section 2. Legislative findings.
The General Assembly finds and declares as follows:
(1) Beginning in the 1990s, a new trend in hospital
mergers and consolidations began, and public sources
currently estimate that there have been over 300 such
hospital mergers since 2007.
(2) These hospitals consolidate and merge by affiliating
with other independent hospitals or purchasing independent
physician practices, or both.
(3) Hospital and physician consolidation has the
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
potential to increase the cost of health care to consumers by
limiting competition and thereby giving hospitals and
physician practices greater negotiating strength, resulting
in higher prices for patients and little incentive to improve
the quality of care delivered.
(4) Research conducted by government agencies, academics
and others concludes that increasing provider consolidation
has the potential to increase health care costs.
(5) The Commonwealth has a duty to protect consumer
interests.
(6) Hospitals and physician practices that also operate
as an integrated delivery network are able to exert
additional market dominance as they can set rates for both
payment and reimbursement.
(7) To ensure that physician practices operating as part
of an integrated delivery network are not permitted to use
their market dominance to exert undue pressure on health
insurance providers or to restrict a patient's access, a
requirement must be imposed that all physician practices
operating as part of an integrated delivery network contract
with any willing health insurance provider.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Default provider agreement." An agreement between a
hospital-owned physician practice 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
20190SB0311PN0306 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
agreeable provider contract within the time frames established
by this act.
"Department." The Insurance Department of the Commonwealth.
"Health care services." Any medical-surgical, hospital,
facility or ancillary service provided to an individual.
"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).
"Hospital-owned physician practice." A physician practice
that meets both of the following:
(1) Provides health care services or other professional
medical services to an individual.
(2) Is any of the following:
(i) Owned or operated by a hospital.
(ii) Under joint control of a hospital.
(iii) A subsidiary of a hospital.
"Integrated delivery network." One or more entities with
20190SB0311PN0306 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
common ownership, operation or control, which include both of
the following:
(1) One 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.
"Provider contract." A written agreement that meets both of
the following:
(1) Is for the payment or reimbursement of health care
services provided to any individual by a hospital-owned
physician practice that is part of an integrated delivery
network or any other entity directly or indirectly owned,
operated or controlled by or otherwise affiliated with the
integrated delivery network.
(2) Is between both of the following:
(i) A hospital-owned physician practice that is part
of an integrated delivery network or any entity directly
or indirectly owned, operated or controlled by or
otherwise affiliated with an integrated delivery network.
(ii) Any health insurance carrier.
Section 4. Responsibilities.
(a) General rule.--A hospital-owned physician practice that
is part of an integrated delivery network shall comply with the
following:
(1) Assure availability and accessibility of adequate
health care services to members of a health insurance
20190SB0311PN0306 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
carrier, which allows access to quality care and continuity
of health care services.
(2) Not engage in either of the following:
(i) Place restrictive covenants in its employment
contracts that restrain any individual from engaging in
the individual's lawful profession.
(ii) Limit or restrict a consumer's access to care
or limit or restrict a consumer's access to continuity of
care solely on the basis of the consumer's health
insurance carrier.
(3) Enter into a provider contract with any health
insurance carrier for health care services.
(b) Effect of failure to maintain or enter into a mutually
agreeable provider contract.--
(1) Failure of any hospital-owned physician practice
that is part of an integrated delivery network and the
willing health insurance carrier to maintain a mutually
agreeable provider contract shall result in the parties
entering into a default provider agreement for health care
services 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 establish all terms of the
new provider contract.
(2) Failure of any newly affiliated hospital-owned
physician practice that is part of an existing integrated
delivery network or the failure of any hospital-owned
physician practice that is part of a newly formed integrated
delivery network and a willing health insurance carrier to
20190SB0311PN0306 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
enter into a mutually agreeable provider contract within 90
days of affiliation or formation shall result in the parties
entering into immediate mandatory binding arbitration. The
arbitrator shall establish all terms of the new provider
contract.
(c) Arbitration.--The following shall apply to arbitration
required under subsection (b)(2):
(1) 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.
(2) All costs associated with the arbitration shall be
split equally between the parties.
(3) The arbitrator shall conduct the arbitration
pursuant to the American Arbitration Association's Healthcare
Payor Provider Arbitration Rules.
(4) 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 established by the arbitrator.
(d) Term of default provider agreement.--The default
provider agreement shall remain in effect until the arbitration
process between the hospital-owned physician practice that is
part of an integrated delivery network and a willing health
insurance carrier is completed.
(e) Payment under the default provider agreement.--The
20190SB0311PN0306 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
reimbursement rate that a health insurance carrier is required
to pay shall be an amount equal to the greatest of the following
possible amounts:
(1) The amount negotiated with in-network providers for
the same services.
(2) The amount calculated by the same method the health
insurance carrier generally uses to determine payments for
out-of-network services, such as the usual, customary and
reasonable charge.
(3) The amount that would be paid under Medicare for the
same services.
(f) Prohibition.--A hospital-owned physician practice is
prohibited from incorporating a termination provision within a
provider contract with a health insurance carrier that allows
for termination for anything other than willful breach.
(g) Copies of contracts.--Copies of all provider contracts
between a hospital-owned physician practice that is part of an
integrated delivery network and any health insurance carrier
shall be provided to the department.
Section 5. Confidentiality.
Any provider contracts, documents, materials or
information received by the department from a hospital-owned
physician practice for the purpose of compliance with this
act and any regulations developed under this act shall be
confidential, subject to the following:
(1) The department may use the information obtained
pursuant to the provisions of this act for the sole purpose
of compliance with this act.
(2) Any provider contracts, documents, materials or
information made confidential under this act shall not be
20190SB0311PN0306 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
subject to requests under the act of February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
Section 6. Enforcement.
(a) General rule.--The department shall ensure compliance
with this act and shall investigate potential violations of this
act based upon information received from health insurance
carriers, hospital-owned physician practices, enrollees and
other sources.
(b) Regulations.--The department shall promulgate such
regulations as may be necessary to carry out the provisions of
this act.
Section 7. Civil penalties.
The department may impose a civil penalty of not more than
$25,000 per day, not to exceed $1,000,000 per calendar year, on
a hospital-owned physician practice that is part of an
integrated delivery network for a violation of this act.
Section 8. Effective date.
This act shall take effect in 90 days.
20190SB0311PN0306 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18