THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY VANCE, FONTANA, ERICKSON, SCARNATI, PILEGGI, ALLOWAY, BAKER, BOSCOLA, BROWNE, CORMAN, COSTA, EARLL, FARNESE, FERLO, GORDNER, GREENLEAF, HUGHES, KASUNIC, LEACH, LOGAN, MELLOW, O'PAKE, ORIE, PICCOLA, PIPPY, RAFFERTY, ROBBINS, STACK, STOUT, TARTAGLIONE, WASHINGTON, WAUGH, YAW, M. WHITE AND WARD, JANUARY 29, 2009

SENATOR ERICKSON, PUBLIC HEALTH AND WELFARE, AS AMENDED,MARCH 17, 2009

AN ACT

AmendingReenacting and amending the act of July 8, 1986

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(P.L.408, No.89), entitled, as reenacted, "An act providing

for the creation of the Health Care Cost Containment Council,

for its powers and duties, for health care cost containment

through the collection and dissemination of data, for public

accountability of health care costs and for health care for

the indigent; and making an appropriation," defining

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"committee"; further providingfurther providing for policy

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declaration, for definitions, for the Health Care Cost

Containment Council and its powers and duties, for data

submission and collection and for access to council data; and 

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providing for the establishment of a Health Care Cost

Containment Council Act Review Committee and; and further

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providing for sunset of act.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 3 of the act of July 8, 1986 (P.L.408,

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No.89), known as the Health Care Cost Containment Act, reenacted

and amended July 17, 2003 (P.L.31, No.14), is amended by adding

a definition to read:

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:

* * *

"Committee."  The Health Care Cost Containment Council Act

Review Committee.

* * *

Section 2.  Sections 4(f), 5(c) and (d), 6(a) and (d) and

10(b)(5) of the act are amended to read:

Section 4.  Health Care Cost Containment Council.

* * *

(f)  Bylaws.--The council shall adopt bylaws, not

inconsistent with this act, and may appoint such committees or

elect such officers subordinate to those provided for in

subsection (c) as it deems advisable. The council shall provide

for the approval and participation of additional delegates

appointed under subsection (b)(7) and (8) so that each

organization represented by delegates under those paragraphs

shall not have more than one vote on any committee to which they

are appointed. The council shall also appoint a technical

advisory group which shall, on an ad hoc basis, respond to

issues presented to it by the council or committees of the

council and shall make recommendations to the council. The

technical advisory group shall include physicians, researchers,

biostatisticians, one representative of the Hospital and

Healthsystem Association of Pennsylvania and one representative

of the Pennsylvania Medical Society. The Hospital and

Healthsystem Association of Pennsylvania and the Pennsylvania

Medical Society representatives shall not be subject to

executive committee approval. In appointing other physicians,

researchers and biostatisticians to the technical advisory

group, the council shall consult with and take nominations from

the representatives of the Hospital Association of Pennsylvania,

the Pennsylvania Medical Society, the Pennsylvania Osteopathic

Medical Society or other like organizations. At its discretion

and in accordance with this section, nominations shall be

approved by the executive committee of the council. If the

subject matter of any project exceeds the expertise of the

technical advisory group, physicians in appropriate specialties

who possess current knowledge of the issue under study may be

consulted. The technical advisory group shall also review the

availability and reliability of severity of illness measurements

as they relate to small hospitals and psychiatric,

rehabilitation and children's hospitals and shall make

recommendations to the council based upon this review. Meetings

of the technical advisory group shall be open to the general

public.

* * *

Section 5.  Powers and duties of the council.

* * *

(c)  Audit powers.--The council shall have the right to

independently audit all information required to be submitted by

data sources as needed to corroborate the accuracy of the

submitted data, pursuant to the following:

(1)  Audits of information submitted by providers or

health care insurers shall be performed on a sample and

issue-specific basis, as needed by the council, and shall be

coordinated, to the extent practicable, with audits performed

by the Commonwealth. All health care insurers and providers

are hereby required to make those books, records of accounts

and any other data needed by the auditors available to the

council at a convenient location within 30 days of a written

notification by the council.

(2)  Audits of information submitted by purchasers shall

be performed on a sample basis, unless there exists

reasonable cause to audit specific purchasers, but in no case

shall the council have the power to audit financial

statements of purchasers.

(3)  All audits performed by the council shall be

performed at the expense of the council.

(4)  The results of audits of providers or health care

insurers shall be provided to the audited providers and

health care insurers on a timely basis, not to exceed 30 days

beyond presentation of audit findings to the council.

(d)  General duties and functions.--The council is hereby

authorized to and shall perform the following duties and

functions:

(1)  Develop a computerized system for the collection,

analysis and dissemination of data. The council may contract

with a vendor who will provide such data processing services.

The council shall assure that the system will be capable of

processing all data required to be collected under this act.

Any vendor selected by the council shall be selected in

accordance with the provisions of section 16, and said vendor

shall relinquish any and all proprietary rights or claims to

the data base created as a result of implementation of the

data processing system.

(2)  Establish a Pennsylvania Uniform Claims and Billing

Form for all data sources and all providers which shall be

utilized and maintained by all data sources and all providers

for all services covered under this act.

(3)  Collect and disseminate data, as specified in

section 6, and other information from data sources to which

the council is entitled, prepared according to formats, time

frames and confidentiality provisions as specified in

sections 6 and 10, and by the council.

(4)  Adopt and implement a methodology to collect and

disseminate data reflecting provider quality and provider

service effectiveness pursuant to section 6.

(5)  Subject to the restrictions on access to raw data

set forth in section 10, issue special reports and make

available raw data as defined in section 3 to any purchaser

requesting it. Sale by any recipient or exchange or

publication by a recipient, other than a purchaser, of raw

council data to other parties without the express written

consent of, and under terms approved by, the council shall be

unauthorized use of data pursuant to section 10(c).

(6)  On an annual basis, publish in the Pennsylvania

Bulletin a list of all the raw data reports it has prepared

under section 10(f) and a description of the data obtained

through each computer-to-computer access it has provided

under section 10(f) and of the names of the parties to whom

the council provided the reports or the computer-to-computer

access during the previous month.

(7)  Promote competition in the health care and health

insurance markets.

(8)  Assure that the use of council data does not raise

access barriers to care.

(10)  Make annual reports to the General Assembly on the

rate of increase in the cost of health care in the

Commonwealth and the effectiveness of the council in carrying

out the legislative intent of this act. In addition, the

council may make recommendations on the need for further

health care cost containment legislation. The council shall

also make annual reports to the General Assembly on the

quality and effectiveness of health care and access to health

care for all citizens of the Commonwealth.

(12)  Conduct studies and publish reports thereon

analyzing the effects that noninpatient, alternative health

care delivery systems have on health care costs. These

systems shall include, but not be limited to: HMO's; PPO's;

primary health care facilities; home health care; attendant

care; ambulatory service facilities; freestanding emergency

centers; birthing centers; and hospice care. These reports

shall be submitted to the General Assembly and shall be made

available to the public.

(13)  Conduct studies and make reports concerning the

utilization of experimental and nonexperimental transplant

surgery and other highly technical and experimental

procedures, including costs and mortality rates.

(14)  In order to ensure that the council adopts and

maintains both scientifically credible and cost-effective

methodology to collect and disseminate data reflecting

provider quality and service effectiveness, the council

shall, within one year of the effective date of this

paragraph, utilizing current Commonwealth agency guidelines

and procedures, issue a request for information from any

vendor that wishes to provide data collection or risk

adjustment methodology to the council to help meet the

requirements of this subsection and section 6. The council

shall establish an independent Request for Information Review

Committee to review and rank all responses and to make a

final recommendation to the council. The Request for

Information Review Committee shall consist of the following

members appointed by the Governor:

(i)  One representative of the Hospital and

Healthsystem Association of Pennsylvania.

(ii)  One representative of the Pennsylvania Medical

Society.

(iii)  One representative of insurance.

(iv)  One representative of labor.

(v)  One representative of business.

(vi)  Two representatives of the general public.

(15)  The council shall execute a request for proposals

with third-party vendors for the purpose of demonstrating a

methodology for the collection, analysis and reporting of

hospital-specific complication rates. The results of this

demonstration shall be provided to the chairman and minority

chairman of the Public Health and Welfare Committee of the

Senate and the chairman and minority chairman of the Health

and Human Services Committee of the House of Representatives.

This methodology may be utilized by the council for public

reporting on comparative hospital complication rates.

Section 6.  Data submission and collection.

(a)  (1)  Submission of data.--The council is hereby

authorized to collect and data sources are hereby required to

submit, upon request of the council, all data required in

this section, according to uniform submission formats, coding

systems and other technical specifications necessary to

render the incoming data substantially valid, consistent,

compatible and manageable using electronic data processing

according to data submission schedules, such schedules to

avoid, to the extent possible, submission of identical data

from more than one data source, established and promulgated

by the council in regulations pursuant to its authority under

section 5(b). If payor data is requested by the council, it

shall, to the extent possible, be obtained from primary payor

sources. The council shall not require any data sources to

contract with any specific vendor for submission of any

specific data elements to the council.

(1.1)  Any vendor shall comply with data submission

guidelines established in the report submitted under section

17.2. The council shall maintain a vendor list of at least

two vendors that may be chosen by any data source for

submission of any specific data elements.

(2)  Except as provided in this section, the council may

adopt any nationally recognized methodology to adjust data

submitted under subsection (c) for severity of illness. Every

three years after the effective date of this paragraph, the

council shall solicit bids from third-party vendors to adjust

the data. The solicitation shall be in accordance with 62

Pa.C.S. (relating to procurement). Except as provided in

subparagraph (i), in carrying out its responsibilities, the

council shall not require health care facilities to report

data elements which are not included in the manual developed

by the national uniform billing committee. The following

apply:

(i)  Within 60 days of the effective date of this

paragraph, the council shall publish in the Pennsylvania

Bulletin a list of diseases, procedures and medical

conditions, not to exceed 35, for which data under

subsections (c)(21) and (d) shall be required. The chosen

list shall not represent more than 50% of total hospital

discharges, based upon the previous year's hospital

discharge data. Subsequent to the publication of the

list, any data submission requirements under subsections

(c)(21) and (d) previously in effect shall be null and

void for diseases, procedures and medical conditions not

found on the list. All other data elements pursuant to

subsection (c) shall continue to be required from data

sources. The council shall review the list and may add no

more than a net of three diseases, procedures or medical

conditions per year over a five-year period starting on

the effective date of this subparagraph. The adjusted

list of diseases, procedures and medical conditions shall

at no time be more than 50% of total hospital discharges.

(ii)  If the current data vendor is unable to

achieve, on a per-chart basis, savings of at least 40% in

the cost of hospital compliance with the data abstracting

and submission requirements of this act by June 30, 2004,

as compared to June 30, 2003, then the council shall

disqualify the current vendor and reopen the bidding

process. The independent auditor shall determine the

extent and validity of the savings. In determining any

demonstrated cost savings, surveys of all hospitals in

this Commonwealth shall be conducted and consideration

shall be given at a minimum to:

(A)  new costs, in terms of making the

methodology operational, associated with laboratory,

pharmacy and other information systems a hospital is

required to purchase in order to reduce hospital

compliance costs, including the cost of electronic

transfer of required data; and

(B)  the audited direct personnel and related

costs of data abstracting and submission required.

(iii)  Review by the independent auditor shall

commence by March 1, 2004, and shall conclude with a

report of findings by July 31, 2004. The report shall be

delivered to the council, the Governor, the Health and

Human Services Committee of the House of Representatives

and the Public Health and Welfare Committee of the

Senate.

* * *

(d)  Provider quality and provider service effectiveness data

elements.--In carrying out its duty to collect data on provider

quality and provider service effectiveness under section 5(d)(4)

and subsection (c)(21), the council shall define a methodology

to measure provider service effectiveness which may include

additional data elements to be specified by the council

sufficient to carry out its responsibilities under section 5(d)

(4). The council may adopt a nationally recognized methodology

of quantifying and collecting data on provider quality and

provider service effectiveness until such time as the council

has the capability of developing its own methodology and

standard data elements. The council shall include in the

Pennsylvania Uniform Claims and Billing Form a field consisting

of the data elements required pursuant to subsection (c)(21) to

provide information on each provision of covered services

sufficient to permit analysis of provider quality and provider

service effectiveness within 180 days of commencement of its

operations pursuant to section 4. In carrying out its

responsibilities, the council shall not require health care

insurers to report on data elements that are not reported to

nationally recognized accrediting organizations, to the

Department of Health or to the Insurance Department in quarterly

or annual reports. The council shall not require reporting by

health care insurers in different formats than are required for

reporting to nationally recognized accrediting organizations or

on quarterly or annual reports submitted to the Department of

Health or to the Insurance Department. The council may adopt the

quality findings as reported to nationally recognized

accrediting organizations. Additional quality data elements must

be defined and released for public comment prior to the

promulgation of regulations pursuant to section 5(b). The public

comment period shall be no less than 30 days from the release of

these elements.

* * *

Section 10.  Access to council data.

* * *

(b)  Limitations on access.--Unless specifically provided for

in this act, neither the council nor any contracting system

vendor shall release and no data source, person, member of the

public or other user of any data of the council shall gain

access to:

* * *

(5)  Any raw data disclosing discounts or differentials

between payments accepted by providers for services and their

billed charges obtained by identified payors from identified

providers unless the data is released in a Statewide,

aggregate format that does not identify any individual payor

or class of payors and the council assures that the release

of such information is not prejudicial or inequitable to any

individual payor or provider or group thereof. Payor data

shall be released to individual providers for purposes of

verification and validation prior to inclusion in a public

report. An individual provider shall verify and validate the

payor data within 30 days of its release to that specific

individual provider.

* * *

Section 3.  The act is amended by adding sections to read:

Section 17.2.  Health Care Cost Containment Council Act Review

Committee.

(a)  Establishment.--There is hereby established an

independent committee to be known as the Health Care Cost

Containment Council Act Review Committee.

(b)  Composition.--The committee shall consist of the

following voting members composed of and appointed as follows:

(1)  One member appointed by the Governor.

(2)  Four members appointed by the General Assembly, one

of whom shall be appointed by each of the following:

(i)  one by the President pro tempore of the Senate;

(ii)  one by the Minority Leader of the Senate;

(iii)  one by the Majority Leader of the House of

Representatives; and

(iv)  one by the Minority Leader of the House of

Representatives .

(3)  Two representatives of the business community, at

least one of whom represents small business, and neither of

whom is primarily involved in the provision of health care or

health insurance, one of whom shall be appointed by the

President pro tempore of the Senate and one of whom shall be

appointed by the Speaker of the House of Representatives from

a list of four qualified persons recommended by the

Pennsylvania Chamber of Business and Industry.

(4)  Two representatives of organized labor, one of whom

shall be appointed by the President pro tempore of the Senate

and one of whom shall be appointed by the Speaker of the

House of Representatives from a list of four qualified

persons recommended by the Pennsylvania AFL-CIO.

(5)  One representative of consumers who is not primarily

involved in the provision of health care or health care

insurance, appointed by the Governor from a list of three

qualified persons recommended jointly by the President pro

tempore of the Senate and the Speaker of the House of

Representatives.

(6)  One representative of hospitals, appointed by the

Governor from a list of three qualified hospital

representatives recommended by the Hospital and Health System

Association of Pennsylvania.

(7)  One representative of physicians, appointed by the

Governor from a list of three qualified physician

representatives recommended jointly by the Pennsylvania

Medical Society and the Pennsylvania Osteopathic Medical

Society.

(8)  One representative of nurses, appointed by the

Governor from a list of three qualified representatives

recommended by the Pennsylvania State Nurses Association.

(9)  One representative of the Blue Cross and Blue Shield

plans in Pennsylvania, appointed by the Governor from a list

of three qualified persons recommended jointly by the Blue

Cross and Blue Shield plans of Pennsylvania.

(10)  One representative of commercial insurance

carriers, appointed by the Governor from a list of three

qualified persons recommended by the Insurance Federation of

Pennsylvania, Inc.

(c)  Chairperson.--The appointment made by the Governor under

subsection (b)(1) shall serve as chairman of the committee.

(d)  Quorum.--Eleven members shall constitute a quorum for

the transaction of any business, and the act by the majority of

the members present at any meeting in which there is a quorum

shall be deemed to be the act of the committee.

(e)  Meetings.--

(1)  All meetings of the committee shall be advertised

and conducted pursuant to 65 Pa.C.S. Ch. 7 (relating to open

meetings).

(2)  All action taken by the committee shall be taken in

open public session, and action of the committee shall not be

taken except upon the affirmative vote of a majority of the

members of the committee present during meetings at which a

quorum is present.

(f)  Compensation and expenses.--The members of the committee

shall not receive a salary or per diem allowance for serving as

members of the committee but shall be reimbursed for actual and

necessary expenses incurred in the performance of their duties.

Expenses may include reimbursement of travel and living expenses

while engaged in committee business.

(g)  Commencement of committee.--

(1)  Within 15 days after the effective date of this

section, each organization or individual required to submit a

list of recommended persons to the Governor, the President

pro tempore of the Senate or the Speaker of the House of

Representatives under subsection (b) shall submit the list.

(2)  Within 30 days of the effective date of this

section, the Governor, the President pro tempore of the

Senate and the Speaker of the House of Representatives shall

make the appointments called for in subsection (b), and the

committee shall begin operations immediately following the

appointments.

(h)  Responsibilities of the committee.--The committee shall

have the following powers and duties:

(1)  To study, review and recommend changes to this act.

(2)  To accept and review suggested changes to this act

submitted by members of the committee.

(3)  To approve, by a majority vote of the members of the

committee, a report recommending statutory changes to this

act. The report shall include, at a minimum, the following:

(i)  The establishment of an Internet database for

the general public showing Medicare reimbursement rates

for common covered services and treatment.

(ii)  In consultation with experts in the fields of

quality data and outcome measures, the definition and

implementation of:

(A)  A methodology by provider type for the

council to risk adjust quality data.

(B)  A methodology for the council to collect and

disseminate data reflecting provider quality and

provider service effectiveness.

(4)  To submit the report approved under paragraph (3) to

the President pro tempore of the Senate and the Speaker of

the House of Representatives by April 30, 2009.

(i) Committee support.--The council shall offer staff and

administrative support from the council or its work groups

necessary for the committee to carry out its duties under this

section.

Section 4.  Section 19 of the act is amended to read:

Section 19.  Sunset.

This act shall expire [June 30, 2008] June 30, 2013, unless

reenacted prior to that date. By September 1, [2007] 2012, a

written report by the Legislative Budget and Finance Committee

evaluating the management, visibility, awareness and performance

of the council shall be provided to the Public Health and

Welfare Committee of the Senate and the Health and Human

Services Committee of the House of Representatives. The report

shall include a review of the council's procedures and policies,

the availability and quality of data for completing reports [to

hospitals and outside vendor purchasers, the ability of the

council to become self-sufficient by selling data to outside

purchasers], whether there is a more cost-efficient way of

accomplishing the objectives of the council and the need for

reauthorization of the council.

Section 1.  The title and section 1 of the act of July 8,

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1986 (P.L.408, No.89), known as the Health Care Cost Containment

Act, reenacted and amended July 17, 2003 (P.L.31, No.14), are

reenacted to read:

AN ACT

Providing for the creation of the Health Care Cost Containment

Council, for its powers and duties, for health care cost

containment through the collection and dissemination of data,

for public accountability of health care costs and for health

care for the indigent; and making an appropriation.

Section 1.  Short title.

This act shall be known and may be cited as the Health Care

Cost Containment Act.

Section 2.  Sections 2, 3, 4, 5 and 6 of the act are

reenacted and amended to read:

[Section 2.  Legislative finding and declaration.

The General Assembly finds that there exists in this

Commonwealth a major crisis because of the continuing escalation

of costs for health care services. Because of the continuing

escalation of costs, an increasingly large number of

Pennsylvania citizens have severely limited access to

appropriate and timely health care. Increasing costs are also

undermining the quality of health care services currently being

provided. Further, the continuing escalation is negatively

affecting the economy of this Commonwealth, is restricting new

economic growth and is impeding the creation of new job

opportunities in this Commonwealth.

The continuing escalation of health care costs is

attributable to a number of interrelated causes, including:

(1)  Inefficiency in the present configuration of health

care service systems and in their operation.

(2)  The present system of health care cost payments by

third parties.

(3)  The increasing burden of indigent care which

encourages cost shifting.

(4)  The absence of a concentrated and continuous effort

in all segments of the health care industry to contain health

care costs.

Therefore, it is hereby declared to be the policy of the

Commonwealth of Pennsylvania to promote health care cost

containment and to identify appropriate utilization practices by

creating an independent council to be known as the Health Care

Cost Containment Council.

It is the purpose of this legislation to promote the public

interest by encouraging the development of competitive health

care services in which health care costs are contained and to

assure that all citizens have reasonable access to quality

health care.

It is further the intent of this act to facilitate the

continuing provision of quality, cost-effective health services

throughout the Commonwealth by providing current, accurate data

and information to the purchasers and consumers of health care

on both cost and quality of health care services and to public

officials for the purpose of determining health-related programs

and policies and to assure access to health care services.

Nothing in this act shall prohibit a purchaser from obtaining

from its third-party insurer, carrier or administrator, nor

relieve said third-party insurer, carrier or administrator from

the obligation of providing, on terms consistent with past

practices, data previously provided to a purchaser pursuant to

any existing or future arrangement, agreement or understanding.]

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:

"Allowance."  The maximum allowed combined payment from a

payor and a patient to a provider for services rendered.

"Ambulatory service facility."  A facility licensed in this

Commonwealth, not part of a hospital, which provides medical,

diagnostic or surgical treatment to patients not requiring

hospitalization, including ambulatory surgical facilities,

ambulatory imaging or diagnostic centers, birthing centers,

freestanding emergency rooms and any other facilities providing

ambulatory care which charge a separate facility charge. This

term does not include the offices of private physicians or

dentists, whether for individual or group practices.

"Charge" or "rate."  The amount billed by a provider for

specific goods or services provided to a patient, prior to any

adjustment for contractual allowances.

"Committee."  The Health Care Cost Containment Council Act

Review Committee.

"Council."  The Health Care Cost Containment Council.

"Covered services."  Any health care services or procedures

connected with episodes of illness that require either inpatient

hospital care or major ambulatory service such as surgical,

medical or major radiological procedures, including any initial

and follow-up outpatient services associated with the episode of

illness before, during or after inpatient hospital care or major

ambulatory service. The term does not include routine outpatient

services connected with episodes of illness that do not require

hospitalization or major ambulatory service.

"Data source."  A [hospital] health care facility; ambulatory

service facility; physician; health maintenance organization as

defined in the act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act; hospital,

medical or health service plan with a certificate of authority

issued by the Insurance Department, including, but not limited

to, hospital plan corporations as defined in 40 Pa.C.S. Ch. 61 

(relating to hospital plan corporations) and professional health

services plan corporations as defined in 40 Pa.C.S. Ch. 63 

(relating to professional health services plan corporations);

commercial insurer with a certificate of authority issued by the

Insurance Department providing health or accident insurance;

self-insured employer providing health or accident coverage or

benefits for employees employed in the Commonwealth;

administrator of a self-insured or partially self-insured health

or accident plan providing covered services in the Commonwealth;

any health and welfare fund that provides health or accident

benefits or insurance pertaining to covered service in the

Commonwealth; the Department of Public Welfare for those covered

services it purchases or provides through the medical assistance

program under the act of June 13, 1967 (P.L.31, No.21), known as

the Public Welfare Code, and any other payor for covered

services in the Commonwealth other than an individual.

"Health care facility."  A general or special hospital,

including tuberculosis and psychiatric hospitals, kidney disease

treatment centers, including freestanding hemodialysis units,

and ambulatory service facilities as defined in this section,

and hospices, both profit and nonprofit, and including those

operated by an agency of State or local government.

"Health care insurer."  Any person, corporation or other

entity that offers administrative, indemnity or payment services

for health care in exchange for a premium or service charge

under a program of health care benefits, including, but not

limited to, an insurance company, association or exchange

issuing health insurance policies in this Commonwealth; hospital

plan corporation as defined in 40 Pa.C.S. Ch. 61 (relating to

hospital plan corporations); professional health services plan

corporation as defined in 40 Pa.C.S. Ch. 63 (relating to

professional health services plan corporations); health

maintenance organization; preferred provider organization;

fraternal benefit societies; beneficial societies; and third-

party administrators; but excluding employers, labor unions or

health and welfare funds jointly or separately administered by

employers or labor unions that purchase or self-fund a program

of health care benefits for their employees or members and their

dependents.

"Health maintenance organization."  An organized system which

combines the delivery and financing of health care and which

provides basic health services to voluntarily enrolled

subscribers for a fixed prepaid fee, as defined in the act of

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

Maintenance Organization Act.

"Hospital."  An institution, licensed in this Commonwealth,

which is a general, [tuberculosis,] mental, chronic disease or

other type of hospital, or kidney disease treatment center,

whether profit or nonprofit, and including those operated by an

agency of State or local government.

"Indigent care."  The actual costs, as determined by the

council, for the provision of appropriate health care, on an

inpatient or outpatient basis, given to individuals who cannot

pay for their care because they are above the medical assistance

eligibility levels and have no health insurance or other

financial resources which can cover their health care.

"Major ambulatory service."  Surgical or medical procedures,

including diagnostic and therapeutic radiological procedures,

commonly performed in hospitals or ambulatory service

facilities, which are not of a type commonly performed or which

cannot be safely performed in physicians' offices and which

require special facilities such as operating rooms or suites or

special equipment such as fluoroscopic equipment or computed

tomographic scanners, or a postprocedure recovery room or short-

term convalescent room.

"Medical procedure incidence variations."  The variation in

the incidence in the population of specific medical, surgical

and radiological procedures in any given year, expressed as a

deviation from the norm, as these terms are defined in the

classical statistical definition of "variation," "incidence,"

"deviation" and "norm."

"Medically indigent" or "indigent."  The status of a person

as described in the definition of indigent care.

"Payment."  The payments that providers actually accept for

their services, exclusive of charity care, rather than the

charges they bill.

"Payor."  Any person or entity, including, but not limited

to, health care insurers and purchasers, that make direct

payments to providers for covered services.

"Physician."  An individual licensed under the laws of this

Commonwealth to practice medicine and surgery within the scope

of the act of October 5, 1978 (P.L.1109, No.261), known as the

Osteopathic Medical Practice Act, or the act of December 20,

1985 (P.L.457, No.112), known as the Medical Practice Act of

1985.

"Preferred provider organization."  Any arrangement between a

health care insurer and providers of health care services which

specifies rates of payment to such providers which differ from

their usual and customary charges to the general public and

which encourage enrollees to receive health services from such

providers.

"Provider."  A hospital, an ambulatory service facility or a

physician.

"Provider quality."  The extent to which a provider renders

care that, within the capabilities of modern medicine, obtains

for patients medically acceptable health outcomes and prognoses,

adjusted for patient severity, and treats patients

compassionately and responsively.

"Provider service effectiveness."  The effectiveness of

services rendered by a provider, determined by measurement of

the medical outcome of patients grouped by severity receiving

those services.

"Purchaser."  All corporations, labor organizations and other

entities that purchase benefits which provide covered services

for their employees or members, either through a health care

insurer or by means of a self-funded program of benefits, and a

certified bargaining representative that represents a group or

groups of employees for whom employers purchase a program of

benefits which provide covered services, but excluding entities

defined in this section as "health care insurers."

"Raw data" or "data."  Data collected by the council under

section 6 [in the form initially received]. No data shall be

released by the council except as provided for in section 11.

"Severity."  In any patient, the measureable degree of the

potential for failure of one or more vital organs.

Section 4.  Health Care Cost Containment Council.

(a)  Establishment.--The General Assembly hereby establishes

an independent council to be known as the Health Care Cost

Containment Council.

(b)  Composition.--The council shall consist of voting

members, composed of and appointed in accordance with the

following:

(1)  The Secretary of Health.

(2)  The Secretary of Public Welfare.

(3)  The Insurance Commissioner.

(4)  Six representatives of the business community, at

least one of whom represents small business, who are

purchasers of health care as defined in section 3, none of

which is primarily involved in the provision of health care

or health insurance, three of which shall be appointed by the

President pro tempore of the Senate and three of which shall

be appointed by the Speaker of the House of Representatives

from a list of twelve qualified persons recommended by the

Pennsylvania Chamber of Business and Industry. Three nominees

shall be representatives of small business.

(5)  Six representatives of organized labor, three of

which shall be appointed by the President pro tempore of the

Senate and three of which shall be appointed by the Speaker

of the House of Representatives from a list of twelve

qualified persons recommended by the Pennsylvania AFL-CIO.

(6)  One representative of consumers who is not primarily

involved in the provision of health care or health care

insurance, appointed by the Governor from a list of three

qualified persons recommended jointly by the Speaker of the

House of Representatives and the President pro tempore of the

Senate.

(7)  Two representatives of hospitals, appointed by the

Governor from a list of five qualified hospital

representatives recommended by the Hospital and Health System

Association of Pennsylvania one of whom shall be a

representative of rural hospitals. Each representative under

this paragraph may appoint two additional delegates to act

for the representative only at meetings of committees, as

provided for in subsection (f).

(8)  Two representatives of physicians, appointed by the

Governor from a list of five qualified physician

representatives recommended jointly by the Pennsylvania

Medical Society and the Pennsylvania Osteopathic Medical

Society. The representative under this paragraph may appoint

two additional delegates to act for the representative only

at meetings of committees, as provided for in subsection (f).

(8.1)  An individual appointed by the Governor who has

expertise in the application of continuous quality

improvement methods in hospitals.

(8.2)  One representative of nurses, appointed by the

Governor from a list of three qualified representatives

recommended by the Pennsylvania State Nurses Association.

(9)  One representative of the Blue Cross and Blue Shield

plans in Pennsylvania, appointed by the Governor from a list

of three qualified persons recommended jointly by the Blue

Cross and Blue Shield plans of Pennsylvania.

(10)  One representative of commercial insurance

carriers, appointed by the Governor from a list of three

qualified persons recommended by the Insurance Federation of

Pennsylvania, Inc.

(11)  One representative of health maintenance

organizations, appointed by the Governor [from a list of

three qualified persons recommended by the Managed Care

Association of Pennsylvania].

(12)  In the case of each appointment to be made from a

list supplied by a specified organization, it is incumbent

upon that organization to consult with and provide a list

which reflects the input of other equivalent organizations

representing similar interests. Each appointing authority

will have the discretion to request additions to the list

originally submitted. Additional names will be provided not

later than 15 days after such request. Appointments shall be

made by the appointing authority no later than 90 days after

receipt of the original list. If, for any reason, any

specified organization supplying a list should cease to

exist, then the respective appointing authority shall specify

a new equivalent organization to fulfill the responsibilities

of this act.

(c)  Chairperson and vice chairperson.--The members shall

annually elect, by a majority vote of the members, a chairperson

and a vice chairperson of the council from among the business

and labor representatives on the council.

(d)  Quorum.--Thirteen members, at least six of whom must be

made up of representatives of business and labor, shall

constitute a quorum for the transaction of any business, and the

act by the majority of the members present at any meeting in

which there is a quorum shall be deemed to be the act of the

council.

(e)  Meetings.--All meetings of the council shall be

advertised and conducted pursuant to 65 Pa.C.S. Ch. 7 (relating

to open meetings), unless otherwise provided in this section.

(1)  The council shall meet at least once every two

months, and may provide for special meetings as it deems

necessary. Meeting dates shall be set by a majority vote of

the members of the council or by the call of the chairperson

upon seven days' notice to all council members.

(2)  All meetings of the council shall be publicly

advertised, as provided for in this subsection, and shall be

open to the public, except that the council, through its

bylaws, may provide for executive sessions of the council on

subjects permitted to be discussed in such sessions under 65

Pa.C.S. Ch. 7. No act of the council shall be taken in an

executive session.

(3)  The council shall publish a schedule of its meetings

in the Pennsylvania Bulletin and in at least one newspaper in

general circulation in the Commonwealth. Such notice shall be

published at least once in each calendar quarter and shall

list the schedule of meetings of the council to be held in

the subsequent calendar quarter. Such notice shall specify

the date, time and place of the meeting and shall state that

the council's meetings are open to the general public, except

that no such notice shall be required for executive sessions

of the council.

(4)  All action taken by the council shall be taken in

open public session, and action of the council shall not be

taken except upon the affirmative vote of a majority of the

members of the council present during meetings at which a

quorum is present.

(f)  Bylaws.--The council shall adopt bylaws, not

inconsistent with this act, and may appoint such committees or

elect such officers subordinate to those provided for in

subsection (c) as it deems advisable. The council shall provide

for the approval and participation of additional delegates

appointed under subsection (b)(7) and (8) so that each

organization represented by delegates under those paragraphs

shall not have more than one vote on any committee to which they

are appointed. The council shall also appoint a technical

advisory group which shall, on an ad hoc basis, respond to

issues presented to it by the council or committees of the

council and shall make recommendations to the council. The

technical advisory group shall include physicians, researchers,

biostatisticians, one representative of the Hospital and

Healthsystem Association of Pennsylvania and one representative

of the Pennsylvania Medical Society. The Hospital and

Healthsystem Association of Pennsylvania and the Pennsylvania

Medical Society representatives shall not be subject to

executive committee approval. In appointing other physicians,

researchers and biostatisticians to the technical advisory

group, the council shall consult with and take nominations from

the representatives of the Hospital Association of Pennsylvania,

the Pennsylvania Medical Society, the Pennsylvania Osteopathic

Medical Society or other like organizations. At its discretion

and in accordance with this section, nominations shall be

approved by the executive committee of the council. If the

subject matter of any project exceeds the expertise of the

technical advisory group, physicians in appropriate specialties

who possess current knowledge of the issue under study may be

consulted. The technical advisory group shall also review the

availability and reliability of severity of illness measurements

as they relate to small hospitals and psychiatric,

rehabilitation and children's hospitals and shall make

recommendations to the council based upon this review. Meetings

of the technical advisory group shall be open to the general

public.

(f.1)  Payment data advisory group.--

(1)  In order to assure the technical appropriateness and

accuracy of payment data, the council shall establish a

payment data advisory group to produce recommendations

surrounding the collection of payment data, the analysis and

manipulation of payment data and the public reporting of

payment data. The payment data advisory group shall include

technical experts and individuals knowledgeable in payment

systems and discharge claims data. The advisory group shall

consist of the following members appointed by the council:

(i)  One member representing each plan under 40

Pa.C.S. Ch. 61 (relating to hospital plan corporations)

and Ch. 63 (relating to professional health services plan

corporations).

(ii)  Two members representing commercial insurance

carriers.

(iii)  Three members representing health care

facilities.

(iv)  Three members representing physicians.

(2)  The payment data advisory group shall meet at least

four times a year and may provide for special meetings as may

be necessary.

(3)  The payment data advisory group shall review and

concur with the technical appropriateness of the use and

presentation of data and report its findings to the council

prior to any vote to publicly release reports. If the council

elects to release a report without addressing the technical

concerns of the advisory group, it shall prominently disclose

this in the public report and include the comments of the

advisory group in the public report.

(4)  The payment data advisory group shall exercise all

powers necessary and appropriate to carry out its duties,

including advising the council on the following:

(i)  Collection of payment data by the council.

(ii)  Manipulation, adjustments and methods used with

payment data.

(iii)  Public reporting of payment data by the

council.

(g)  Compensation and expenses.--The members of the council

shall not receive a salary or per diem allowance for serving as

members of the council but shall be reimbursed for actual and

necessary expenses incurred in the performance of their duties.

Said expenses may include reimbursement of travel and living

expenses while engaged in council business.

(h)  Terms of council members.--

(1)  The terms of the Secretary of Health, the Secretary

of Public Welfare and the Insurance Commissioner shall be

concurrent with their holding of public office. The council

members under subsection (b)(4) through (11) shall each serve

for a term of four years and shall continue to serve

thereafter until their successor is appointed.

(2)  Vacancies on the council shall be filled in the

manner designated under subsection (b), within 60 days of the

vacancy, except that when vacancies occur among the

representatives of business or organized labor, two

nominations shall be submitted by the organization specified

in subsection (b) for each vacancy on the council. If the

officer required in subsection (b) to make appointments to

the council fails to act within 60 days of the vacancy, the

council chairperson may appoint one of the persons

recommended for the vacancy until the appointing authority

makes the appointment.

(3)  A member may be removed for just cause by the

appointing authority after recommendation by a vote of at

least 14 members of the council.

(4)  No appointed member under subsection (b)(4) through

(11) shall be eligible to serve more than two full

consecutive terms of four years beginning on the effective

date of this paragraph.

(j)  Subsequent appointments.--Submission of lists of

recommended persons and appointments of council members for

succeeding terms shall be made in the same manner as prescribed

in subsection (b), except that:

(1)  Organizations required under subsection (b) to

submit lists of recommended persons shall do so at least 60

days prior to expiration of the council members' terms.

(2)  The officer required under subsection (b) to make

appointments to the council shall make said appointments at

least 30 days prior to expiration of the council members'

terms. If the appointments are not made within the specified

time, the council chairperson may make interim appointments

from the lists of recommended individuals. An interim

appointment shall be valid only until the appropriate officer

under subsection (b) makes the required appointment. Whether

the appointment is by the required officer or by the

chairperson of the council, the appointment shall become

effective immediately upon expiration of the incumbent

member's term.

Section 5.  Powers and duties of the council.

(a)  General powers.--The council shall exercise all powers

necessary and appropriate to carry out its duties, including the

following:

(1)  To employ an executive director, investigators and

other staff necessary to comply with the provisions of this

act and regulations promulgated thereunder, to employ or

retain legal counsel and to engage professional consultants,

as it deems necessary to the performance of its duties. Any

consultants, other than sole source consultants, engaged by

the council shall be selected in accordance with the

provisions for contracting with vendors set forth in section

16.

(2)  To fix the compensation of all employees and to

prescribe their duties. Notwithstanding the independence of

the council under section 4(a), employees under this

paragraph shall be deemed employees of the Commonwealth for

the purposes of participation in the Pennsylvania Employee

Benefit Trust Fund.

(3)  To make and execute contracts and other instruments,

including those for purchase of services and purchase or

leasing of equipment and supplies, necessary or convenient to

the exercise of the powers of the council. Any such contract

shall be let only in accordance with the provision for

contracting with vendors set forth in section 16.

(4)  To conduct examinations and investigations, to

conduct audits, pursuant to the provisions of subsection (c),

and to hear testimony and take proof, under oath or

affirmation, at public or private hearings, on any matter

necessary to its duties.

(4.1)  To provide hospitals with individualized data on

patient safety indicators pursuant to section 6(c)(7). The

data shall be risk adjusted and made available to hospitals

electronically and free of charge on a quarterly basis within

45 days of receipt of the corrected quarterly data from the

hospitals. The data is intended to provide the patient safety

committee of each hospital with information necessary to

assist in conducting patient safety analysis.

(5)  To do all things necessary to carry out its duties

under the provisions of this act.

(b)  Rules and regulations.--The council shall promulgate

rules and regulations in accordance with the act of June 25,

1982 (P.L.633, No.181), known as the Regulatory Review Act,

necessary to carry out its duties under this act. This

subsection shall not apply to regulations in effect on June 30,

2003.

(c)  Audit powers.--The council shall have the right to

independently audit all information required to be submitted by

data sources as needed to corroborate the accuracy of the

submitted data, pursuant to the following:

(1)  Audits of information submitted by providers or

health care insurers shall be performed on a sample and

issue-specific basis, as needed by the council, and shall be

coordinated, to the extent practicable, with audits performed

by the Commonwealth. All health care insurers and providers

are hereby required to make those books, records of accounts

and any other data needed by the auditors available to the

council at a convenient location within 30 days of a written

notification by the council.

(2)  Audits of information submitted by purchasers shall

be performed on a sample basis, unless there exists

reasonable cause to audit specific purchasers, but in no case

shall the council have the power to audit financial

statements of purchasers.

(3)  All audits performed by the council shall be

performed at the expense of the council.

(4)  The results of audits of providers or health care

insurers shall be provided to the audited providers and

health care insurers on a timely basis, not to exceed 30 days

beyond presentation of audit findings to the council.

(d)  General duties and functions.--The council is hereby

authorized to and shall perform the following duties and

functions:

(1)  Develop a computerized system for the collection,

analysis and dissemination of data. The council may contract

with a vendor who will provide such data processing services.

The council shall assure that the system will be capable of

processing all data required to be collected under this act.

Any vendor selected by the council shall be selected in

accordance with the provisions of section 16, and said vendor

shall relinquish any and all proprietary rights or claims to

the data base created as a result of implementation of the

data processing system.

(2)  Establish a Pennsylvania Uniform Claims and Billing

Form for all data sources and all providers which shall be

utilized and maintained by all data sources and all providers

for all services covered under this act.

(3)  Collect and disseminate data, as specified in

section 6, and other information from data sources to which

the council is entitled, prepared according to formats, time

frames and confidentiality provisions as specified in

sections 6 and 10, and by the council.

(4)  Adopt and implement a methodology to collect and

disseminate data reflecting provider quality and provider

service effectiveness pursuant to section 6.

(5)  Subject to the restrictions on access to raw data

set forth in section 10, issue special reports and make

available raw data as defined in section 3 to any purchaser

requesting it. Sale by any recipient or exchange or

publication by a recipient, other than a purchaser, of raw

council data to other parties without the express written

consent of, and under terms approved by, the council shall be

unauthorized use of data pursuant to section 10(c).

(6)  On an annual basis, publish in the Pennsylvania

Bulletin a list of all the raw data reports it has prepared

under section 10(f) and a description of the data obtained

through each computer-to-computer access it has provided

under section 10(f) and of the names of the parties to whom

the council provided the reports or the computer-to-computer

access during the previous month.

(7)  Promote competition in the health care and health

insurance markets.

(8)  Assure that the use of council data does not raise

access barriers to care.

(10)  Make annual reports to the General Assembly on the

rate of increase in the cost of health care in the

Commonwealth and the effectiveness of the council in carrying

out the legislative intent of this act. In addition, the

council may make recommendations on the need for further

health care cost containment legislation. The council shall

also make annual reports to the General Assembly on the

quality and effectiveness of health care and access to health

care for all citizens of the Commonwealth.

(12)  Conduct studies and publish reports thereon

analyzing the effects that noninpatient, alternative health

care delivery systems have on health care costs. These

systems shall include, but not be limited to: HMO's; PPO's;

primary health care facilities; home health care; attendant

care; ambulatory service facilities; freestanding emergency

centers; birthing centers; and hospice care. These reports

shall be submitted to the General Assembly and shall be made

available to the public.

(13)  Conduct studies and make reports concerning the

utilization of experimental and nonexperimental transplant

surgery and other highly technical and experimental

procedures, including costs and mortality rates.

[(14)  In order to ensure that the council adopts and

maintains both scientifically credible and cost-effective

methodology to collect and disseminate data reflecting

provider quality and effectiveness, the council shall, within

one year of the effective date of this paragraph, utilizing

current Commonwealth agency guidelines and procedures, issue

a request for information from any vendor that wishes to

provide data collection or risk adjustment methodology to the

council to help meet the requirements of this subsection and

section 6. The council shall establish an independent Request

for Information Review Committee to review and rank all

responses and to make a final recommendation to the council.

The Request for Information Review Committee shall consist of

the following members appointed by the Governor:

(i)  One representative of the Hospital and

Healthsystem Association of Pennsylvania.

(ii)  One representative of the Pennsylvania Medical

Society.

(iii)  One representative of insurance.