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PRINTER'S NO. 3102
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2127
Session of
2018
INTRODUCED BY CHRISTIANA, MILLARD AND WARD, MARCH 9, 2018
REFERRED TO COMMITTEE ON HEALTH, MARCH 9, 2018
AN ACT
Requiring physician practices operating as part of an integrated
delivery network to meet certain requirements to ensure
patient access and consumer choice; and imposing powers and
duties on the Insurance Department.
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 either
affiliating with other independent hospitals or purchasing
independent physician practices.
(3) Hospital and physician consolidation has the
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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 conclude 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,
mandatory contracting requirements must be imposed requiring
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
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the parties in the event that they fail to enter into a mutually
agreeable provider contract within the time frames established
by this act.
"Department." The Insurance Department of the Commonwealth.
"Health care services." A 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 this act 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).
"Health insurance policy." A health insurance policy,
subscriber contract, certificate or policy that provides health
or sickness and accident coverage offered by a health insurance
carrier and that is subject to review by the department under
the provisions of the act of December 18, 1996 (P.L.1066,
No.159), known as the Accident and Health Filing Reform Act. The
term does not include any of the following:
(1) An accident-only policy.
(2) A credit-only policy.
(3) A long-term care or disability income policy.
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(4) A specified disease policy.
(5) A Medicare supplement policy.
(6) A Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS) supplement policy.
(7) A dental-only policy, other than a qualified dental
policy.
(8) A vision-only policy.
(9) A workers' compensation policy.
(10) An automobile medical payment policy under 75
Pa.C.S. (relating to vehicles).
(11) Any other similar policies providing for limited
benefits.
"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
common ownership, operation or control that include both of the
following:
(1) A hospital, physician practice or health care
provider, offering health care services.
(2) An entity 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.
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"Provider contract." A written agreement that meets all of
the following:
(1) Is for the payment or reimbursement of health care
services provided to an 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 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;
and
(ii) a 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 all
of the following responsibilities:
(1) Ensure availability, accessibility and continuity of
adequate health care services to members of a health
insurance carrier.
(2) Not engage in either of the following:
(i) Place restrictive covenants in its employment
contracts that restrain an 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.
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(3) Enter into a provider contract with any health
insurance carrier that is willing to enter into a provider
contract for health care services.
(b) Effect of failure to maintain or enter into a mutually
agreeable provider contract.--The following shall apply:
(1) Failure of a hospital-owned physician practice that
is part of an integrated delivery network and a 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 set all terms of the new
provider contract.
(2) Failure of a newly affiliated hospital-owned
physician practice that is part of an existing integrated
delivery network or the failure of a hospital-owned physician
practice that is part of a newly formed integrated delivery
network and a willing health insurance carrier to 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 set 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
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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 set by the arbitrator.
(d) Term of default provider agreement.--The default
provider agreement shall last 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
reimbursement rate that a health insurance carrier is required
to pay shall be an amount equal to the greatest of the following
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
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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.
The following confidentiality provisions shall apply:
(1) 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.
(2) The department may use the information obtained
pursuant to the provisions of this act for the sole purpose
of compliance with this act.
(3) Provider 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 6. Enforcement.
(a) General rule.--The department shall enforce 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
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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.
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