COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 186
(By Senators Tomblin, Mr. President, and Boley,
By Request of the Executive)
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[Originating in the Committee on Health and Human Resources;
reported February 28, 1995.]
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A BILL to amend chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article one-b, relating to the preservation and enhancement of rural health infrastructure through the authorization and regulation of rural health care networks; defining certain terms relating to rural health care networks; the creation of a rural health care network board; designation of the board's membership; terms; requiring a quorum to conduct business; defining the powers for the rural health care network board, including the requirement; requiring the board to adopt conflict of interest provisions; the authorization of preliminary discussions by health care providers of rural health care network formation; permitting expedited authorization of discussions; setting forth the requirements for certification by the rural health care network board of rural health care network coordination agreements and rural health care networks; the procedural requirements for certification of rural health care coordination agreements and rural health care networks; the standard and criteria for approval of rural health care network coordination agreements and rural health care networks; the monitoring of rural health care networks; the standards and procedures for modification or termination of approval of rural health care networks; the time limitation on accepting or granting applications related to the formation of rural health care networks; prohibiting the exclusion of opportunity for essential community providers and limiting the application of this prohibition; defining the terms and conditions of those; and the designation of a termination date for the preservation and enhancement of rural health infrastructure act.

Be it enacted by the Legislature of West Virginia:
That chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article one-b, to read as follows:

ARTICLE 1B. RURAL HEALTH INFRASTRUCTURE PRESERVATION AND ENHANCEMENT ACT.

§16-1B-1. Statement of legislative intent.
The legislature finds that the following are true: (1) That health care delivery and financing systems are rapidly changing; (2) That urban managed care models, based on competition, may not be the best model for enhancing health care delivery in rural areas of the state and may threaten the continued existence of certain essential health services; (3) that loss of such services would force residents in rural areas of West Virginia to travel long distances for primary and essential health care services, thereby placing the physical health and safety of such residents at risk; (4) that providers of health services to rural areas and consumers in those areas may desire to work voluntarily together to form health care networks to plan, organize and preserve essential and primary health care services in rural areas; (5) that urban providers of health services to rural areas may support and participate in such network and the state should not exclude urban providers from such networks; (6) that federal antitrust laws may pose barriers to competing rural providers and consumers from voluntarily working together unless the state becomes actively involved in the planning, certification and monitoring of voluntary networks; (7) that in certain instances the interests of health care consumers will be enhanced by encouraging and facilitating the development of collaborative health care networks in rural areas; and (8) that the state must assure that managed care practices and reimbursement policies of public and private payors do not impair access to essential health care services in rural areas.
§16-1B-2. Definitions.
For purposes of this article, the following terms shall have the meanings set forth in this section:
(a) "Agreement" means a rural health network care coordination agreement as that term is defined in this section;
(b) "Board" means the rural health care network board created by this article;
(c) "Department" means the department of health and human resources;
(d) "Essential community provider" means: (1) Sole community provider hospitals as designated by the federal health care financing authority; (2) rural hospitals located in nonmetropolitan areas with less then seventy-five licensed acute care beds, which are located in communities where there is only one medical/surgical acute care facility, which derive at least fifty percent of revenue from governmental payors, and which are part of a rural network; (3) rural primary care hospitals designated by the federal health care financing authority under the essential access community hospital program; (4) primary care providers in federally designated medically underserved or health professional shortage areas who are part of a rural health network; (5) school health programs which are linked to an existing provider; (6) public health departments; (7) federally qualified health centers and rural health clinics; or (8) nonprofit primary care centers designated by the office of community and rural health services. In order to be designated as an essential community provider, the entity must participate in the medicare and medicaid programs and adopt and comply with a policy for the provision of health care services to indigent and charity patients;
(e) "Health benefit plan" means the health insurance policy or subscriber agreement between a covered person or policyholder and a health care insurer which defines the covered services and benefit levels available;
(f) "Network" means a rural health care network as that term is defined in this section;
(g) "Rural health care market" means a geographic area defined by the rural health care network board by rule within which the board finds that health care services would be improved and enhanced if health care providers within that geographic area formed an integrated rural health network;
(h) "Rural health care network" means a collaborative organization with a designated responsible entity established by two or more health care providers in a rural health care market which exists for the purpose of implementing a rural health care network coordination agreement, as defined in this article, and which has been approved by the rural health care network board pursuant to the provisions of this article, including section eight of this article;
(i) "Rural health care network coordination agreement" means a nonexclusive agreement among two or more health care facilities or other health care providers for the sharing, allocation or referral of patients, personnel, instructional programs, equipment, support services and facilities or medical, diagnostic or laboratory facilities or procedures or other services traditionally offered or purchased by health care facilities or other health care providers;
(j) "Rural primary health care provider" means an individual or entity that has traditionally served as a provider of primary health care services within a rural health care market; and
(k) "Secretary" means the secretary of the department of
health and human resources.
§16-1B-3. Rural health care network board.
(a) There is hereby created the rural health care network board which replaces the existing rural networking advisory council, which shall be an agency within the department. The board shall consist of thirteen members, one of whom shall be the secretary, or his or her designee, who shall also serve as chairperson of the board. The other twelve members of the board shall be chosen by the governor with the advice and consent of the Senate and shall consist of the following:
(1) One member who is a licensed primary care physician, practicing and residing within a rural area of the state;
(2) One member who is a registered professional nurse, practicing and residing within a rural area of the state;
(3) One member who represents business and is not associated with the health care industry nor represents insurance interests or payors and one member representing payors;
(4) One member, residing within the state, who is a hospital administrator of a rural hospital within the state with fewer than one hundred patient beds;
(5) One member, residing within the state, who is a hospital
administrator of a hospital within the state with one hundred patient beds or more;
(6) One member who represents the health sciences programs of the state university system;
(7) One member who represents the interests of primary care centers operating in the state;
(8) One member who represents the interests of public health providers operating in the state;
(9) One member who represents the interests of emergency medical services providers operating in the state; and
(10) Two members from organizations representing health care consumers.
(b) The twelve members of the board other than the secretary, or his or her designee, shall each serve terms that commence on the first day of May, one thousand nine hundred ninety-five. Of the initial appointments to the board, four shall serve for one-year terms, four shall serve for two-year terms and four shall serve for three-year terms. Thereafter, each appointment shall be for a three-year term commencing upon the expiration of the term of his or her previous term or of his or her predecessor's terms. Each board member shall, before entering upon the duties of his or her office, take and subscribe to the oath provided by section five, article IV of the constitution of the state of West Virginia, which oath shall be filed in the office of the secretary of state.
(c) The presence of seven members of the board shall constitute a quorum for purposes of conducting the business of the board: Provided, That the concurrent judgement of seven board members when in session as the board shall be required to take any action.
§16-1B-4. Powers generally; budget expenses of the board.
(a) In addition to the powers granted to the board elsewhere in this article, the board may:
(1) Adopt, amend and repeal necessary, appropriate and lawful policy guidelines, rules in accordance with article three, chapter twenty-nine-a of this code: Provided, That subsequent amendments and modifications to any rule promulgated pursuant to this article and not exempt from the provisions of article three, chapter twenty-nine-a of this code may be implemented by emergency rule;
(2) Hold public hearings, conduct investigations and require the filing of information relating to matters affecting the creating and administration of rural health care networks subject to the provisions of this article.
(3) Apply for, receive and accept gifts, payments, grants and other funds and advances from the United States, the state or any other governmental body, agency or agencies or from any other private or public corporation or person (with the exception of any entity or individual subject to the provisions of this article) and enter into agreements with respect thereto, including the undertaking of studies, plans, demonstrations or projects: Provided, That any such gifts, payments or other funds shall be placed by the treasurer in a special revenue account;
(4) To require the payment of the following fees: One thousand dollars per applicant for board authorization of preliminary discussions; three thousand dollars per applicant for board certification of rural health networks; and one thousand dollars for annual renewal of such certification;
(5) Employ such persons as may be necessary in carrying out the board's functions and to execute all contracts and other instruments necessary or convenient in carrying out the board's functions and duties: Provided, That the board do so with existing appropriations to the department; and
(6) Exercise, subject to the limitations or restrictions herein imposed, all other powers which are reasonably necessary or essential to effect the express objectives and purposes of this article.
(b) The board shall, as one of its first items of business, adopt conflict of interest provisions regarding its members and shall annually prepare a budget for the next fiscal year for submission to the secretary.
(c) Each member of the board shall receive no compensation for his or her services as a member, but subject to any other applicable law regulating travel and other expenses for a state officer, he or she shall receive his or her actual and necessary travel and other expenses incurred in the performance of his or her official duties.

§16-1B-5. Board authorization of preliminary discussions by health care providers of rural health care network formation.

(a) Health care providers that are considering the creation of a rural health care network may apply to the board, on an application form prescribed by the board, for authorization to engage in negotiations aimed at the execution of a rural health
care network coordination agreement. Such applications, if granted by the board, shall be for specific and limited periods of time and for the limited purpose of drafting and executing a rural health care network coordination agreement: Provided, That no such authorization shall exceed one hundred eighty days: Provided, however, That such authorizations by the board shall not be subject to the procedural requirements set forth in section seven of this article: Provided further, That extensions beyond one hundred eighty days may be granted upon a showing that applicants are making substantial progress toward the creation of a network and a network agreement is likely to be achieved and such authorizations shall not be subject to the procedural requirements set forth in section seven of this article.
(b) Existing collaborative organizations established by one or more health care providers may apply for expedited authorization of preliminary discussion pursuant to criteria established by the board.
(c) The board shall promulgate procedural rules, on or before the first day of July, one thousand nine hundred ninety- five, governing the process to be utilized by health care providers and the board in granting such authorizations. These rules shall include provisions requiring the active supervision and participation by the board or its staff in any discussions by health care providers actively seeking certification as a rural health care network.

§16-1B-6. Application requirements for board certification of rural health care network coordination agreements and rural health care networks.

The parties to a rural health care network coordination agreement or any existing collaborative organization of one or more health providers developing a network may apply to the board for approval of that agreement and for approval of the rural health care network proposed by that agreement. The application shall be on a form prescribed by the board and shall include the following:
(a) A copy of the proposed rural health care network coordination agreement and a listing of all legal and natural persons that are parties to the agreement or that are proposed participants in the rural health care network called for by the agreement;
(b) A detailed description of the nature and scope of the
cooperation and joint activities contemplated by the proposed
rural health care network coordination agreement;
(c) An explanation of how the standards for approval, set forth in section eight of this article, apply to the particular rural health care network proposal under consideration;
(d) An analysis of whether the health care market served by the proposed rural health care network meets the definition of rural health care market as set forth by the board pursuant to this article;
(e) A description of how the participants in the proposed network will continue the health care provider training programs that exist, at the time of the filing of the rural health care network application, within the facilities maintained by participants in the proposed rural health care network; and
(f) Any other material that the board may require, pursuant to the regulations promulgated by the board and that is reasonably related to the approval of a rural health care network coordination agreement or a rural health care network.
§16-1B-7. Procedural requirements for board certification of rural health care coordination agreements and rural health care networks.

(a) The board shall review all submitted applications and conduct such hearings as it deems necessary for the proper approval or disapproval of a rural health care network and shall hold hearings when required by provisions of this chapter or upon the written demand therefor by a person aggrieved by any act or failure to act by the board, or when required by any rule, regulation or order of the board. All hearings of the board shall be noticed and conducted in the manner set forth in section one, article five, chapter twenty-nine-a of this code. All hearings of the board shall be announced in the manner set forth in article nine-a, chapter six of this code, and such hearings shall be open to the public except as otherwise provided by said article.
(b) All pertinent provisions of article five, chapter twenty-nine-a of this code shall apply to and govern the hearing and administrative procedures in connection with and following the hearing except as specifically stated to the contrary in this article.
(c) Any hearing may be conducted by the board or, at the board's direction, by designated staff of the department.
(d) Following any hearing, and due deliberation thereof, and in consideration of the total record made, the board shall either grant or deny the application in writing. The written grant or denial may be accompanied by whatever findings and conclusions the board deems necessary, but the decision need not comply with the provisions of section three, article five, chapter twenty- nine-a of this code. A copy of the board's decision shall be served by first class mail on the party demanding the hearing, or upon that party's designated agent, if any.
(e) In no case shall the procedure set forth in this section take longer than one hundred twenty days to complete, such period to commence upon the date of the filing of an application.
(f) A reconsideration and appeal process shall be set forth in a rule promulgated by the board in accordance with the provisions of chapter twenty-nine-a of this code.

§16-1B-8. Standards for approval by the board of rural health care network coordination agreements and rural health care networks: criteria.

(a) The board shall approve a rural health care network coordination agreement and proposed rural health care network if it determines that such agreement and network are likely to maintain and improve the cost effectiveness, availability, accessibility, quality or delivery or hospital or other health care services in the affected rural health care market and that such agreement and network are consistent with other state statutory health care policies and programs. The board shall develop criteria for determining whether such standards have been met: Provided, That each individual network will develop credentialing, scope of service, and other guidelines applicable to the network.
(b) Before approving a rural health care network coordination agreement and proposed rural health care network, the board shall also take into consideration, the benefits of any reduction or elimination of competition. The board shall not approve any agreement or network until the criteria required by this section and article have been developed by the board.
(c) The agreement and network must provide for a transition of the network upon expiration of this article on or before the thirtieth day of June, two thousand.
(d) Nothing contained within this article shall be construed to immunize or exclude any person or entity from the provisions of article two-d, chapter sixteen of this code, nor shall any provision of this article by construed to limit the application of any other statute concerning the licensure of facilities, services, or professions and any activities, undertaken pursuant to a rural health care network coordination agreement or through a rural health care network, shall comply with all applicable law: Provided, That in reviewing certificate of need applications, the health care cost review authority shall give due consideration to the importance of the formation of networks consistent with the findings set forth herein.

§16-1B-9. Supervision of rural health care networks by the board; network monitors; reporting.

(a) Once a rural health care network coordination agreement and a rural health care network have been approved by the board, the board shall ensure the on-going monitoring, review and supervision of the network. The board shall, through its staff, have full and immediate access, to any network related personnel, activity or information. Each network shall provide the board with reasonable written notice prior to all meetings among officers, directors or key personnel of the network or of any participating provider in a rural health care network.
(b) Each rural health care network shall provide the board with an annual report from the first anniversary date of the network agreement, that evaluates its continuing compliance with the standards and criteria set forth in section eight of this article, as well as provide any other information which the board may require.
(b) The board shall review each agreement approved by the board at least every two years from the anniversary date of the agreement. If the board determines that the likely benefits resulting from its state action approval no longer outweigh any disadvantages attributable to any potential reduction in competition resulting from the agreement, the board shall initiate a proceeding to withdraw its state action approval governing the agreement. The proceeding constitutes a contested case and shall be governed by the procedures set forth in chapter twenty-nine-a of this code.

§16-1B-10. Modification or termination of board approval of network; standards; procedures.

(a) The board, upon its own motion approved by at least seven members of the board, may modify or withdraw its original approval of a rural health care network coordination agreement and a rural health care network if it determines that:
(1) The board's original approval of the agreement and network was procured by fraud or other material misrepresentation;
(2) The parties to the agreement or the participants in the network have failed, in some material respect, to comply with the terms of this article, to comply with the terms of the agreement as approved by the board, to maintain the structure of the network as approved by the board or to abide by the terms of the board's original decision approving the agreement and network;
(3) The parties to the agreement or the participants in the network have failed or refused to comply with the monitoring or reporting requirements of section nine of this article; or
(4) The agreement or network no longer meets the standards or criteria for approval set forth in section eight of this article.
(b) If the board shall commence, based on its own motion or otherwise, a proceeding to modify or terminate an agreement or network that it originally approved, the board shall provide an opportunity for a hearing in accordance with the provisions of section seven of this article, and notice of such hearing shall be given to all parties subject to the agreement, all participants in the network and any other parties admitted to any previous proceeding involving the agreement. The board may subpoena witnesses, papers, records, documents and all other data and administer oaths or affirmations in any hearing or investigation relating to such proceeding.
(c) The withdrawal of any approval of a rural health care network coordination agreement or rural health care network pursuant to the provisions of this section shall be prospective in application.

§16-1B-11. Time limitation on accepting or granting applications for negotiations, agreements and networks.

(a) Notwithstanding any other provision of this article to the contrary, no application for approval of preliminary network negotiations, pursuant to the provisions of section five of this article, may be accepted or granted after the thirty-first day of December, one thousand nine hundred ninety-eight.
(b) Notwithstanding any other provision of this article to the contrary, no application for approval of a rural health care network coordination agreement and rural health care network, pursuant to the provisions of section six of this article, may be accepted or granted after the thirtieth day of June, one thousand nine hundred ninety-nine.
§16-1B-12. Essential community providers.
(a) Prior to the thirtieth day of June, two thousand, no essential community provider shall be denied the opportunity to become a participating provider in a health benefit plan. This subsection shall apply to any essential community provider which is willing to render health care services covered by a health benefit plan under one of the following:
(1) The same terms and conditions, including payment terms, applicable to other participating providers of the same provider category in the plan; or
(2) Such terms and conditions as may be mutually agreed upon by such provider and the health care insurer offering the health benefit plan.
In the event an essential community provider requests the opportunity to become a participating provider in any health benefit plan, the health care insurer of that plan shall conduct reasonable and good faith negotiations with such essential community provider. If the requesting essential community provider does meet the terms and conditions applicable to other participating providers of the same provider category, the health care insurer shall approve such provider as participating provider for purposes of such plan. Nothing in this subsection shall be deemed to prevent a health care insurer from voluntarily approving any provider as a participating provider in any health benefit plan.
To reject or terminate an essential community provider from serving as a participating provider in a health plan, the health care insurer shall:
(1) Inform the provider in writing of the basis of such rejection or termination, referring to the specific qualification or standards which the provider failed to meet; and
(2) Afford the provider a reasonable opportunity to conform to such qualification or standard.
(b) The insurance commissioner shall ensure compliance and enforcement of the provisions of this section.
§16-1B-13. Termination date.
The board shall terminate on the thirtieth day of June, two thousand, unless extended by the legislation before that date.

FINANCE COMMITTEE AMENDMENTS

On page ___, section two, line ___, by striking out the word "or";
On page ___, section two, line ___, after the word "services" by changing the period to a semicolon and inserting the following "or (9) county aging programs operating personal care services.";
On page ___, section six, after line ___, by inserting thereto a new subdivision (c) to read as follows:
"(c) A detailed description of the assets, stock, money or other consideration passing to and among the parties to the rural health care network coordination agreement and passing to and among the parties to the proposed rural health care network;"
And,
By relettering the remaining subdivisions.