H. B. 4604

(By Mr. Speaker, Mr. Kiss, and Delegate Trump)

[By Request of the Executive]

[Introduced February 22, 2000; referred to the

Committee on Government Organization then Finance.]

A BILL to amend and reenact section eight, article twenty-nine-b, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to amend chapter thirty-three of said code, by adding thereto a new article, designated as article twenty-five-e, all relating to powers of the health care authority; joint negotiations by physicians with health benefit plans; defining terms, authorizing joint negotiations; exceptions to joint negotiations; joint negotiations agreements; physicians' representatives; health care authority; rulemaking authority; and fees.

Be it enacted by the Legislature of West Virginia:
That section eight, article twenty-nine-b, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that chapter thirty-three of said code be amended by adding thereto a new article, designated article twenty-five-e, all to read as follows:

§16-29B-8. 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 and 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 costs of health care services subject to the provisions of this article and may subpoena witnesses, papers, records, documents and all other data in connection therewith. The board may administer oaths or affirmations in any hearing or investigation;
(3) Oversee and approve joint negotiations by physicians with health benefit plans as set forth in section one, article twenty-five-e, chapter thirty-three of the code;
(4) Apply for, receive and accept gifts, payments 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 hospitals subject to the provisions of this article, or associations representing them, doing business in the state of West Virginia, except in accordance with subsection (c) of this section), and enter into agreements with respect thereto, including the undertaking of studies, plans, demonstrations or projects. Any such gifts or payments that may be received or any such agreements that may be entered into shall be used or formulated only so as to pursue legitimate, lawful purposes of the board, and shall in no respect inure to the private benefit of a board member, staff member, donor or contracting party;
(5) Lease, rent, acquire, purchase, own, hold, construct, equip, maintain, operate, sell, encumber and assign rights or dispose of any property, real or personal, consistent with the objectives of the board as set forth in this article: Provided, That such acquisition or purchase of real property or construction of facilities shall be consistent with planning by the state building commissioner and subject to the approval of the Legislature;
(6) Contract and be contracted with an execute all instruments necessary or convenient in carrying out the board's functions and duties; and
(7) Exercise, subject to 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 annually prepare a budget for the next fiscal year for submission to the governor and the Legislature which shall include all sums necessary to support the activities of the board and its staff.
(c) Each hospital subject to the provisions of this article shall be assessed by the board on a pro rata basis using the gross revenues of each hospital as reported under the authority of section eighteen of this article as the measure of the hospital's obligation. The amount of such fee shall be determined by the board except that in no case shall the hospital's obligation exceed one tenth of one percent of its gross revenue. Such fees shall be paid on before the first day of July in each year and shall be paid into the state treasury and kept as a special revolving fund designated "health care cost review fund," with the moneys in such fund being expendable after appropriation by the Legislature for purposes consistent with this article. Any balance remaining in said fund at the end of any fiscal year shall not revert to the treasury, but shall remain in said fund and such moneys shall be expendable after appropriation by the Legislature in ensuring fiscal years.
(d) Each hospital's assessment shall be treated as an allowable expense by the board.
(e) The board is empowered to withhold rate approvals, certificates of need and rural health system loans and grants if any such fees remain unpaid, unless exempted under subsection (g), section four, article two-d of this chapter.


§33-25E-1. Findings and purposes.
The Legislature finds that joint negotiation by competing physicians of certain terms and conditions of contracts with health benefit plans will result in procompetitive effects in the absence of any express or implied threat of retaliatory joint action, such as a boycott or strike, by physicians. Although the Legislature finds that joint negotiations over fee-related terms may in some circumstances yield anti-competitive effects, it also recognizes that there are instances in which health benefit plans dominate the market to such a degree that fair negotiations between physicians and health benefit plans are unobtainable absent any joint action on behalf of physicians. In these instances, health plans have the ability to virtually dictate the terms of the contracts they offer physicians. Consequently, the Legislature finds it appropriate and necessary to authorize joint negotiations on fee-related and other issues where determined that such imbalances exist.
§33-25E-2. Definitions.
In this article:
(1) "Health benefit plan" means a plan described by section three, article twenty-five-e, chapter thirty-three of this article.
(2) "Person" means an individual, association, corporation or any other legal entity.
(3) "Physician" means an individual licensed under the laws of the state to practice medicine or dentistry.
(4) "Physicians' representative" means a third party who will engage in joint negotiations, and is authorized by physicians to negotiate on their behalf with health benefit plans over contractual terms and conditions affecting those physicians.
§33-25E-3. Scope of article.
(a) This article applies only to a health benefit plan that provides benefits for medical or surgical expenses incurred as a result of a health condition, accident or sickness, including an individual, group, blanket or franchise insurance policy or insurance agreement, a group hospital service contract, or an individual or group evidence of coverage or similar coverage document that is offered by:
(1) An insurance company;
(2) A group hospital service corporation;
(3) A fraternal benefit society;
(4) A medical service corporation;
(5) A health service corporation;
(6) A health maintenance organization.
(b) This chapter does not apply to:
(1) A plan that provides coverage:
(A) Only for a specified disease or other limited benefit;
(B) Only for accidental death or dismemberment;
(C) For wages or payments in lieu of wages for a period during which an employee is absent from work because of sickness or injury;
(D) As a supplement to liability insurance;
(E) For credit insurance;
(F) Only for dental or vision care;
(G) Only for hospital expenses; or
(H) Only for indemnity for hospital confinement.
(2) A small employer health benefit plan written under article sixteen-d, chapter thirty-three
of this code;
(3) A Medicare supplemental policy as defined by section 1882 (g) (1), Social Security Act (42 U.S.C. §1395 et seq.), as amended;
(4) Workers' compensation insurance coverage;
(5) Medical payment insurance coverage issued as part of a motor vehicle insurance policy; or
(6) A long term care policy, including a nursing home indemnity policy, unless the health care authority determines that the policy provides benefit coverage so comprehensive that the policy is a health benefit plan as described by subsection (a) of this article.
§33-25E-4. Joint negotiation authorized.
Competing physicians within the service area of a health benefit plan may meet and communicate for the purpose of jointly negotiating the following terms and conditions of contracts with the health benefit plan:
(1) Practices and procedures to assess and improve the delivery of effective, cost-efficient preventive health care services, including childhood immunizations, prenatal care and mammograms and other cancer screening tests or procedures;
(2) Practices and procedures to encourage early detection and effective, cost-efficient management of diseases and illnesses in children;
(3) Practices and procedures to assess and improve the delivery of women's medical and health care, including menopause and osteoporosis;
(4) Clinical criteria for effective, cost-efficient disease management programs, including diabetes, asthma and cardiovascular disease;
(5) Practices and procedures to encourage and promote patient education and treatment compliance, including parental involvement with their children's health care;
(6) Practices and procedures to identify, correct and prevent potentially fraudulent activities;
(7) Practices and procedures for the effective, cost-efficient use of outpatient surgery;
(8) Clinical practice guidelines and coverage criteria;
(9) Administrative procedures, including methods and timing of physician payment for services;
(10) Dispute resolution procedures relating to disputes between health benefit plans and physicians;
(11) Patient referral procedures;
(12) Formulation and application of physician reimbursement methodology;
(13) Quality assurance programs;
(14) Health service utilization review procedures;
(15) Health benefit plan physician selection and termination criteria; and
(16) The inclusion or alteration of terms and conditions to the extent they are the subject of government regulation prohibiting or requiring the particular term or condition in question: Provided, That such restriction does not limit physician rights to jointly petition government for a change in such regulation.
§33-25E-5. Limitations on joint negotiation.
Except as provided in section six of this article, competing physicians shall not meet and communicate for the purpose of jointly negotiating the following terms and conditions of contracts with health benefit plans:
(1) The fees or prices for services, including those arrived at by applying any reimbursement methodology procedures;
(2) The conversion factors in a resource-based relative value scale reimbursement methodology or similar methodologies;
(3) The amount of any discount on the price of services to be rendered by physicians; and
(4) The dollar amount of capitation or fixed payment for health services rendered by physicians to health benefit plan enrollees.
§33-25E-6. Exception to limitations on joint negotiation.
(a) Competing physicians within the service area of a health benefit plan may jointly negotiate the terms and conditions specified in section five of this article where the health benefit plan has substantial market power and those terms and conditions have already affected or threaten to adversely affect the quality and availability of patient care. The health care authority shall make the determination of what constitutes substantial market power.
(b) The commissioner shall have the authority to collect and investigate information necessary to determine, on an annual basis:
(1) The average number of covered lives per month per county by every health care entity in the state; and
(2) The annual impact, if any, of this article on average physician fees in this state.
§33-25E-7. Joint negotiation agreements.
Competing health care physicians' exercise of joint negotiation rights granted by sections four and six of this article shall conform to the following criteria:
(1) Physicians may communicate with each other with respect to the contractual terms and conditions to be negotiated with a health benefit plan;
(2) Physicians may communicate with a third party, who is authorized to negotiate on their behalf with health benefit plans over contractual terms and conditions;
(3) The third party is the sole party authorized to negotiate with health benefit plans on behalf of the physicians as a group;
(4) At the option of each physician, the physicians may agree to be bound by the terms and conditions negotiated by the third party authorized to represent their interests;
(5) Health benefit plans communicating or negotiating with the physicians' representative shall remain free to contract with or offer different contract terms and conditions to individual competing physicians; and
(6) The physicians' representative shall comply with the provisions of section eight of this article.
§33-25E-8. Requirements for physicians' representative.
Any person or organization proposing to act or acting as a representative of physicians for the purpose of exercising authority granted under this chapter shall comply with the following requirements:
(a) Before engaging in any joint negotiations with health benefit plans on behalf of physicians, the representative shall furnish, for health care authority approval, a report identifying:
(1) The representative's name and business address;
(2) The names and addresses of the physicians who will be represented by the identified representative;
(3) The relationship of the physicians requesting joint representation to the total population of physicians in a geographic service area;
(4) The health benefit plans with which the representative intends to negotiate on behalf of the identified physicians;
(5) The proposed subject matter of the negotiations or discussions with the identified health benefit plans;
(6) The representative's plan of operation and procedures to ensure compliance with this section;
(7) The expected impact of the negotiations on the quality of patient care; and
(8) The benefits of a contract between the identified health benefit plan and physicians;
(b) After the parties identified in the initial filing have reached an agreement, the representative shall furnish, for health care authority approval, a copy of the proposed contract and plan of action; and
(c) Within fourteen days of a health benefit plan decision declining negotiation, terminating negotiation, or failing to respond to a request for negotiation, the representative shall report to the health care authority the end of negotiations. If negotiations resume within sixty days of such notification to the health care authority, the applicant shall be permitted to renew the previously filed report without submitting a new report for approval.
§33-25E-9. Approval process by health care authority.
(a) The health care authority shall either approve or disapprove an initial filing, supplemental filing or proposed filing, within thirty days of each filing. If disapproved, the health care authority shall furnish a written explanation of any deficiencies along with a statement of specific remedial measures as to how such deficiencies could be corrected. A representative who fails to obtain the health care authority approval is deemed to act outside the authority granted under this article.
(b) The health care authority shall approve a request to enter into joint negotiations or a proposed contract if it determines that the applicants have demonstrated that the likely benefits resulting from the joint negotiation or proposed contract outweigh the disadvantages attributable to a reduction in competition that may result from the joint negotiation or proposed contract. The
health care authority shall consider physician distribution by specialty and its effect on competition. The joint negotiation shall represent no more than ten per cent of the physicians in a health benefit plan's defined geographic service area except in cases where in conformance with the other provisions of this article conditions support the approval of a greater or lesser percentage.
(c) An approval of the initial filing by the health care authority shall be effective for all subsequent negotiations between the parties specified in the initial filing.
(d) If the health care authority does not issue a written approval or rejection of an initial filing, supplemental filing or proposed contract within the specified time period, the applicant shall have the right to petition a circuit court for a writ of mandamus requiring the health care authority to approve or disapprove the contents of the filing forthwith.
§33-25E-10. Certain joint action prohibited.
Nothing contained in this chapter shall be construed to enable physicians to jointly coordinate any cessation, reduction or limitation of healthcare services. Physicians may not meet and communicate for the purpose of jointly negotiating a requirement that a physician or group of physicians, as a condition of the physicians' or group of physicians' participation in a health benefit plan, must participate in all the products within the same health benefit plan. Physicians may not negotiate with the plan to exclude, limit or otherwise restrict nonphysician health care providers from participation in a health benefit plan based substantially on the fact the health care provider is not a licensed physician unless that restriction, exclusion or limitation is otherwise permitted by law. The representative of the physicians shall advise physicians of the provisions of this article and shall warn physicians of the potential for legal action against physicians who violate state or federal antitrust laws when acting outside the authority of this chapter.
§33-25E-11. Rulemaking authority.
The health care authority shall have the authority to promulgate emergency rules necessary to implement the provisions of this chapter. The health care authority may by rule authorize podiatric physicians to participate in the joint negotiations permitted by this chapter.
§33-25E-12. Construction.
This chapter shall not be construed to prohibit physicians from negotiating the terms and conditions of contracts as permitted by other state or federal law.
§33-25E-13. Fees.
Each person who acts as the representative of negotiating parties under this chapter shall pay to the commissioner a fee to act as a representative. The health care authority, by rule, shall set fees in amounts reasonable and necessary to cover the costs incurred by the state in administering this chapter.

NOTE: The purpose of this bill is to permit joint negotiation by competing physicians of certain terms and conditions of contracts with health benefit plans.

This article is new; therefore, strike-throughs and underscoring have been omitted.