Senate Bill No. 321
(By Senator Hunter)
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[Introduced March 13, 1997; referred to the
Committee on Health and Human Resources; and then to the
Committee on Finance.]
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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; 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; 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; procedural requirements for
certification of rural health care coordination agreements
and rural health care networks; standard and criteria for
approval of rural health care network coordination
agreements and rural health care networks; monitoring of
rural health care networks; standards and procedures for
modification or termination of approval of rural health care
networks; 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; (8) nonprofit
primary care centers designated by the office of community and
rural health services; or (9) county aging programs operating
personal care services; or (10) home health agencies. 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;
(10) Two members from organizations representing health care
consumers; and
(11) One member who represents the interests of home care
providers operating in the state.
(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 said section.
(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- seven, 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) 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;
(d) 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;
(e) 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;
(f) 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
(g) 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 be 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, two thousand.
(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, two thousand
one.
§16-1B-12. Essential community providers.
(a) Prior to the thirtieth day of June, two thousand two, 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 two, unless extended by the Legislature before that
date.