Senate Bill No. 346
(By Senators Ross, Helmick, Sharpe, Walker and Plymale)
[Introduced March 17, 1997; referred to the Committee on
on Banking and Insurance; and then to the Committee on Finance.]
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 formation, operation and regulation of provider-
sponsored networks; findings and intent; definitions;
organization of provider-sponsored networks authorized;
participation agreements; contracts with purchasers and
requirements for capitated or similar risk-sharing
contracts; commissioner of health to review purchase
agreements; evidence of provider-sponsored network's
financial soundness to be reviewed by commissioner of
health; additional standards for provider-sponsored
networks; prohibited practices and penalties; and
enforcement and proposal of rules by the commissioner of
health.
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. PROVIDER SPONSORED NETWORKS.
§16-1B-1. Legislative findings and intent.
The Legislature finds that:
(a) The goals of containing health care costs, improving
the quality of health care and preserving the access of this
state's citizens to health care services will be enhanced by the
expanded use of community-based delivery systems;
(b) The use of community-based delivery systems will be
expanded by the formation and operation of provider sponsored
networks;
(c) The formation and operation of provider sponsored
networks is hindered by existing and proposed restrictions upon
and uncertainty regarding the networks' ability to contract with
purchasers to provide health care services, on a capitated or
other prepaid basis;
(d) The citizens of this state benefiting from contracts
with provider sponsored networks must be adequately protected
against the insolvency of the networks, assured that the
networks are accountable for meeting appropriate standards for market conduct, fair complaint and appeal processes,
credentialing, quality assurance, utilization management,
access, and reporting, and assured of their continued receipt of
health care services; and
(e) The formation, operation and regulation of provider
sponsored networks pursuant to this article will expand the use
of community-based delivery systems and managed care while
adequately protecting the citizens of this state.
§16-1B-2. Definitions.
(a) The term "capitation" means a fixed amount paid
periodically by a purchaser to a provider sponsored network
under contract with the purchaser in exchange for the rendering
of health care services.
(b) The term "commissioner" means the state commissioner of
health pursuant to chapter sixteen, article one of this code.
(c) The terms "enrollee," "member" or "subscriber" mean an
individual who has enrolled in a managed care plan which has
contracted with a provider sponsored network to provide
community-based health care.
(d) The term "financially sound" or "fiscally sound" means
that, according to presently accepted actuarial standards of
practice, consistently applied and fairly stated, that the
payments to be made under a contract, together with estimated
investment earnings thereon, make adequate provision for the anticipated cash flows required by the contractual obligations
and related expenses of the parties to the contract.
(e) The term "health care provider" means a person,
partnership, corporation, facility or institution that is
certified or licensed or otherwise authorized by law to provide
health care services in this state.
(f) The term "health care services" means any services or
goods offered by a "health care provider" as defined in
subdivision (e) of this subsection included in the furnishing to
any individual of medical, behavioral health or dental care, or
hospitalization, osteopathic services, nursing, long term care,
home health, emergency care, health education or rehabilitation,
as well as the furnishing to any person of any and all other
services or goods for the purpose of preventing, alleviating,
curing or healing human illness or injury.
(g) The term "prepayment" means a payment mechanism through
contract between a purchaser and a provider sponsored network
which may include, but is not limited to capitation, partial
capitation, percent of premium, budget target and risk
corridors.
(h) The term "provider sponsored network" means a legal
entity organized, owned, and operated by affiliated health care
providers and regulated under this article to provide health
care services to enrollees of managed health care plans offered by purchasers on a prepaid or capitated basis:
Provided, That
this article does not apply to a network of providers which
contract with purchasers through noncapitated or other
nonprepaid arrangements.
(i) The term "managed care plan" means the program or
programs offered by purchasers to consumers.
(j) The term "participating provider" means a health care
provider or an organization owned, controlled or affiliated with
one or more health care providers, including, without being
limited to, a professional corporation, partnership or other
similar organization.
(k) The term "purchaser" means any entity responsible for
providing payment for health care services, including, but not
limited to, the department of health and human resources, the
public employees insurance agency, the division of workers'
compensation or any other state agency, the federal medicare
program or any qualified self-insured employer. However
, the
contracts between self-insured employers, health care
facilities, providers, and provider sponsored networks are
considered to be exempted from state regulatory action by the
federal Employee Retirement Income Security Act, 29 U.S.C. §
1144, and the commissioner of insurance may not construe this
act to require licensure of such health care facilities,
providers, or provider sponsored networks. Also, the term "purchaser" does not include any entity authorized under chapter
thirty-three of the code.
(l) The term "qualified independent actuary" means an
actuary who is a member of the American academy of actuaries or
the society of actuaries and has experience in establishing
rates for entities similar to provider sponsored networks and
who has no financial or employment interest in the provider
sponsored network.
§16-1B-3. Organization; powers.
A provider sponsored network may be organized as a
corporation under article one, chapter thirty-one of this code,
as a limited liability company under article one-a, chapter
thirty-one of this code, or in any other form that constitutes
a legal entity under the laws of this state and shall have such
powers as are available under the applicable authorizing law.
If a provision of this article conflicts with such authorizing
law, the provision of this article apply. The state or federal
government or any agency or political subdivision of the state
or federal government may be a participating provider in a
provider sponsored network. A provider sponsored network may
not be considered an insurer, health maintenance organization,
intermediary, prepaid limited health service organization,
hospital, medical, dental or health service corporation, health
care corporation or any other entity governed by chapter thirty-three of this code. Operations of the provider sponsored
network may not be construed as the corporate practice of
medicine or other health care profession prohibited by chapter
thirty of this code. However, each participating provider is
licensed or otherwise authorized under the laws of this state to
provide the health care services it is providing.
§16-1B-4. Participation agreements.
A provider sponsored network and its participating
providers may execute participation agreements permitting the
participating providers to provide some or all of their health
care services through the provider sponsored network to the
enrollees of a managed care plan.
§16-1B-5. Purchaser contracts.
A purchaser may execute contracts for the purchase of
health care services from a provider sponsored network in
accordance with this section. A contract between a provider
sponsored network and a purchaser may provide for payment by the
purchaser on a capitated or prepaid basis. The following shall
be met:
(a) The contract shall be in writing.
(b) The contract shall provide:
(1) If the purchaser fails to pay for health care services
as set forth in the contract, the enrollee is not liable to the
provider sponsored network or the participating providers for any sums owed by the purchaser; and
(2) A participating provider, agent, trustee or assignee
thereof may not maintain any action at law against a patient to
collect sums owed by the purchaser.
(c) A capitated or similar prepaid contract shall be filed
by the provider sponsored network with the commissioner. Within
thirty days of the date the contract was filed, the commissioner
shall review the contract to determine if it complies with the
provisions of this section. If the contract does not so
comply, the commissioner shall disapprove the contract and shall
notify the provider sponsored network of his disapproval in
writing not later than the forty-fifth day after the dated
contract was filed. If disapproval has not been received by the
forty-fifth day, the contract shall take effect. The
commissioner shall propose procedural rules pursuant to chapter
twenty-nine-a of this code to implement this subsection.
§16-1B-6. Financial soundness.
(a) Prior to entering into any contract with a purchaser
that is not either licensed under chapter thirty-three of the
code or an agency of this state or the federal government, which
contract provides for capitation or any other prepaid
arrangement, the provider sponsored network shall file with the
commissioner evidence that it is financially sound. A contract
under which a provider sponsored network assumes a corridor of risk not greater than ten percent during its first year of
operation and not greater than twenty percent in any year
thereafter is not be subject to this section. Evidence shall
include, at a minimum, the following:
(1) Evidence that the provider sponsored network either
has net worth equal to or greater than one million dollars, or
the sum of eight percent of the expected annual costs for
services from the nonaffiliated providers and four percent of
the expected annual costs from affiliated providers; or
(2) Evidence that the provider sponsored network satisfies
a stop-loss based test by:
An independent actuarial certification that it has
aggregate and individual stop-loss coverage at the actuarial
equivalent of one hundred percent of the aggregate expected
claims level; or
Evidence that it has aggregate only stop-loss coverage with
no more than a one hundred twenty percent aggregate attachment
point and the dollar amount of the corridor, that is, the amount
of potential exposure between one hundred percent and one
hundred twenty percent attachment, must be less than ten percent
of its net worth determined by generally accepted accounting
principles; or
Evidence that it has a letter of credit from a bank for all
claims in excess of ten percent of its net worth determined by generally accepted accounting principles.
(b) For purposes of the stop-loss tests, "stop-loss" can
include stop-loss insurance purchased from a licensed carrier or
the amount of risk retained by public purchasers or the
self-insured employer under a risk corridor agreement.
(c) In addition, the period for which advance payment may
be made to the provider sponsored network shall be limited to
one month.
(d) For purposes of determining the net worth of an
organization under subdivisions (1) and (2), subsection (a) of
this section, the commissioner shall treat as admitted assets
land, buildings and equipment of the organization used for the
direct provision of health care services.
(e) For purposes of determining evidence of financial
soundness under subdivisions (1) and (2), subsection (a) of this
section, the commissioner may establish a protocol and criteria
to be specified in a memorandum of understanding with the
division of insurance in accordance with the provisions of this
article for provider sponsored networks. Evidence of financial
soundness may not exceed the provisions set forth in this
article.
§16-1B-7. Additional standards
(a) A provider sponsored network shall develop and operate
an ongoing quality assurance program which:
(1) Stresses health outcomes;
(2) Provides opportunities for input by physicians and
other health care professionals;
(3) Monitors and evaluates high volume and high risk
services and the care of acute and chronic conditions;
(4) Evaluates the continuity and coordination of care that
patients receive;
(5) Establishes mechanisms to detect both underutilization
and overutilization of services;
(6) After identifying areas for improvement, establishes
standards to facilitate improvement;
(7) Takes action to improve quality and assess the
effectiveness of action through systematic follow up;
(8) Makes available information on quality and outcomes
measures to facilitate consumer comparison and choice of health
options; and
(9) Is evaluated on an ongoing basis as to its
effectiveness.
(b) A provider sponsored network shall be treated as
meeting the requirements of subsection (a) of this section if it
is accredited by a private organization that has been approved
by the commissioner to make examinations concerning the quality
of health care services by providers who own the provider
sponsored network or with whom the network has contracts, agreements or arrangements.
(c) A provider sponsored network shall be required to meet
additional standards established by rule by the commissioner,
which are equivalent but which do not exceed those requirements
set forth for certificate of authority holders pursuant to
article twenty-five-a of this code, but which are determined to
be appropriate for provider sponsored networks, limited to the
following:
(1) Enrollment and market conduct standards which
establish: (i) Parameters for marketing of provider sponsored
networks; (ii) criteria for approval of marketing materials by
the commissioner; (iii) requirements for inclusion of certain
information in marketing materials; and (iv) requirements for
specific information to the consumer on how to access care, list
of providers, and other information;
(2) Consumer care-related complaint and appeal standards
which requires a complaint process for consumers, and a formal
care related grievance process in the event complaints are not
adequately addressed;
(3) Standards requiring disclosure of: (i) Utilization and
selection data; (ii) referral, treatment options, or service
limitations; and (iii) credentialing criteria;
(4) Access standards which assure: (i) Sufficient numbers
and types of providers to deliver the contracted services for reasonable geographic access and ability of network providers to
take new patients; (ii) reasonable waiting times and appointment
times; (iii) if the provider sponsored network is responsible
for primary care services that there is availability of primary
care practitioners twenty-four hours a day; (iv) if the entity
is responsible for providing emergency services that adequate
care is provided in an emergency or perceived emergency
situation both in, and if the entity is responsible, out of
network; and (v) periodic monitoring of utilization patterns;
(5) Standards for utilization management which are no less
favorable to consumers than those established in rule for
certificate of authority holders under article twenty-five-a of
this chapter; and
(6) Reporting requirements including: (i) A report from a
nationally recognized accreditation and review organization, or
other similar quality, of access, patient satisfaction, and
outcomes measures appropriate to the services provided; (ii)
data on utilization patterns and other matters as may reasonably
be required by rule; and (iii) an annual financial statement and
other information relating to the performance of the provider
sponsored network as is reasonably necessary to enable the
commissioner to carry out his or her duties under this article.
§16-1B-8. Prohibited practices; penalties.
(a) It is unlawful for any person or any agents, officers or employees thereof to coerce or require any person to agree,
either in writing or orally, not to join or become or remain a
participant in any provider sponsored network as a condition of
securing or retaining a contract for health care services with
the person.
(b) It is unlawful for any person or any combination of
persons or any agents, officers or employees thereof to engage
in acts or coercion, intimidation or boycott of, or any refusal
to deal with, any provider because that provider is
participating or may participate in a provider sponsored
network.
(c) It is unlawful for any provider sponsored network to
engage in any acts of coercion, intimidation or boycott, or any
concerted refusal to deal with, any purchaser that can
demonstrate to the provider sponsored network, either through
licensure by the commissioner or otherwise, that it is
financially stable, which purchaser seeks to contract with the
network on a competitive, reasonable and nonexclusive basis.
(d) Subject to subsections (a) through (c) of this
section, a provider sponsored network may not be considered a
combination in restraint of trade, and any participation
agreements that contain provisions regarding the price the
network will charge to purchasers or regarding the prices the
participants will charge to the network, or regarding the allocation of gains or losses among the participants, or
regarding the delivery, quality, allocation or location or
health care services to be provided, are not contracts that
unreasonably restrain trade.
(e) Violation of any provision of this section shall be
considered a violation under section eighteen, chapter
forty-eight of this code.
§16-1B-9. Enforcement; regulations.
This article shall be enforced by the commissioner, who
shall have all the powers with respect thereto provided by
article one, chapter sixteen of this code. The commissioner
shall propose legislative rules subject to approval by the
Legislature, to implement this article but may not expand the
restrictions upon provider sponsored networks set forth in this
article and shall amend any rules in existence on the date of
enactment of this article in conflict with this article. In
developing rules under this section, the commissioner shall
solicit the views of health care providers, consumers,
purchasers and state agencies.
NOTE: The purpose of this bill is to authorize the
formation, operation and regulation of provider sponsored
networks; to authorize participation agreements among the
participants in the provider sponsored network; to set forth
requirements for purchaser contracts that provide for payment on
a capitated or similar risk sharing basis; to require purchase contracts to be reviewed by the commissioner of health; to
require a provider sponsored network to provide the commissioner
of health with evidence of financial soundness; to set forth
additional standards, prohibited practices and penalties; and to
provide for the enforcement of the article and adoption of rules
for its implementation by the commissioner of health.
This article is new; therefore, strike-throughs and
underscoring have been omitted.
Email
Webmaster | © 2024 West Virginia Legislature **
