By:  Harris                        S.B. No. 1468
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to the regulation of physician joint negotiation.
 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-3           SECTION 1.  The Insurance Code is amended by adding Chapter
 1-4     29 to read as follows:
 1-5                CHAPTER 29.  JOINT NEGOTIATIONS BY PHYSICIANS
 1-6                          WITH HEALTH BENEFIT PLANS
 1-7           Art. 29.01.  FINDINGS AND PURPOSES.  The legislature finds
 1-8     that joint negotiation by competing physicians of certain terms and
 1-9     conditions of contracts with health plans will result in
1-10     procompetitive effects in the absence of any express or implied
1-11     threat of retaliatory joint action, such as a boycott or strike, by
1-12     physicians.  Although the legislature finds that joint negotiations
1-13     over fee-related terms may in some circumstances yield
1-14     anticompetitive effects, it also recognizes that there are
1-15     instances in which health plans dominate the market to such a
1-16     degree that fair negotiations between physicians and the plan are
1-17     unobtainable absent any joint action on behalf of physicians.  In
1-18     these instances, health plans have the ability to virtually dictate
1-19     the terms of the contracts they offer physicians.  Consequently,
1-20     the legislature finds it appropriate and necessary to authorize
1-21     joint negotiations on fee-related and other issues where it
1-22     determines that such imbalances exist.
1-23           Art. 29.02.  DEFINITIONS.  In this chapter:
1-24                 (1)  "Health benefit plan" means a plan described by
 2-1     Article 29.03 of this code.
 2-2                 (2)  "Person" means an individual, association,
 2-3     corporation, or any other legal entity.
 2-4                 (3)  "Physicians' representative" means a third party
 2-5     who is authorized by physicians to negotiate on their behalf with
 2-6     health benefit plans over contractual terms and conditions
 2-7     affecting those physicians.
 2-8           Art. 29.03.  SCOPE OF CHAPTER.  (a)  This chapter applies
 2-9     only to a health benefit plan that provides benefits for medical or
2-10     surgical expenses incurred as a result of a health condition,
2-11     accident, or sickness, including an individual, group, blanket, or
2-12     franchise insurance policy or insurance agreement, a group hospital
2-13     service contract, or an individual or group evidence of coverage or
2-14     similar coverage document that is offered by:
2-15                 (1)  an insurance company;
2-16                 (2)  a group hospital service corporation operating
2-17     under Chapter 20 of this code;
2-18                 (3)  a fraternal benefit society operating under
2-19     Chapter 10 of this code;
2-20                 (4)  a stipulated premium insurance company operating
2-21     under Chapter 22 of this code;
2-22                 (5)  a reciprocal exchange operating under Chapter 19
2-23     of this code;
2-24                 (6)  a health maintenance organization operating under
2-25     the Texas Health Maintenance Organization Act (Chapter 20A,
2-26     Vernon's Texas Insurance Code); or
 3-1                 (7)  a multiple employer welfare agreement that holds a
 3-2     certificate of authority under Article 3.95-2 of this code.
 3-3           (b)  This chapter does not apply to:
 3-4                 (1)  a plan that provides coverage:
 3-5                       (A)  only for a specified disease or other
 3-6     limited benefit;
 3-7                       (B)  only for accidental death or dismemberment;
 3-8                       (C)  for wages or payments in lieu of wages for a
 3-9     period during which an employee is absent from work because of
3-10     sickness or injury;
3-11                       (D)  as a supplement to liability insurance;
3-12                       (E)  for credit insurance;
3-13                       (F)  only for dental or vision care;
3-14                       (G)  only for hospital expenses; or
3-15                       (H)  only for indemnity for hospital confinement;
3-16                 (2)  a small employer health benefit plan written under
3-17     Chapter 26 of this code;
3-18                 (3)  a Medicare supplemental policy as defined by
3-19     Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss),
3-20     as amended;
3-21                 (4)  workers' compensation insurance coverage;
3-22                 (5)  a "group model health maintenance organization"
3-23     that is a state-certified health maintenance organization that
3-24     provides the majority of its professional services through a single
3-25     group medical practice that educates medical students or resident
3-26     physicians through a contract with the medical school component of
 4-1     a Texas state-supported college or university accredited by the
 4-2     Accreditation Council of Graduate Medical Education or the American
 4-3     Osteopathic Association;
 4-4                 (6)  medical payment insurance coverage issued as part
 4-5     of a motor vehicle insurance policy; or
 4-6                 (7)  a long-term care policy, including a nursing home
 4-7     fixed indemnity policy, unless the attorney general determines that
 4-8     the policy provides benefit coverage so comprehensive that the
 4-9     policy is a health benefit plan as described by Subsection (a) of
4-10     this article.
4-11           Art. 29.04.  JOINT NEGOTIATION AUTHORIZED.  Competing
4-12     physicians within the service area of a health benefit plan may
4-13     meet and communicate for the purpose of jointly negotiating the
4-14     following terms and conditions of contracts with the health benefit
4-15     plan:
4-16                 (1)  clinical practice guidelines and coverage
4-17     criteria;
4-18                 (2)  administrative procedures including methods and
4-19     timing of physician payment for services;
4-20                 (3)  dispute resolution procedures relating to disputes
4-21     between health benefit plans and physicians;
4-22                 (4)  patient referral procedures;
4-23                 (5)  formulation and application of physician
4-24     reimbursement methodology;
4-25                 (6)  quality assurance programs;
4-26                 (7)  health service utilization review procedures;
 5-1                 (8)  health benefit plan physician selection and
 5-2     termination criteria; and
 5-3                 (9)  the inclusion or alteration of terms and
 5-4     conditions to the extent they are the subject of government
 5-5     regulation prohibiting or requiring the particular term or
 5-6     condition in question; provided, however, that such restriction
 5-7     does not limit physician rights to jointly petition government for
 5-8     a change in such regulation.
 5-9           Art. 29.05.  LIMITATIONS ON JOINT NEGOTIATION.  Except as
5-10     provided in Article 29.06 of this code, competing physicians shall
5-11     not meet and communicate for the purposes of jointly negotiating
5-12     the following terms and conditions of contracts with health benefit
5-13     plans:
5-14                 (1)  the fees or prices for services, including those
5-15     arrived at by applying any reimbursement methodology procedures;
5-16                 (2)  the conversion factors in a resource-based
5-17     relative value scale reimbursement methodology or similar
5-18     methodologies;
5-19                 (3)  the amount of any discount on the price of
5-20     services to be rendered by physicians; and
5-21                 (4)  the dollar amount of capitation or fixed payment
5-22     for health services rendered by physicians to health benefit plan
5-23     enrollees.
5-24           Art. 29.06.  EXCEPTION TO LIMITATIONS ON JOINT NEGOTIATION.
5-25     (a)  Competing physicians within the service area of a health
5-26     benefit plan may jointly negotiate the terms and conditions
 6-1     specified in Article 29.05 of this code where the health benefit
 6-2     plan has substantial market power.  The attorney general shall make
 6-3     the determination of what constitutes substantial market power.
 6-4           (b)  The department shall have the authority to collect and
 6-5     investigate information necessary to determine on an annual basis
 6-6     the average number of covered lives per month per county by every
 6-7     health care entity in the state.
 6-8           Art. 29.07.  JOINT NEGOTIATION REQUIREMENTS.  Competing
 6-9     health care physicians' exercise of joint negotiation rights
6-10     granted by Articles 29.04 and 29.06 of this code shall conform to
6-11     the following criteria:
6-12                 (1)  physicians may communicate with each other with
6-13     respect to the contractual terms and conditions to be negotiated
6-14     with a health benefit plan;
6-15                 (2)  physicians may communicate with the third party
6-16     who is authorized to negotiate on their behalf with health benefit
6-17     plans over these contractual terms and conditions;
6-18                 (3)  the third party is the sole party authorized to
6-19     negotiate with health benefit plans on behalf of the physicians as
6-20     a group;
6-21                 (4)  physicians are bound by the terms and conditions
6-22     negotiated by the third party authorized to represent their
6-23     interests;
6-24                 (5)  health benefit plans communicating or negotiating
6-25     with the physicians' representative shall remain free to contract
6-26     with or offer different contract terms and conditions to individual
 7-1     competing physicians; and
 7-2                 (6)  the physicians' representative shall comply with
 7-3     the provision of Article 29.08 of this code.
 7-4           Art. 29.08.  REQUIREMENTS FOR PHYSICIANS' REPRESENTATIVE.
 7-5     Any person or organization proposing to act or acting as a
 7-6     representative of physicians for the purpose of exercising
 7-7     authority granted under this chapter shall comply with the
 7-8     following requirements:
 7-9                 (1)  before engaging in any joint negotiations with
7-10     health benefit plans on behalf of physicians, the representative
7-11     shall furnish, for the attorney general's approval, a report
7-12     identifying:
7-13                       (A)  the representative's name and business
7-14     address;
7-15                       (B)  the names and addresses of the physicians
7-16     who will be represented by the identified representative;
7-17                       (C)  the relationship of the physicians
7-18     requesting joint representation to the total population of
7-19     physicians in a geographic service area;
7-20                       (D)  the health benefit plans with which the
7-21     representative intends to negotiate on behalf of the identified
7-22     physicians;
7-23                       (E)  the proposed subject matter of the
7-24     negotiations or discussions with the identified health benefit
7-25     plans;
7-26                       (F)  the representative's plan of operation and
 8-1     procedures to ensure compliance with this section;
 8-2                       (G)  the expected impact of the negotiations on
 8-3     the quality of patient care; and
 8-4                       (H)  the benefits of a contract between the
 8-5     identified health benefit plan and physicians;
 8-6                 (2)  after the parties identified in the initial filing
 8-7     have reached an agreement, the representative shall furnish, for
 8-8     the attorney general's approval, a copy of the proposed contract
 8-9     and plan of action; and
8-10                 (3)  within 14 days of a health benefit plan decision
8-11     declining negotiation, terminating negotiation, or failing to
8-12     respond to a request for negotiation, the representative shall
8-13     report to the attorney general the end of negotiations.  If
8-14     negotiations resume within 60 days of such notification to the
8-15     attorney general, the applicant shall be permitted to renew the
8-16     previously filed report without submitting a new report for
8-17     approval.
8-18           Art. 29.09.  APPROVAL PROCESS BY ATTORNEY GENERAL.  (a)  The
8-19     attorney general shall either approve or disapprove an initial
8-20     filing, supplemental filing, or a proposed contract within 30 days
8-21     of each filing.  If disapproved, the attorney general shall furnish
8-22     a written explanation of any deficiencies along with a statement of
8-23     specific remedial measures as to how such deficiencies could be
8-24     corrected.  A representative who fails to obtain the attorney
8-25     general's approval is deemed to act outside the authority granted
8-26     under this article.
 9-1           (b)  The attorney general shall approve a request to enter
 9-2     into joint negotiations or a proposed contract if the attorney
 9-3     general determines that the applicants have demonstrated that the
 9-4     likely benefits resulting from the joint negotiation or proposed
 9-5     contract outweigh the disadvantages attributable to a reduction in
 9-6     competition that may result from the joint negotiation or proposed
 9-7     contract.  The joint negotiation shall represent no more than 10
 9-8     percent of the licensed physicians in a defined geographic area.
 9-9     Either the health benefit plan or the physicians' representative
9-10     shall have the right to appeal the percentage, and if conditions
9-11     support such a change, a higher or lower percentage can be
9-12     authorized by the attorney general.
9-13           (c)  An approval of the initial filing by the attorney
9-14     general shall be effective for all subsequent negotiations between
9-15     the parties specified in the initial filing.
9-16           (d)  If the attorney general does not issue a written
9-17     approval or rejection of an initial filing, supplemental filing, or
9-18     proposed contract within the specified time period, the applicant
9-19     shall have the right to petition a district court for a mandamus
9-20     order requiring the attorney general to approve or disapprove the
9-21     contents of the filing forthwith.  The petition shall be filed in a
9-22     district court in Travis County.
9-23           Art. 29.10.  CERTAIN JOINT ACTION PROHIBITED.  Nothing
9-24     contained in this chapter shall be construed to enable physicians
9-25     to jointly coordinate any cessation, reduction, or limitation of
9-26     health care services.  The representative of the physicians shall
 10-1    advise physicians of the provisions of this article and shall warn
 10-2    physicians of the potential for legal action against physicians who
 10-3    violate state or federal antitrust laws when acting outside the
 10-4    authority of this chapter.
 10-5          Art. 29.11.  RULEMAKING AUTHORITY.  The attorney general and
 10-6    the commissioner shall have the authority to promulgate rules
 10-7    necessary to implement the provisions of this chapter.
 10-8          Art. 29.12.  CONSTRUCTION.  This chapter shall not be
 10-9    construed to prohibit physicians from negotiating the terms and
10-10    conditions of contracts as permitted by other state or federal law.
10-11          Art. 29.13.  FEES.  Each person who acts as the
10-12    representative of negotiating parties under this chapter shall pay
10-13    to the department a fee to act as a representative.  The attorney
10-14    general, by rule, shall set fees in amounts reasonable and
10-15    necessary to cover the costs incurred by the state in administering
10-16    this chapter.  A fee collected under this article shall be
10-17    deposited in the state treasury to the credit of the operating fund
10-18    from which the expense was incurred.
10-19          SECTION 2.  This Act takes effect September 1, 1999.
10-20          SECTION 3.  The importance of this legislation and the
10-21    crowded condition of the calendars in both houses create an
10-22    emergency and an imperative public necessity that the
10-23    constitutional rule requiring bills to be read on three several
10-24    days in each house be suspended, and this rule is hereby suspended.
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