HB 1496

AN ACT relative to joint negotiations by physicians with health benefit plans.

SPONSORS: Rep. Asplund, Merr 13; Rep. Pilliod, Belk 3

This bill authorizes joint negotiations by physicians with health benefit plans. The bill establishes the requirements and limitations of such negotiations. The bill requires the attorney general to approve such negotiations.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Statement of Purpose. The general court 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 general court finds that joint negotiations over fee-related terms may in some circumstances yield anticompetitive effects, it also recognizes that there are instances in which health plans dominate the market to such a degree that fair negotiations between physicians and the plan 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 general court finds it appropriate and necessary to authorize joint negotiations on fee-related and other issues where it determines that such imbalances exist.

2 Definition Added; Physicians' Representative. Amend RSA 420-J:3 by inserting after paragraph XXVIII the following new paragraph:

XXVIII-a. "Physicians' representative" means a third party, including a member of the physicians who will engage in joint negotiations, who is authorized by physicians to negotiate on their behalf with health benefit plans over contractual terms and conditions affecting those physicians.

3 New Subdivision; Joint Negotiations by Physicians with Health Benefit Plans. Amend RSA 420-J by inserting after section 14 the following new subdivision:

420-J:15 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:

I. 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.

II. Practices and procedures to encourage early detection and effective, cost-efficient management of diseases and illnesses in children.

III. Practices and procedures to assess and improve the delivery of women's medical and health care, including menopause and osteoporosis.

IV. Clinical criteria for effective, cost-efficient disease management programs, including diabetes, asthma, and cardiovascular disease.

V. Practices and procedures to encourage and promote patient education and treatment compliance, including parental involvement with their children's health care.

VI. Practices and procedures to identify, correct, and prevent potentially fraudulent activities.

VII. Practices and procedures for the effective, cost-efficient use of outpatient surgery.

IX. Administrative procedures, including methods and timing of physician payment for services.

X. Dispute resolution procedures relating to disputes between health benefit plans and physicians.

XVI. 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, however, that such restriction does not limit physician rights to jointly petition government for a change in such regulation.

I. Except as provided in paragraph II, competing physicians shall not meet and communicate for the purposes of jointly negotiating the following terms and conditions of contracts with health benefit plans:

(a) The fees or prices for services, including those arrived at by applying any reimbursement methodology procedures.

(b) The conversion factors in a resource-based relative value scale reimbursement methodology or similar methodologies.

(d) The dollar amount of capitation or fixed payment for health services rendered by physicians to covered persons.

II.(a) Competing physicians within the service area of a health benefit plan may jointly negotiate the terms and conditions specified in paragraph I 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 attorney general shall make the determination of what constitutes substantial market power.

(b) The insurance department 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.

(2) The annual impact, if any, of this subdivision on average physician fees in this state.

(1) A medicaid managed care plan under the medicaid managed care delivery system.

420-J:17 Joint Negotiation Requirements. Competing health care physicians' exercise of joint negotiation rights under this subdivision shall conform to the following criteria:

I. Physicians may communicate with each other with respect to the contractual terms and conditions to be negotiated with a health benefit plan.

II. Physicians may communicate with the third party who is authorized to negotiate on their behalf with health benefit plans over these contractual terms and conditions.

III. The third party is the sole party authorized to negotiate with health benefit plans on behalf of the physicians as a group.

IV. 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.

V. 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.

VI. The physicians' representative shall comply with the provisions of RSA 420-J:18.

420-J:18 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 subdivision shall comply with the following requirements:

I. Before engaging in any joint negotiations with health benefit plans on behalf of physicians, the representative shall furnish, for the attorney general's approval, a report identifying the:

(b) Names and addresses of the physicians who will be represented by the identified representatives.

(c) Relationship of the physicians requesting joint representation to the total population of physicians in a geographic service areas.

(d) Health benefit plans with which the representative intends to negotiate on behalf of the identified physicians.

(e) Proposed subject matter of the negotiations or discussions with the identified health benefit plans.

(f) Representative's plan of operation and procedures to ensure compliance with this section.

(h) Benefits of a contract between the identified health benefit plan and physicians.

II. After the parties identified in the initial filing have reached an agreement, the representative shall furnish, for the attorney general's approval, a copy of the proposed contract and plan of action.

III. Within 14 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 attorney general at the end of negotiations. If negotiations resume within 60 days of such notification to the attorney general, the applicant shall be permitted to renew the previously filed report without submitting a new report for approval.

I. The attorney general shall either approve or disapprove an initial filing, supplemental filing, or a proposed contract within 30 days of each filing. If disapproved, the attorney general 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 attorney general's approval is deemed to act outside the authority granted under this subdivision.

II. The attorney general shall approve a request to enter into joint negotiations or a proposed contract if the attorney general 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 joint negotiation shall represent no more than 10 percent 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 subdivision conditions support the approval of a greater or lesser percentage.

III. An approval of the initial filing by the attorney general shall be effective for all subsequent negotiations between the parties specified in the initial filing.

IV. If the attorney general 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 district court for a mandamus order requiring the attorney general to approve or disapprove the contents of the filing. The petition shall be filed in the appropriate district court.

420-J:20 Certain Joint Action Prohibited. Nothing in this subdivision shall be construed to enable physicians to jointly coordinate any cessation, reduction, or limitation of health care services. Physicians shall not meet and communicate solely 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. The representative of the physicians shall advise physicians of the provisions of this subdivision 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 subdivision.

420-J:21 Fees. Each person who acts as the representative of negotiating parties under this subdivision shall pay to the insurance department a fee to act as a representative.

420-J:22 Construction. This subdivision shall not be construed to prohibit physicians from negotiating the terms and conditions of contracts as permitted by other state or federal law.

The Insurance Department has stated this bill may have an indeterminable impact on state, county, and local expenditures in FY 2001 and each year thereafter. The Department of Justice has determined this bill will increase state general fund expenditures by $299,558 in FY 2001, by $223,620 in FY 2002, by $229,309, and by $234,972 in FY 2004. There will be no fiscal impact on state, county, and local revenue.

The Insurance Department has indicated this bill allows physicians to jointly negotiate contractual terms with insurance companies and health plans. The effect of these provision on the cost of health insurance cannot be readily determined. Therefore, the effect on state, county, and local governments as ratepayers cannot be determined. The Department of Justice has stated this bill institutes responsibilities on the Department concerning physicians negotiated terms with health benefit plans that will require additional legal staff, clerical staff, consultant services, and database development and ongoing maintenance. The Department provided the detail of costs as follows:

Assistant AG

Salary & Benefits $ 66,674 $ 67,163 $ 71,152 $ 75,140

Consultant 100,000 100,000 100,000 100,000

Database 100,000 25,000 25,000 25,000

Legal Secretary

Salary & Benefits 32,884 31,457 33,157 34,832

Total $299,558 $223,620 $229,309 $284,972