House Co-Sponsorship Memoranda

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House of Representatives
Session of 2013 - 2014 Regular Session

MEMORANDUM

Posted:	October 2, 2013 01:28 PM
From:	Representative Jim Christiana and Rep. Dan Frankel
To:	All House members
Subject:	Reforms to Address Restricted Health Care Access

Ever-increasing healthcare spending is impacting local government, businesses, and individual consumers by crowding out the possibility for other spending – on education, businesses expansion, or household budget items. According to some estimates, health care spending will be 20 percent of our gross domestic product by 2020. Hospital spending, a key driver of health care costs, has been growing at nearly 5 percent annually.

Hospital consolidation is one of the major components of this increased spending – experts link consolidation with increased rates and higher health care costs. Nonetheless, with the current changes in the marketplace further hospital consolidation is expected. Pennsylvania must get in front of this trend in order to create a fairer, more transparent healthcare system that encourages hospitals to compete based on value, rather than on market leverage. Patients should reap the benefits of clinical integration – better coordinated care and increased efficiency – but should be protected from the potential for collusion or other anti-competitive behavior leading to higher prices or restricted access.

Components of a fairer, more competitive healthcare marketplace include transparency, payment reform and real competition based on value. In the near future, we will be introducing legislation that begins to tackle some of these issues in order to ensure that consolidation does not result in higher prices and less access for our constituents to the hospital and doctor of their choice.

We propose to begin addressing marketplace fairness issues first by focusing on hospitals operating as part of an integrated delivery network – where a large health system and insurance carrier/health plan operate under the same corporate structure. These institutions deserve special attention, as they function both as providers and payers, and therefore can have an exceptional impact on the marketplace.

There are strong consumer protection and public policy reasons for adopting this legislation. These additional regulatory requirements accomplish two important objectives. First, by requiring hospitals and physicians operating as part of an integrated delivery network to contract with all insurers, consumers will not be denied care, or worse abandoned mid-treatment, simply because they hold one type of insurance over another. All consumers should be afforded access to these vital hospital and physician services, regardless of which insurance card they carry.

Second, the legislation will eliminate the ability of any dominant hospital system from demanding unreasonable rates for services from insurers, and in turn raising the overall cost of health care because they are the “must have” system in the area.

Please join me in co-sponsoring this legislation. If you have any questions, please do not hesitate to call my office at (717)-260-6144.

Document #1

Introduced as HB1621

Description:	Our legislation would amend Chapter 8 (Licensing of Health Care Facilities) in the Health Care Facilities Act by imposing additional requirements on hospitals operating as part of an integrated delivery network. Specifically, the amendments to the Health Care Facilities Act add the following criteria to obtain a license to operate a hospital in the Commonwealth: Require hospitals operating as part of an integrated delivery network to contract with any willing insurer. Permit hospitals operating as part of an integrated delivery network to contract for its services at any price or discount that result in adequate reimbursement rates, provided that such rates are based upon sound actuarial data and the open exchange of information. Prohibit hospitals operating as part of an integrated delivery network when contracting with insurers from using contractual provisions and engaging in business practices that impede the availability of quality health care at affordable prices and that restrict access to facilities or services. If a mutually agreeable contract cannot be reached, a contract will be imposed on the parties through mandatory binding arbitration, and will include a default reimbursement rate established by the same methodology and approach used in the federal Affordable Care Act (ACA) to set a minimum level of compensation to be paid by insurers to non-participating providers for emergency services.

Description:

Our legislation would amend Chapter 8 (Licensing of Health Care Facilities) in the Health Care Facilities Act by imposing additional requirements on hospitals operating as part of an integrated delivery network.

Specifically, the amendments to the Health Care Facilities Act add the following criteria to obtain a license to operate a hospital in the Commonwealth:

Require hospitals operating as part of an integrated delivery network to contract with any willing insurer.

Permit hospitals operating as part of an integrated delivery network to contract for its services at any price or discount that result in adequate reimbursement rates, provided that such rates are based upon sound actuarial data and the open exchange of information.

Prohibit hospitals operating as part of an integrated delivery network when contracting with insurers from using contractual provisions and engaging in business practices that impede the availability of quality health care at affordable prices and that restrict access to facilities or services.

If a mutually agreeable contract cannot be reached, a contract will be imposed on the parties through mandatory binding arbitration, and will include a default reimbursement rate established by the same methodology and approach used in the federal Affordable Care Act (ACA) to set a minimum level of compensation to be paid by insurers to non-participating providers for emergency services.

Document #2

Introduced as HB1622

Description:	We will also be introducing freestanding legislation, the Assuring Patient Access & Consumer Choice Act (APACCA), which will establish the same contracting requirements on hospital-owned physician practice organizations operating as part of an integrated delivery network.