PRINTER'S NO. 2225
No. 1816 Session of 1999
INTRODUCED BY YUDICHAK, MANN, SOLOBAY, RUFFING, BEBKO-JONES,
CURRY, DeWEESE, FRANKEL, GRUCELA, FREEMAN, HENNESSEY,
HERSHEY, McILHINNEY, MUNDY, SCRIMENTI, HARHAI, MELIO,
STABACK, SURRA, TIGUE, TRELLO, WALKO, WOJNAROSKI, WRIGHT AND
YOUNGBLOOD, AUGUST 30, 1999
REFERRED TO COMMITTEE ON PROFESSIONAL LICENSURE, AUGUST 30, 1999
AN ACT
1 Authorizing physicians and other health professionals to enter
2 into collective negotiation relating to certain terms and
3 conditions of managed care organization contracts; providing
4 for terms and conditions of the collective negotiation;
5 requiring physician representatives to register certain
6 information with the Department of State; and providing for
7 the powers and duties of the Attorney General, for prohibited
8 activities and for dispute resolution.
9 The General Assembly finds and declares as follows:
10 (1) Collective negotiation by competing physicians and
11 other health care professionals of certain terms and
12 conditions of contracts with managed care organizations can
13 result in better standardized procedures which in turn will
14 result in improvements in the delivery of care and more
15 efficiency in the delivery of health care services.
16 (2) These improvements outweigh any concerns that might
17 arise over the reduction in competition between physicians by
18 allowing collective negotiation, particularly if negotiations
19 are largely limited to noncompensation matters and collective
1 retaliatory action is clearly prohibited.
2 The General Assembly of the Commonwealth of Pennsylvania
3 hereby enacts as follows:
4 Section 1. Short title.
5 This act shall be known and may be cited as the Physician
6 Collective Negotiation Act.
7 Section 2. Definitions.
8 The following words and phrases when used in this act shall
9 have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Competing physicians and health care professionals."
12 Physicians and other health care professionals who do not
13 practice together in a group practice, limited liability
14 corporation, professional corporation or other form of business
15 partnership recognized under State law.
16 "Health care professional." An individual who is licensed to
17 practice as a:
18 (1) Podiatrist under the act of March 2, 1956 (1955
19 P.L.1206, No.375), known as the Podiatry Practice Act.
20 (2) Psychologist under the act of March 23, 1972
21 (P.L.136, No.52), known as the Professional Psychologists
22 Practice Act.
23 (3) Optometrist under the act of June 6, 1980 (P.L.197,
24 No.57), known as the Optometric Practice and Licensure Act.
25 (4) Chiropractor under the act of December 16, 1986
26 (P.L.1646, No.188), known as the Chiropractic Practice Act.
27 "Managed care organization." A health care plan that uses a
28 gatekeeper to manage the utilization of health care services,
29 integrates the financing and delivery of health care services to
30 enrollees through arrangements with health care providers
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1 selected to participate on the basis of specific standards or
2 provides financial incentives for enrollees to use participating
3 health care providers in accordance with procedures established
4 by the plan. A managed care organization includes an entity that
5 arranges for and pays for the provision of health care services
6 under any of the following:
7 (1) Section 603 of the act of May 17, 1921 (P.L.682,
8 No.284), known as The Insurance Company Law of 1921.
9 (2) The act of December 29, 1972 (P.L.1701, No.364),
10 known as the Health Maintenance Organization Act.
11 (3) The act of December 14, 1992 (P.L.835, No.134),
12 known as the Fraternal Benefit Societies Code.
13 (4) 40 Pa.C.S. Ch. 61 (relating to hospital plan
14 corporations).
15 (5) 40 Pa.C.S. Ch. 63 (relating to professional health
16 plan corporations).
17 The term does not include a plan that:
18 (1) only provides coverage for a specified disease or
19 condition;
20 (2) only provides coverage for accidental death or
21 dismemberment;
22 (3) only provides compensation for wages or payments in
23 lieu of wages for a period of time when an employee is absent
24 from work because of sickness or injury;
25 (4) is a supplement to liability insurance;
26 (5) only provides coverage for credit insurance;
27 (6) only provides coverage for dental or vision care or
28 hospital expenses;
29 (7) is a Medicare supplemental policy;
30 (8) provides coverage for workers' compensation or motor
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1 vehicle insurance claims; or
2 (9) only provides coverage for long-term care expenses.
3 "Physician." A physician licensed to practice under the act
4 of October 5, 1978 (P.L.1109, No.261), known as the Osteopathic
5 Medical Practice Act, or the act of December 20, 1985 (P.L.457,
6 No.112), known as the Medical Practice Act of 1985.
7 "Physician representative." A third party who is authorized
8 by physicians or other health care professionals to negotiate on
9 their behalf with managed care organizations over contractual
10 terms and conditions that affect those physicians and health
11 care professionals.
12 Section 3. Collective negotiation authorized.
13 Competing physicians and other health professionals within
14 the approved service area of a managed care organization may,
15 except as provided in section 4, meet and communicate for the
16 purpose of collectively negotiating the following terms and
17 conditions of contracts with that managed organization:
18 (1) Clinical practice guidelines and coverage criteria.
19 (2) Dispute resolution procedures relating to disputes
20 between managed care organizations and physicians and other
21 health care professionals.
22 (3) Patient referral procedures.
23 (4) Quality assurance and utilization review procedures.
24 (5) Managed care plan network credentialing procedures,
25 including criteria used to measure provider performance.
26 (6) Performance incentives and withholding practices.
27 Section 4. Limitations on collective negotiation.
28 Competing physicians and other health care professionals may
29 not meet and communicate for the purposes of collectively
30 negotiating the following terms and conditions of contracts with
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1 managed care organizations unless a managed care organization
2 expressly requests the opportunity to collectively negotiate
3 such issues as:
4 (1) The fees or prices paid for services, including
5 those arrived at by applying any reimbursement methodology
6 procedures.
7 (2) The conversion factors in a resource-based relative
8 value scale reimbursement methodology or similar
9 methodologies.
10 (3) The amount of any discount on the price of services
11 to be rendered by physicians or other health care
12 professionals.
13 (4) The dollar amount of capitation or fixed payment for
14 health services rendered by physicians or other health care
15 professionals to managed care organization enrollees.
16 Section 5. Terms and conditions for collective negotiation.
17 The exercise of collective negotiation rights by competing
18 physicians and other health care professionals under this act
19 shall conform to the following terms and conditions:
20 (1) Physicians and other health care professionals may
21 communicate with each other with respect to the contractual
22 terms and conditions to be negotiated with a managed care
23 organization.
24 (2) Physicians and other health care professionals may
25 communicate with a third party whom they have authorized to
26 negotiate with managed care organizations.
27 (3) The third party shall be the sole entity who is
28 authorized to negotiate on their behalf with managed care
29 organizations on behalf of the physicians and other health
30 care professionals as a group.
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1 (4) Physicians and other health care professionals shall
2 be bound by the terms and conditions negotiated by the third
3 party authorized to represent their interests.
4 (5) Managed care organizations shall retain the ability
5 to negotiate with individual physicians and other health care
6 professionals over those issues which are not within the
7 scope of issues subject to collective negotiation.
8 (6) Managed care organizations shall retain the right to
9 negotiate with individual physicians and other health care
10 professionals who are not participating in a group
11 represented by a third party the terms and conditions of any
12 contractual relationship between that managed care
13 organization and the nonparticipating physician or health
14 care professional.
15 (7) The third-party representative is in compliance with
16 section 6.
17 Section 6. Registration of physician's representative.
18 Any person or entity proposing to act or acting as a
19 physician representative under this act shall register the
20 following information with the Department of State:
21 (1) The name and address of the physician
22 representative.
23 (2) The names, addresses, specialties and practice type
24 of those physicians and other health care professionals who
25 shall be represented by the physician representative.
26 (3) The ratio of the physicians within that geographic
27 area.
28 (4) The managed care organizations with which the
29 representative intends to negotiate on behalf of the
30 identified physicians and other health care professionals.
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1 (5) A copy of the contract between the physician
2 representative and the physicians and health care
3 professionals that individual or entity represents.
4 The Department of State shall maintain a registry of physician
5 representatives and shall have the authority to establish
6 reasonable fees for registering physician representatives.
7 Section 7. Approval of negotiated contract by Attorney General.
8 (a) General rule.--After conclusion of a contract negotiated
9 between a managed care organization and a physician
10 representative, the physician representative shall submit a copy
11 of the contract to the Office of the Attorney General for review
12 and approval. The Attorney General shall review and approve or
13 reject a proposed contract within 15 days of submission by the
14 physician representative. The failure to issue disapproval
15 within such time shall be deemed to be approval.
16 (b) Written explanation for disapproval.--If the contract is
17 disapproved by the Attorney General, a written explanation of
18 the reasons for such disapproval shall be provided to the
19 physician representative and the managed care organization, with
20 a specific statement as to how the deficiencies may be remedied.
21 (c) Criteria for approval.--The Attorney General shall
22 approve the contract if:
23 (1) The terms and conditions of the contract are
24 reasonable and sound.
25 (2) The terms and conditions of the contract do not
26 violate Article XXI of the act of May 17, 1921 (P.L.682,
27 No.284), known as The Insurance Company Law of 1921.
28 (3) The benefits of the contract outweigh the
29 disadvantages that could be alleged to have occurred due to
30 the reduction in competition from allowing physicians and
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1 other health care professionals to have collectively
2 negotiated the contract.
3 (d) Legal effect.--A contract negotiated between a managed
4 care organization and a physician representative that is not
5 approved by the Attorney General in accordance with this section
6 shall be void and unenforceable.
7 Section 8. Prohibited activities.
8 Nothing in this act shall be construed to enable physicians
9 or other health care professionals to collectively coordinate
10 any cessation in the provision of health care services. The
11 physician representatives shall advise those physicians and
12 other health care professionals he represents about the
13 provisions of this section and of the potential for adverse
14 legal action against physicians and other health care
15 professionals who violate antitrust laws when acting outside the
16 authority of this act.
17 Section 9. Dispute resolution.
18 Disputes arising between physician representatives and
19 managed care organizations during the course of collective
20 negotiations may be submitted by mutual consent to an
21 independent arbitrator. The recommendations of the independent
22 arbitrator shall not be binding on either party. Disputes
23 between physicians and other health care professionals over the
24 terms and conditions of contracts collectively negotiated under
25 this act shall be resolved pursuant to the applicable provisions
26 of the laws of this Commonwealth, the terms of the contracts or
27 may be submitted by mutual agreement to an independent
28 arbitrator.
29 Section 10. Construction.
30 Nothing in this act shall be construed to prohibit any
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1 physician or other health care professional from negotiating a
2 contract as permitted by other Federal or State law, nor to
3 prohibit a physician or other health care professional from
4 forming a professional association or partnership.
5 Section 11. Applicability.
6 This act shall apply to all contracts, amendments and
7 renewals thereto entered into on or after the effective date of
8 this act.
9 Section 12. Effective date.
10 This act shall take effect in 60 days.
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