GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 941

Short Title:  Health Provider Cooperation Act.	(Public)
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Sponsors: Representatives Gamble, Green; Alexander, Cummings, Dickson, Gottovi, and Russell.
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Referred to:  Health and Human Services.
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April 14, 1993

A BILL TO BE ENTITLED
AN ACT TO ENCOURAGE REGULATED ARRANGEMENTS AMONG HEALTH CARE PROVIDERS WHEN THE ARRANGEMENT WILL HELP CONTROL COSTS, IMPROVE ACCESS, IMPROVE QUALITY, OR IMPLEMENT MANDATED HEALTH CARE REFORMS.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 90 of the General Statutes is amended by adding the following new Article to read:
"ARTICLE 1E.
"Regulated Health Care Provider Arrangements.
"§ 90-21.24. Findings and intent.
The General Assembly finds that health care reform efforts will require cooperative relationships among providers to achieve the reforms' objectives.  In particular, the formation of cooperative provider networks for the purpose of generating more efficient ways of delivering high quality provider services and medical care will be essential to health system reform.  The goals of controlling health care costs, improving the quality of medical care, and expanding access to health care services will be significantly enhanced by some cooperative arrangements that would be prohibited by State and federal antitrust laws if undertaken without governmental oversight.  The purpose of this Article is to create an opportunity for the State to review proposed cooperative arrangements among providers and to substitute regulation for competition when an arrangement is likely to result in lower costs, greater economic efficiencies, higher access to or quality of health care, or better implementation of the reforms of this act, than would otherwise occur given the requirements of the antitrust laws.  This act is not intended to prohibit any provider arrangements that are permissible under the antitrust laws.  The act intends that the process set forth in this Article shall be considered State action for purposes of application of the federal antitrust laws.
"§ 90-21.25.  Definitions.
As used in this Article, unless the context clearly requires otherwise, the term:
(1)	'Provider' means, without limitation, any person who pursuant to the provisions of this Chapter is licensed, or is otherwise registered or certified to engage in the practice of or otherwise perform the duties associated with medicine and the allied occupations.
(2)	'Department' means the Department of Human Resources.
"§ 90-21.26. Review and approval of provider arrangements.
The Department, in consultation with the Office of the Attorney General, shall establish criteria and procedures to review and authorize contracts, business or financial arrangements, or other activities, practices, or arrangements involving providers that might be construed to be violations of State or federal antitrust laws but which further the goals enumerated in this Article.  The Department shall not approve any application unless the Department finds that the proposed cooperative arrangement is likely to:
(1)	Result in lower health care costs, or
(2)	Result in greater economic efficiencies, or
(3)	Result in higher access to or quality of health care, or
(4)	Otherwise better implement mandated health reforms.
The Department may condition approval on a modification of all or part of the arrangement to eliminate any restrictions on competition that are not reasonably related to the goals of controlling costs, achieving efficiencies, improving access or quality, or otherwise facilitating the implementation of mandated reforms.  The Department shall also establish conditions and criteria for approval that are reasonably necessary to protect against any abuses of private economic power and to ensure that the arrangement has sufficient oversight by the State.  These conditions may include annual reports by the participants in the arrangements, periodic review by the Department, and a process for hearing complaints by any parties aggrieved by the activities of an approved cooperative arrangement.  The Department may revoke its approval upon a finding that the arrangement is not in substantial compliance with the terms of the application or the conditions of approval.
"§ 90-21.27. Applications for approval of provider arrangements.
Applications for approval under this section shall be filed with the Department and shall include the following:
(1)	A detailed description of the proposed cooperative arrangement in detail;
(2)	Identification of all the participants;
(3)	The purpose or intent of the arrangement;
(4)	The expected effects of the arrangement; and
(5)	An explanation of how the arrangement will help control costs or achieve economic efficiencies, or improve access or quality, or otherwise facilitate the implementation of mandated health care reforms.
The Department may request the Office of the Attorney General to comment on an application, but the application and any information obtained by the Department under this section is not admissible in any proceeding brought by the State based on antitrust violations.
"§ 90-21.28. Provider networks.
The Department shall establish criteria and conditions designed to facilitate and encourage the formation of provider networks that can negotiate with health plans, and permit provider input into the administration, coverage, prepayment policies, and other operational policy decisions of health plans.  The applications of provider networks that meet the criteria and conditions established by the Department shall be approved pursuant to the applications process.  The Department shall have discretion over what criteria and conditions to develop, but must develop criteria and conditions for at least the following:
(1)	Provider networks designed to collectively develop and present position statements to health plans.  Such position statements may include:
a.	Cost data in support of a request to modify a health plan's fee schedule;
b.	Suggestions as to specific proposed reimbursement levels; and
c.	Proposals regarding payment procedures, utilization review, administrative requirements, coverage issues, and other aspects of the operation of the health plan.
(2)	Providers may select an agent (such as a consultant, attorney, medical society, or other person or entity) for the purposes of developing and presenting the position statements.  Providers who participate in a provider network must be subject to the following restrictions:
a.	Any individual provider in the network shall be permitted to negotiate and enter into individual arrangements with any health plan (including the health plan to which a position statement is submitted);
b.	Any individual provider in the network shall  be permitted to enter into arrangements with other provider networks for purposes of negotiating arrangements with any health plan;
c.	The providers shall not exchange information among independently practicing providers in the network concerning their usual charges, except on an aggregate or composite basis that does not reveal the charges of any individual provider; and
d.	The providers may not boycott or threaten a boycott of health plans that do not accept the proposals made by the providers.
"§ 90-21.29. State antitrust laws.
Notwithstanding the trade regulation laws of this State, contracts, business or financial arrangements, or other activities, practices, or arrangements involving providers or purchasers that are approved by the Department under this Article do not constitute an unlawful contract, combination, or conspiracy in unreasonable restraint of trade or commerce under North Carolina law.  Approval by the Department is an absolute defense against any action under State law."
Sec. 2. The Department of Human Resources shall, not later than February 1, 1994, adopt permanent rules to implement this Article.  
Sec. 3. This act is effective upon ratification and applies only to arrangements duly approved by the Department pursuant to this Article and rules adopted thereunder.