HBA-MSH H.B. 3012 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3012
By: Smithee
Insurance
3/25/2001
Introduced



BACKGROUND AND PURPOSE 

Current antitrust laws prohibit physicians from meeting to discuss or
jointly negotiate prices of services and matters relating to contracts with
health benefits plans.  Physicians are thus not able to form networks large
enough to negotiate competitively with health plans.  House Bill 3012
authorizes physicians to meet to discuss matters relating to contracts with
health benefit plans and sets forth provisions relating to the negotiating
representatives of physicians, applications to jointly negotiate, and the
right of the attorney general to monitor joint negotiations. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 5 (Article 29.06, Insurance Code) and to the attorney general in
SECTION 7 (Art. 29.08, Insurance Code) of this bill. 

ANALYSIS

House Bill 3012 amends the Insurance Code to authorize competing physicians
within the service area of a health benefit plan (physicians) to meet and
communicate for the purpose of jointly negotiating the fees or prices for
services, the conversion factors in a resource-based relative value scale
reimbursement methodology or similar methodologies, the amount of any
discount on the price of services to be rendered by physicians, and the
dollar amount of capitation or fixed payment for health services rendered
by physicians to health benefit plan enrollees, unless the benefit plan is
a Medicaid managed care plan or a state child health plan (CHIP) (Article
29.04).  The bill authorizes competing physicians to meet and communicate
to organize a joint negotiating group (group) and select and authorize a
representative.  The physicians must notify the attorney general no later
than the 15th business day after the first meeting.  The attorney general
or a designee is authorized to attend any meeting and receive and review
any correspondence of the group (Art. 29.05).   

The bill requires the Department of Insurance (department) to collect and
maintain information to determine annually the average number of covered
lives per county by every health benefit plan in the state and to release
the information collected and maintained to any person on written request.
The bill requires the commissioner of insurance (commissioner) to adopt
rules to provide for the collection, maintenance, and distribution of the
information (Art. 29.06).   

The bill requires any person or organization acting as a negotiating
representative on behalf of physicians (representative) to furnish to the
attorney general an application including the representative's best
estimate of the relationship of the physicians requesting joint
representation to the total population of physicians in a geographic
service area and a description of and the size market strength of the
health benefit plans with which the representative plans to negotiate.
The bill requires the attorney general to determine the sufficiency of an
application to negotiate.  The bill authorizes the attorney general to
require additional information and adopt rules setting forth technical and
procedural requirements for the application.  The bill removes provisions
requiring the filing of a proposed contract and the termination of
negotiations (Art. 29.08).  The bill requires the attorney general to
approve an application to enter into joint negotiations if  the attorney
general determines that the proposed joint negotiations are in the best
interest of patients, taking into account various specified factors.  The
bill provides that an application approved by the attorney general is
effective for all subsequent negotiations by the joint negotiating group
for two years from the date the application was approved unless the joint
negotiating group or its representative notifies the attorney general that
the composition of the joint negotiating group has not substantially
changed,  in which case the approval is effective for an additional two
years.  The bill provides that if the attorney general does not issue a
written approval or rejection of an application within 30 days, the bill
requires the applicant to 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 bill authorizes the attorney general to
monitor and have a representative at any negotiations or meetings and
receive copies of any correspondence between the joint negotiating group
and a health benefit plan (Art. 29.09).   

The bill removes provisions relating to the ability of physicians to
negotiate restrictions on participation in a health benefit plan.  The bill
provides that a denial or refusal to sign or agree to renew a contract by a
member or members of a joint negotiating group after the end of
negotiations does not constitute a violation and does not form the basis of
civil or administrative action for antitrust against the joint negotiating
group, its representative, or the individual physicians or components of
the joint negotiating group (Art 29.10). 

The bill provides that any information, reports, or records provided to the
attorney general by a representative of physicians or the physicians
negotiating group or a physician relating to joint negotiations and any
information, records, reports, or material received or developed by the
attorney general  relating to joint negotiations are privileged and
confidential and not subject to release, including by subpoena or under
provisions regarding public information (Art. 29.11).  The bill repeals the
expiration date placed on the provisions relating to joint negotiations
(SECTION 11). 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.