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.