1589-S.E AAS 4/14/95

1589-S.E AAS 4/14/95

ESHB 1589 - S COMM AMD (S3032.2)

By Committee on Health & Long-Term Care

ADOPTED AS AMENDED 4/14/95

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 43.70 RCW to read as follows:

QUALITY ASSURANCE‑-INTERAGENCY COOPERATION--ELIMINATION AND COORDINATION OF DUPLICATE STATE PROGRAMS. No later than July 1, 1995, the department of health together with the health care authority, the department of social and health services, the office of the insurance commissioner, and the department of labor and industries shall form an interagency group for coordination and consultation on quality assurance activities. By December 31, 1996, the group shall review all state agency programs governing health service quality assurance and shall recommend to the legislature, the consolidation, coordination, or elimination of rules and programs that would be made unnecessary pursuant to the development of a uniform quality assurance and improvement program.

NEW SECTION. Sec. 2. A new section is added to chapter 48.43 RCW to read as follows:

No public or private health care payer subject to the jurisdiction of the state of Washington shall propose, issue, sign, or renew a provider agreement or enrollee service agreement that contains a clause whose effect, in any way, is to disclaim liability for the care delivered or not delivered to an enrollee because of a decision of the payer as to whether the care was a covered service, medically necessary, economically provided, medically appropriate, or similar consideration. Similarly, no clause shall attempt to shift liability for harm caused by such payer decision as to whether care should be delivered, as opposed to paid for, is between the provider and patient alone as if the fact of whether or not care is paid for played little or no role in a patient's decision to obtain care. Nothing in this section shall be inferred to result in liability to anyone for the payer's payment decisions that are consistent with the language of the applicable service agreement or consistent with the cost-effective delivery of health care. The intent of this section is only to prevent payers from shifting their liability for payment decisions to either providers, or enrollees, or both.

NEW SECTION. Sec. 3. MANAGED COMPETITION‑-FINDINGS AND INTENT. (1) The legislature recognizes that competition among health care providers, facilities, payers, and purchasers will yield the best allocation of health care resources, the lowest prices for health care, and the highest quality of health care when there exists a large number of buyers and sellers, easily comparable health care plans and services, minimal barriers to entry and exit into the health care market, and adequate information for buyers and sellers to base purchasing and production decisions. However, the legislature finds that purchasers of health care services and health care coverage do not have adequate information upon which to base purchasing decisions; that health care facilities and providers of health care services face legal and market disincentives to develop economies of scale or to provide the most cost-efficient and efficacious service; that health carriers face market disincentives in providing health care coverage to those Washington residents with the most need for health care coverage; and that potential competitors in the provision of health care coverage bear unequal burdens in entering the market for health care coverage.

(2) The legislature therefore intends to exempt from state anti-trust laws, and to provide immunity from federal anti-trust laws through the state action doctrine for activities approved under this chapter that might otherwise be constrained by such laws and intends to displace competition in the health care market: To contain the aggregate cost of health care services; to promote the development of comprehensive, integrated, and cost-effective health care delivery systems through cooperative activities among health care providers and facilities; to promote comparability of health care coverage; to improve the cost-effectiveness in providing health care coverage relative to health promotion, disease prevention, and the amelioration or cure of illness; to assure universal access to a publicly determined, standard package of health care benefits; and to create reasonable equity in the distribution of funds, treatment, and medical risk among purchasers of health care coverage, payers of health care services, providers of health care services, health care facilities, and Washington residents. To these ends, any lawful action taken pursuant to chapter 492, Laws of 1993, by any person or entity created or regulated by chapter 492, Laws of 1993, are declared to be taken pursuant to state statute and in furtherance of the public purposes of the state of Washington.

(3) The legislature does not intend and unless explicitly permitted in accordance with section 4 of this act or under rules adopted pursuant to chapter 492, Laws of 1993, does not authorize any person or entity to engage in activities or to conspire to engage in activities that would constitute per se violations of state and federal anti-trust laws including but not limited to conspiracies or agreements:

(a) Among competing health care providers not to grant discounts, not to provide services, or to fix the price of their services;

(b) Among health carriers as to the price or level of reimbursement for health care services;

(d) Among purchasers of health plans to boycott a particular carrier or class of carriers;

(e) Among health carriers to divide the market for health care coverage; or

(f) Among health carriers and purchasers to attract or discourage enrollment of any Washington resident or groups of residents in a health carrier based upon the perceived or actual risk of loss in including such resident or group of residents in a health carrier or subscriber purchasing group.

NEW SECTION. Sec. 4. MANAGED COMPETITION‑-COMPETITIVE OVERSIGHT‑-ATTORNEY GENERAL DUTIES‑-ANTI-TRUST IMMUNITY. (1) A health carrier, health care facility, health care provider, or other person involved in the development, delivery, or marketing of health care or health plans may request, in writing, that the insurance commissioner obtain an informal opinion from the attorney general as to whether particular conduct is lawful under federal and state anti-trust and similar statutes. Trade secret or proprietary information contained in a request for informal opinion shall be identified as such and shall not be disclosed other than to an authorized employee of the insurance commissioner or attorney general without the consent of the party making the request, except that information in summary or aggregate form and market share data may be contained in the informal opinion issued by the attorney general. The attorney general shall issue such opinion within thirty days of receipt of a written request for an opinion or within thirty days of receipt of any additional information requested by the attorney general necessary for rendering an opinion unless extended by the attorney general for good cause shown. If the attorney general concludes that such conduct is not lawful, the person or organization making the request may petition the commissioner for review and approval of such conduct in accordance with subsection (3) of this section.

(2) After obtaining the written opinion of the attorney general and subject to the approval of the attorney general, the insurance commissioner:

(a) May authorize conduct by a health carrier, health care facility, health care provider, or any other person that could tend to lessen competition in the relevant market upon a strong showing that the conduct is likely to achieve the policy goals of health care reform and a more competitive alternative is impractical;

(b) Shall adopt rules governing conduct among providers, health care facilities, and health carriers including rules governing provider and facility contracts with health carriers, rules governing the use of "most favored nation" clauses and exclusive dealing clauses in such contracts, and rules providing that health carriers offering managed care health plans in rural areas contract with a sufficient number and type of health care providers and facilities to ensure consumer access to local health care services;

(c) Shall adopt rules permitting health care providers within the service area of a plan to collectively negotiate the terms and conditions of contracts with the carrier including the ability of providers to meet and communicate for the purposes of these negotiations; and

(d) Shall adopt rules governing cooperative activities among health care facilities and providers.

(3) A health carrier, health care facility, health care provider, or any other person involved in the development, delivery, and marketing of health services or health plans may file a written petition with the insurance commissioner requesting approval of conduct that could tend to lessen competition in the relevant market. Such petition shall be filed in a form and manner prescribed by rule of the insurance commissioner. Trade secret or proprietary information contained in a written petition shall be identified as such and shall not be disclosed other than to an authorized employee of the commissioner or the attorney general without the consent of the party filing the written petition, except that information in summary or aggregate form and market share data may be contained in the written decision issued by the commissioner.

Subject to the approval of the attorney general, the insurance commissioner shall issue a written decision approving or denying a petition filed under this section within ninety days of receipt of a properly completed written petition unless extended by the commissioner for good cause shown. The decision shall set forth findings as to benefits and disadvantages and conclusions as to whether the benefits outweigh the disadvantages.

(4)(a) In authorizing conduct and adopting rules of conduct under this section, the insurance commissioner with the advice of the attorney general, shall consider the benefits of such conduct in furthering the goals of health care reform including but not limited to:

(i) Enhancement of the quality of health services to consumers;

(ii) Gains in cost-efficiency of health services;

(iii) Improvements in utilization of health services and equipment;

(iv) Avoidance of duplication of health services resources; or

(v) And as to (a) (ii) and (iii) of this subsection: (A) Facilitates the exchange of information relating to performance expectations; (B) simplifies the negotiation of delivery arrangements and relationships; and (C) reduces the transactions costs on the part of health carriers and providers in negotiating more cost-effective delivery arrangements.

(b) These benefits must outweigh disadvantages including and not limited to:

(i) Reduced competition among health carriers, health care providers, or health care facilities;

(ii) Adverse impact on quality, availability, or price of health care services to consumers; or

(iii) The availability of arrangements less restrictive to competition that achieve the same benefits.

(5) Conduct authorized by the insurance commissioner shall be deemed taken pursuant to state statute and in the furtherance of the public purposes of the state of Washington.

(6) With the assistance of the attorney general's office, the insurance commissioner shall actively supervise any conduct authorized under this section to determine whether such conduct or rules permitting certain conduct should be continued and whether a more competitive alternative is practical. The commissioner shall periodically review petitioned conduct through, at least, annual progress reports from petitioners, annual or more frequent reviews by the commissioner that evaluate whether the conduct is consistent with the petition, and whether the benefits continue to outweigh any disadvantages. Subject to the advice and approval of the attorney general, the commissioner may determine that the likely benefits of any conduct approved through rule, petition, or otherwise by the commissioner no longer outweigh the disadvantages attributable to potential reduction in competition and the commissioner shall order a modification or discontinuance of such conduct. Conduct ordered discontinued by the commissioner shall no longer be deemed to be taken pursuant to state statute and in the furtherance of the public purposes of the state of Washington.

(7) Nothing contained in this act is intended to in any way limit the ability of rural hospital districts to enter into cooperative agreements and contracts pursuant to RCW 70.44.450 and chapter 39.34 RCW.

NEW SECTION. Sec. 5. RCW 70.170.080 and 1993 sp.s. c 24 s 925, 1991 sp.s. c 13 s 71, & 1989 1st ex.s. c 9 s 508 are each repealed.

NEW SECTION. Sec. 6. If specific funding through the health services account to continue the comprehensive hospital abstract reporting system is not provided by June 30, 1995, in the omnibus appropriations act, section 5 of this act is null and void.

NEW SECTION. Sec. 7. CAPTIONS. Captions as used in this act constitute no part of the law.

NEW SECTION. Sec. 8. SEVERABILITY. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 9. EMERGENCY CLAUSE‑-EFFECTIVE DATE. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995."

ESHB 1589 - S COMM AMD (S3032.2)

By Committee on Health & Long-Term Care

ADOPTED 4/14/95

On page 1, line 1 of the title, after "assurance;" strike the remainder of the title and insert "adding a new section to chapter 43.70 RCW; adding a new section to chapter 48.43 RCW; creating new sections; repealing RCW 70.170.080; providing an effective date; and declaring an emergency."