Health carriers must file all provider contracts and provider compensation agreements with the Office of the Insurance Commissioner (OIC) 30 calendar days before use. When a carrier and provider negotiate an agreement that deviates from a filed agreement, the specific contract must be filed 30 days prior to use. Any provider compensation agreements not affirmatively disapproved by OIC are deemed approved, except OIC may extend the approval date an additional 15 days with notice before the initial 30-day period expires. Changes to the previously filed agreements that modify the compensation or related terms must be filed and are deemed approved upon filing if no other changes are made to the previously approved agreement.

OIC may not base a disapproval of the agreement on the amount of the compensation or other financial arrangements between the carrier and provider, unless the compensation amount causes the underlying health benefit plan to be in violation of state or federal law.

Provider compensation agreements are confidential and not subject to public inspection or public disclosure if they are filed following the procedures for submitting confidential filings in the electronic rate and form filings. If the filing instructions are not followed and the carrier indicates that the compensation agreement will be withheld from public inspection, OIC must reject the filing and notify the carrier to amend the filing to comply with the confidentiality instructions.

For health plans, including plans offered to public employees, issued on or after January 1, 2024, a provider contract between a hospital or any affiliate of a hospital and a health carrier may not directly include an all-or-nothing clause, an anti-steering clause, an anti-tiering clause, or any clause that sets provider compensation agreements or other terms for an affiliate of a hospital that will not be included as participating providers in the agreement.

For the purposes of this act:

• an "all-or-nothing clause" means a contract provision that requires a health carrier to contract with multiple hospitals or affiliates of a hospital owned or controlled by the same single entity; 
• an "anti-steering clause" means a contract provision that restricts the ability of a health carrier to encourage an enrollee to obtain a health care service from a competitor of the hospital or an affiliate of the hospital, including offering incentives to encourage enrollees to utilize specific health care providers; and 
• an "anti-tiering clause" means a contract provision that requires a health carrier to place a hospital or any affiliate of the hospital in a tier or a tiered provider network reflecting the lowest or lower enrollee cost-sharing amounts. 

A health carrier is not prohibited from voluntarily agreeing to contract with other hospitals owned or controlled by the same single entity, however, if a health carrier voluntarily agrees to contract with other hospitals owned or controlled by the same single entity, the health carrier must file a declaration with OIC.

The prohibition on all-or-nothing clauses and clauses that set provider compensation agreements for affiliates outside the network do not:

• apply if they prevent a hospital, provider, or carrier from participating in state or federally sponsored health care program or grant opportunity; and
• apply if they prevent a hospital and carrier from participating in a value-based purchasing agreement, including, but not limited to, a clinically integrated network, accountable care organization, bundled payment arrangement, or a comprehensive population-based payment agreement meeting the criteria of category 4B or higher as set forth in the health care payment learning and action network alternative payment model framework, as it existed on January 1, 2023, that also is structured to increase appropriate utilization, improve health outcomes, and contain health care costs.

This act does not prohibit a critical access hospital or sole community hospital from negotiating payment rates and methodologies on behalf of an individual health care practitioner or a medical group the hospital is affiliated with.

The provision of this act do not apply to independent health care provider groups, including but not limited to emergency physicians, anesthesiologists, radiologists, pathologists and hospitalists, that contract with hospitals to provide facility-based services, and are not otherwise affiliated with a hospital.

OIC, in collaboration with Office of the Attorney General, must study regulatory approaches used by other states to address affordability of health plan rates and the impact of anticompetitive behaviors on health care affordability. OIC must submit a report to the Legislature by December 31, 2023.

• Removes provision limiting the prohibition on antisteering and antitiering clauses to carrier networks where tiering is based on quality metric.
• Restores the provision requiring carriers to file a declaration with OIC if they choose to contract with multiple hospitals owned by a single entity.
• Alters the exceptions related to the prohibition on all-or-nothing clauses and clauses that set provider compensation agreements for affiliates outside the network by removing the exception for specialized services that are centralized in one hospital, the prohibition on carriers to excluding hospital or affiliates when 50 percent or more of the total charges from those facilities are for Medicaid and Medicare patients, and the prohibition on carriers refusing to credential providers who become an employee of a hospital or physician group which has an existing compensation agreement. It further clarifies the circumstances in which those provisions cannot prevent a hospital and carrier from entered into a value-based purchasing agreement.
• Modifies the definition of “all-or-nothing clause” by removing the portion of the definition related to a carrier requiring a hospital to accept multiple product lines.
• Restores the provision from the bill as introduced requiring OIC to conduct a study on the impact of anticompetitive behavior on affordability with modified language.

• Removes the provision requiring carriers to file a declaration with OIC if they choose to contract with multiple hospitals owned by a single entity.
• Limits the prohibition on anti-steering and anti-tiering clauses to carrier networks where tiering is based on quality metrics.
• Specifies that the prohibition on all-or-nothing clauses and clauses that set provider compensation agreements for affiliates outside the network do not:
  1. apply if they prevent a hospital, provider, or carrier from participating in state or federally sponsored health care program or grant opportunity;
  2. apply if they prevent a hospital, provider or carrier from participating in a value-based purchasing agreement, including agreements involving integrated networks, accountable care organizations, managed care or bundled payment agreements;
  3. apply to specialized services that centralized in one hospital;
  4. allow carriers to exclude hospital or affiliates when 50 percent or more of the total charges from those facilities are for Medicaid and Medicare patients; and
  5. allow carriers to refuse to credential providers who become an employee of a hospital or physician group which has an existing compensation agreement.
• Removes the requirement for an attestation stating that terms prohibited in the bill were not part of the negotiations for a carrier contract.
• Removes the provision prohibiting a contract clause in a contract between a health plan and a hospital, physician or physician group, or ancillary provider requiring the health carrier to reimburse a hospital, physician or physician group, or ancillary provider at the acquirer's contract rate when acquired by that entity.
• Exempts independent provider groups from the provisions of the bill.
• Modifies the definition of all-or-nothing clause.
• Removes "indirectly" from several provision in the bill.
• Removes the provision requiring OIC to conduct a study on the impact of anticompetitive behavior on affordability.
• Removes the self-funded plan opt-in.

The committee recommended a different version of the bill than what was heard. PRO: One key driver of health care prices is consolidation of health systems. Consolidation does not lead to lower costs or better care. Carriers need sufficient networks, and with health system consolidation network participation is controlled by a single entity that can leverage that power for higher rates. Contract negotiations are not level and this bill helps to level the playing field and puts sideboards on consolidation. Increased health care costs reduces the ability of small businesses to provide health care to employees. This bill prohibits anticompetitive practices.

CON: Consolidation allows needed facilities to remain open and it is not done for market leverage. This bill gives disproportionate power to health carriers. This bill will negatively affect the ability to negotiate value based contracts. This bill would fracture integrated care models. Increased payment rates have been below inflation. The bill only applies in one direction and carriers use all or nothing provision as well.  This bill is unnecessary and could harm competition. This would affect those groups without market power.

OTHER: There is a concern that value-based care will be negatively affected by this bill. To provide value-based care, hospitals need partnerships.

The committee recommended a different version of the bill than what was heard.  PRO: We all share a goal in trying to figure out how to decrease healthcare costs. If you pull apart healthcare costs, there are two drivers that stick out. One is the cost of hospitals and the other is the cost of pharmaceuticals. Balance between health plans and healthcare providers is important. Healthcare coverage has little value unless consumers can access the care they need. This bill is a work in progress to find the right balance. Network adequacy matters. Healthcare consolidation has gone unchecked in Washington and has left us with a tightly limited number of hospital systems with tremendous bargaining power.

OTHER: This bill’s substitute is an improvement on the original bill. It is unclear that there is an actual problem that this bill addresses. Studies are needed before the bill should move forward.