H.B. NO.














relating to collective mediation by physicians.





     SECTION 1.  The Hawaii Revised Statutes is amended by adding a new chapter to title 36 to be appropriately designated and to read as follows:


collective mediation by physicians

     §   -1  Findings and purpose.  The State finds that permitting competing physicians to engage in collective mediation of certain terms and conditions of contracts with a health benefit plan will benefit competition; provided that the parties do not engage in an express or implied threat of retaliatory collective action, including boycotts or strikes.

     The State further finds that permitting physicians to engage in collective mediation over fee­related terms may in some circumstances yield anti-competitive effects.  There are, however, instances in which a health benefit plan dominates the market to the degree that the negotiations between physicians and the health benefit plan are not possible in the absence of joint action on behalf of physicians.  Without such joint action, the health benefit plan can virtually dictate the terms of the contracts that it offers to physicians.

     The State further finds that it is appropriate and necessary to authorize collective mediation between competing physicians and health benefit plans when the imbalances in bargaining capacity described in this section exist.

     The purpose of this chapter is to authorize physicians to engage in collective mediation with health benefit plans.

     §   -2  Definitions.  As used in this chapter, unless the context indicates otherwise:

     "Authorized third party" means a person authorized by the physicians to negotiate on their behalf with a health benefit plan under this chapter.

     "Geographic service area" means the geographic area of the physicians seeking to jointly negotiate.

     "Health benefit plan" means an accident or health insurer covered under article 10A of chapter 431, a mutual benefit society covered under article 1 of chapter 432, or a health maintenance organization covered under chapter 432D, but does not include a self-insured health benefit plan.

     "Provider" means "health care professional," as defined in section 451D-2.

     §   -3  Collective action by competing physicians.  (a)  Competing physicians may meet and communicate in order to collectively mediate with a health benefit plan concerning any of the contract terms and conditions described in this subsection, but may not negotiate the exclusion of providers who are nonphysicians from direct reimbursement by the health benefit plan or the setting in which providers who are nonphysicians deliver services.  Competing physicians may not engage in a boycott related to these terms and conditions. Competing physicians may meet and communicate concerning:

     (1)  Physician clinical practice guidelines and coverage criteria;

     (2)  The respective liability of physicians and the health benefit plan for the treatment or lack of treatment of insured or enrolled persons;

     (3)  Administrative procedures, including methods and timing of the payment of services to physicians;

     (4)  Procedures for the resolution of disputes between the health benefit plan and physicians;

     (5)  Patient referral procedures;

     (6)  The formulation and application of payment fees and methodology;

     (7)  Quality assurance programs;

     (8)  Health service utilization review procedures; and

     (9)  Criteria to be used by health benefit plans for the selection and termination of physicians, including whether to engage in selective contracting.

     (b)  An authorized third party that intends to negotiate under subsection (a) shall provide the attorney general with written notice of the intended negotiations before the negotiations begin.

     (c)  In exercising the collective rights established under subsection (a):

     (1)  Physicians may communicate with each other with respect to the contractual terms and conditions to be negotiated with the health benefit plan;

     (2)  Physicians may communicate with an authorized third party regarding the terms and conditions of contracts allowed under this section;

     (3)  The authorized third party shall be the sole party authorized to negotiate with the health benefit plan on behalf of a defined group of physicians;

     (4)  Physicians shall be bound by the terms and conditions negotiated by the authorized third party that represents their interests;

     (5)  A health benefit plan communicating and negotiating with the authorized third party may contract with, or offer different contract terms and conditions to, individual competing physicians;

     (6)  An authorized third party may not represent physicians if the health benefit plan has less than a five per cent market share as determined by the number of covered lives as reported by the insurance commissioner for the most recently completed calendar year or by the actual number of consumers of prepaid comprehensive health services; provided that in this paragraph, "covered lives" means the total number of individuals who are entitled to benefits under the health benefit plan; and

     (7)  Any authorized third party shall comply with subsection (d).

     (d)  A person acting or proposing to act as an authorized third party under this section, before engaging in collective mediation with the health benefit plan, shall file with the attorney general the information that identifies the authorized third party, the physicians represented by the third party, the authorized third party's plan of operation, and the authorized third party's procedures to ensure compliance with this section.

     (e)  Parties shall furnish to the attorney general, for the attorney general's approval, a brief report that identifies the proposed subject matter of the negotiations or discussions and contains an explanation of the efficiencies or benefits that are expected to be achieved through the collective mediation:

     (1)  The attorney general shall review whether the group of physicians represented is appropriate to present the interests involved in the mediation.  The attorney general shall not approve the report if the group of physicians is not appropriate to represent the interests involved in the mediation or if the proposed mediation exceeds the authority granted in this chapter and, if the group is not appropriate or the mediation exceeds the granted authority, shall enter an order prohibiting any further collective mediation.  The authorized third party shall provide supplemental information to the attorney general as new information becomes available that indicates that the subject matter of mediation with the health benefit plan has changed or will change;

     (2)  The group of physicians or their authorized third party, as the case may be, within fourteen days after receiving a health benefit plan's decision to decline to mediate or to terminate mediation, or within fourteen days after requesting mediation with a health benefit plan that fails to respond within that time period, shall report to the attorney general that mediation has ended or has been declined;

     (3)  During the mediation process, the group of physicians or their authorized third party, as the case may be, shall provide the attorney general upon the attorney general's request with a copy of all written communications that are between the physicians and the health benefit plan, that are relevant to the mediation, and that are in the possession of any authorized third party; and

     (4)  The authorized third party, before reporting the results of mediation with the health benefit plan and before giving the physicians an evaluation of any offer made by a health benefit plan, shall provide to the attorney general for the attorney general's approval a copy of all communications to be made to physicians related to the mediation, discussions, and health benefit plan offers.

     (e)  The attorney general shall either approve or disapprove the contract that was the subject of the collective negotiation within sixty days after receiving the reports required under subsection (d).  If the contract is disapproved, the attorney general shall furnish a written explanation of any deficiencies along with a statement of specific remedial measures that would correct any identified deficiencies.  An authorized third party who fails to obtain the attorney general's approval is considered to be acting outside the authority of this section.

     (f)  The attorney general shall approve the collective mediation contract if:

     (1)  The competitive and other benefits of the contract terms outweigh any anticompetitive effects; and

     (2)  The contract terms are consistent with other applicable laws and rules.

     (g)  A collective mediation contract shall include terms relating to the following:

     (1)  Restoration of the competitive balance in the market for healthcare services;

     (2)  Protections for access to quality patient care;

     (3)  Promotion of healthcare infrastructure and medical advancement; and

     (4)  Improved communications between healthcare providers and healthcare insurers.

     (h)  When weighing anticompetitive effects of contract terms, the attorney general shall consider whether the terms:

     (1)  Provide for excessive payments; or

     (2)  Contribute to unreasonable escalation of the cost of providing healthcare services.

     (i)  This section does not authorize competing physicians to act in concert in response to a report issued by an authorized third party related to the authorized third party's decision or mediation with the health benefit plan.  The authorized third party shall advise the physicians of the subject matter of this section and shall warn them of the potential for legal action against those who violate state or federal antitrust laws by exceeding the authority granted under this section.

     (j)  A contract allowed under this section may not exceed the term of five years.

     (k)  The documents relating to a collective negotiation described under this section that are in the possession of the department of the attorney general are confidential and shall not be open to public inspection under chapter 92F.

     (l)  Nothing in this section shall be construed to exempt the conduct of health care professionals or negotiations or agreements between health care professionals and a health benefit plan from the antitrust laws if the purpose or effect of the conduct, negotiations, or agreement would be, directly or indirectly, to exclude, limit the participation or reimbursement of, or otherwise limit the scope of services to be provided by separate or competing classes of health care professionals who practice or seek to practice within the scope of the occupational licenses held by the health care professionals.

     §   -4  Fee for registration of authorized parties.  (a)  The attorney general shall adopt rules pursuant to chapter 91 that establish the amount and manner of payment of a registration fee for an authorized third party.  The attorney general shall establish the fee level so that the total amount of fees collected from authorized third parties approximately equals the actual regulatory costs for the oversight of joint negotiations between physicians and health benefit plans.  The attorney general shall annually review the fee level to determine whether the regulatory costs are approximately equal to the fee revenues.  If the review indicates that the fee revenues and regulatory costs are not approximately equal, the attorney general shall calculate fee adjustments and adopt rules pursuant to chapter 91 to implement the adjustments.  In January of each year, the attorney general shall report on the fee level and revisions from the previous year to the governor.

     (b)  As used in this section, "regulatory costs" means costs of the department of the attorney general that are attributable to oversight of joint negotiations between physicians and health benefit plans.

     §   -5  Rules.  Notwithstanding section    -4, the attorney general may adopt rules in accordance with chapter 91 as necessary to implement this chapter."

     SECTION 2.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 3.  This Act shall take effect upon its approval.








Report Title:

Physicians; Collective Mediation; Health Benefit Plans



Authorizes physicians to engage in collective mediation with health benefit plans.




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