CHAPTER 67
HEALTH CARE FAIRNESS ACT

(1) Active, robust and fully competitive markets for health care services provide the best opportunity for residents of this state to receive high quality health care services at an appropriate cost.

(2) A substantial amount of health care services in this state is purchased for the benefit of patients by health care insurers engaged in the provision of health care financing services or is otherwise delivered subject to the terms of agreements between health care insurers and providers of the services.

(3) Health care insurers are able to control the flow of patients to providers of health care services through compelling financial incentives for patients in their plans to utilize only the services of providers with whom the insurers have contracted.

(4) Health care insurers also control the health care services rendered to patients through utilization review programs and other managed care tools and associated coverage and payment policies.

(5) The power of health care insurers in markets of this state for health care services has become great enough to create a competitive imbalance, reducing levels of competition and threatening the availability of high quality, cost-effective health care.

(6) Health care insurers often are able to virtually dictate the terms of the provider contracts that they offer physicians and other health care providers and commonly offer provider contracts on a take it or leave it basis.

(7) The power of health care insurers to unilaterally impose provider contract terms jeopardizes the ability of physicians and other health care providers to deliver the superior quality health care services.

(8) Physicians and other health care providers do not have sufficient market power to reject unfair provider contract terms that impede their ability to deliver medically appropriate care without undue delay or hassle.

(9) Inequitable reimbursement and other unfair payment terms adversely affect quality patient care and access by reducing the resources that health care providers can devote to patient care and decreasing the time that physicians are able to spend with their patients.

(10) Empowering health care providers to jointly negotiate with health care insurers as provided in this act will help restore the competitive balance and improve competition in the markets for health care services in this state, thereby providing benefits for consumers, health care providers and less dominant health care insurers.

(11) Allowing health care providers to jointly negotiate with health care insurers through a common joint negotiation representative will improve the efficiency and effectiveness of communications between the parties and result in provider contracts that better reflect the mutual areas of agreement.

(12) This act is necessary, proper and constitutes an appropriate exercise of the authority of this state to regulate the business of insurance and the delivery of health care services.

(13) The procompetitive and other benefits of the joint negotiations and related joint activity authorized by this act, including, but not limited to, restoring the competitive balance in the market for health care services, protecting access to quality patient care and improving communications, outweigh any anticompetitive effects.

(14) It is the intention of the general assembly to authorize health care providers to jointly negotiate with health care insurers and to qualify such joint negotiations and related joint activities for the state action exemption to the federal antitrust laws through the articulated state policy and active supervision provided in this act.

(1) "Attorney general." The attorney general of the state.

(2) "Covered lives." The total number of individuals who are entitled to benefits under a health care insurance plan, including, but not limited to, beneficiaries, subscribers and members of the plan.

(3) "Department of attorney general." The department of attorney general of the state.

(4) "Health care insurer." An entity, subject to the insurance laws of this state or otherwise subject to the jurisdiction of the insurance commissioner, which contracts or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services, including, but not limited to, an entity licensed under any of the following:

(a) R.I. general laws section 27-1-1 et seq. -- "Domestic Insurance Companies";

(b) R.I. general laws section 27-41-1 et seq. -- "Health Maintenance Organizations";

(c) R.I. general laws section 27-25-1 et seq. -- "Rhode Island Fraternal Code";

(d) R.I. general laws section 27-19-1 et seq. - "Nonprofit Hospital Service Corporation Act";

(e) R.I. general laws section 27-20-1 et seq. -- "Nonprofit Medical Service Corporation Act";

(f) R.I. general laws section 27-20.1-1 et seq. -- "Nonprofit Dental Service Corporation Act";

(g) R.I. general laws section 27-20.2-1 et seq. -- "Nonprofit Optometric Service Corporation Act", except as provided in section 27-67-16. For purposes of this act, a third party administrator shall be considered a health care insurer when interacting with health care providers and enrollees on behalf of a health care insurer.

(5) "Health care insurer affiliate." A health care insurer that is affiliated with another entity by either the insurer or entity having a five percent (5%) or greater, direct or indirect, ownership or investment interest in the other through equity, debt or other means.

(6) "Health care provider." An individual, acting alone or acting with other individuals through any type or form of partnership, a professional services corporation, independent practice association or organization, (or group of partnerships, professional services corporations, independent practice associations or organizations), who is licensed, certified or otherwise regulated to provide health care services under the laws of this state including, but not limited to, a physician, dentist, podiatrist, optometrist, pharmacist, psychologist, chiropractor, physical therapist, certified nurse practitioner or nurse midwife.

(7) "Health care services." Services for the diagnosis, prevention, treatment, cure or relief of a health condition, injury, disease or illness, including, but not limited to, the professional and technical component of professional services, supplies, drugs and biologicals, diagnostic X-ray, laboratory and other diagnostic tests, preventive screening services and tests, such as pap smears and mammograms, radium and radioactive isotope therapy, surgical dressing, devices for the reduction of fractures, durable medical equipment, eyeglasses and contact lenses, braces, trusses, artificial limbs and eyes, dialysis services, home health services and hospital and other facility services.

(8) "HMO." A health maintenance organization. The term includes any health care insurer product that requires enrollees to use health care providers in a designated provider network to obtain covered services except in limited circumstances such as emergencies.

(9) "Impasse." An impasse occurs when a health care insurer and health care provider(s) or a joint negotiation representative have reached a point in meetings and negotiations regarding the terms of a provider contract where their differences in position are so substantial or prolonged that future meetings and negotiations would be futile.

(10) "Joint negotiation." Negotiation with a health care insurer by two or more health care providers acting together as part of a formal entity or group or otherwise. The term "joint negotiation" shall not include negotiations by health care providers that are or would be lawful under state and federal law regardless of the effectiveness of this act.

(11) "Joint negotiation representative." A representative selected by a group of health care providers to be the group's representative in joint negotiations with a health care insurer under this act.

(12) "POS." A point-of-service plan, including, but not limited to, a variation of an HMO that provides limited coverage for certain out of network services.

(13) "PPO." A preferred provider organization. The term includes any health care insurer product, other than an HMO or POS product, that provides financial incentives for enrollees to use health care providers in a designated provider network for covered services.

(14) "Provider contract." An agreement between a health care provider, or group of health care providers, and a health care insurer which sets forth the terms and conditions under which the provider is, or providers are to deliver health care services to enrollees of the insurer. The term does not include employment contracts between a health care insurer and a health care professional.

(15) "Provider network." A group of health care providers who have provider contracts with a health care insurer.

(16) "Self-funded health benefit plan." A plan that provides for the assumption of the cost of, or spreading the risk of, loss resulting from health care services of covered lives by an employer, union or other sponsor substantially out of the current revenues, assets or any other funds of the sponsor.

(17) "Third party administrator." An entity that provides utilization review, provider network credentialing or other administrative services for a health care insurer or a self-funded health benefit plan.

(1) The definition of medical necessity and other conditions of coverage.

(2) Utilization review criteria and procedures.

(3) Clinical practice guidelines.

(4) Preventive care and other medical management policies.

(5) Patient referral standards and procedures, including, but not limited to, those applicable to out-of-network referrals.

(6) Drug formularies and standards and procedures for prescribing off-formulary drugs.

(7) Quality assurance programs.

(8) Respective health care provider and health care insurer liability for the treatment or lack of treatment of plan enrollees.

(9) The methods and timing of payments, including, but not limited to, interest and penalties for late payments.

(10) The terms and conditions for amending any agreement between health care providers and a health insurer, including the amendment of payment methodologies, fee schedules, and payment and claims policies and procedures.

(11) Other administrative procedures, including, but not limited to, enrollee eligibility verification systems and claim documentation requirements.

(12) Cedentialing standards and procedures for the selection, retention and termination of participating health care providers.

(13) Mechanisms for resolving disputes between the health care insurer and health care providers, including, but not limited to, claims payment, and the appeals process for utilization review and credentialing determinations.

(14) The health insurance plans sold or administered by the insurer in which the health care providers are required to participate.

(1) The amount of payment or the methodology for determining the payment for a health care service.

(2) The conversion factor for a resource based relative value scale or similar reimbursement methodology for health care services.

(3) The amount of any discount on the price of a health care service.

(4) The procedure code or other description of the health care service or services covered by a payment.

(5) The amount of a bonus related to the provision of health care services or a withhold from the payment due for a health care service.

(6) The amount of any other component of the reimbursement methodology for a health care service.

(1) the insurer's market share in the comprehensive health care financing market or a relevant segment of that market, alone or in combination with the market shares of affiliates, exceeds either thirty percent (30%) of the covered lives in the geographic service area of the providers seeking to jointly negotiate; or

(2) the attorney general determines that the market power of the insurer in the relevant service and geographic markets for the services of the providers seeking to jointly negotiate significantly exceeds the countervailing market power of the providers acting individually.

(b) Comprehensive health care financing market. -- The comprehensive health care financing market includes:

(1) All health care insurer products which provide comprehensive coverage, alone or in combination with other products sold together as a package, including, but not limited to, indemnity, HMO, PPO and POS products and packages.

(2) Self-funded health benefit plans which provide comprehensive coverage.

(c) Relevant market segments. -- Relevant market segments in the comprehensive health care financing market shall include the following:

(1) Health care insurer products and self-funded health benefits plans.

(2) Within the health care insurer product category, private health insurance, Medicare HMO, PPO and POS and Medicaid HMO.

(3) Within the private health insurance category, indemnity, HMO, PPO and POS products.

(4) Such other segments as the attorney general determines are appropriate for purposes of determining whether a health care insurer has substantial market power.

(1) Health care providers shall select the members of their joint negotiation group by mutual agreement.

(2) Health care providers shall designate a joint negotiation representative as the sole party authorized to negotiate with the health care insurer on behalf of the health care providers as a group.

(3) Health care providers may communicate with each other and their joint negotiation representative with respect to the matters to be negotiated with the health care insurer.

(4) Health care providers may agree upon a proposal to be presented by their joint negotiation representative to the health care insurer.

(9) Either a health care insurer or health care provider or joint negotiation representative may declare that an impasse has been reached between the parties in negotiations regarding the terms of a provider contract. The parties may mutually agree to the selection of an arbitrator approved by the attorney general for the purpose of resolving the impasse. If the parties are unable to mutually agree, either party may request the attorney general to appoint an arbitrator. In that case, the attorney general shall, not later than five (5) business days after the receipt of the request, appoint an arbitrator in accordance with section 27-67-8(e). The arbitrator shall meet with the parties, either jointly or separately, and shall take any other steps as are appropriate in order to persuade the parties to resolve their differences and effect a mutually acceptable agreement. If the arbitrator is unable to effect a settlement within thirty (30) days after the arbitrator's appointment, the arbitrator shall resolve all disputes regarding the provider contract terms.

(10) Health care providers may not negotiate the inclusion or alteration of terms and conditions to the extent the terms or conditions are required or prohibited by government regulation. This paragraph shall not be construed to limit the right of health care providers to jointly petition government for a change in such regulation.

(1) the name and business address of the health care providers' joint negotiation representative;

(2) the names and business addresses of the health care providers petitioning to jointly negotiate;

(3) the name and business address of the health care insurer or insurers with which the petitioning providers seek to jointly negotiate;

(4) the proposed subject matter of the negotiations or discussions with the health care insurer or insurers;

(5) the proportionate relationship of the health care providers to the total population of health care providers in the relevant geographic service area of the providers by provider type and specialty;

(6) in the case of a petition seeking approval of joint negotiations regarding one (1) or more fee or fee-related terms, a statement of the reasons why the health care insurer has substantial market power over the health care providers;

(7) a statement of the procompetitive and other benefits of the proposed negotiations;

(8) the health care provider's joint negotiation representative's plan of operation and procedures to ensure compliance with this act;

(9) such other data, information and documents that the petitioners desire to submit in support of their petition.

(b) Petition for approval of modification of joint negotiations. -- The health care providers shall supplement a petition under subsection 27-67-8(a) or 26-67-8(b) as new information becomes available that indicates that the subject matter of the proposed negotiations with the health care insurer has or will materially change and must obtain the attorney general's approval of material changes. The petition seeking approval shall include:

(1) the attorney general's file reference for the original petition for approval of joint negotiations;

(2) the proposed new subject matter;

(3) the information required by subsection (a)(6) and (7) with respect to the proposed new subject matter;

(4) such other data, information and documents that the health care providers or health care insurer desire to submit in support of their petition.

(c) Petition for approval of provider contract terms. -- No provider contract terms negotiated under this act shall be effective until the terms are approved by the attorney general. The petition seeking approval shall be jointly submitted by the health care providers and the health care insurer who are parties to the contract. The petition shall include:

(1) the attorney general's file reference for the original petition for approval of joint negotiations;

(2) the negotiated provider contract terms;

(3) a statement of the procompetitive and other benefits of the negotiated provider contract terms;

(4) such other data, information and documents that the health care providers or health care insurer desire to submit in support of their petition.

The attorney general, in his sole discretion, may seek the advice and counsel of any department or agency of the state for purposes of the attorney general's review of the petition for approval of provider contract terms. The attorney general shall make any such request in writing to the director of each state department or agency from which counsel is sought. The director of each said department or agency shall provide a substantive response in writing to the attorney general's request within thirty (30) days of receiving such request.

(d) Continuation of negotiations. - In the event that an impasse is declared pursuant to subsection 27-67-7(9), the parties may continue the previously approved negotiations without obtaining a separate approval of the continuation from the attorney general.

(e) Arbitration. -- The attorney general shall develop a list of approved arbitrators to resolve an impasse. If the health care insurer and health care provider or joint negotiation representative do not mutually agree on the selection of an approved arbitrator to resolve the impasse, the attorney general, upon request of either party, shall appoint an arbitrator.

(b) Standards for reviewing petitions. - (1) The department of attorney general shall approve a petition under subsections 27-67-8(a) and 27-67-8(b) if: (i) The procompetitive and other benefits of the joint negotiations outweigh any anticompetitive effects.

(ii) In the case of a petition seeking approval to jointly negotiate one (1) or more fee or fee-related terms, the health care insurer has substantial market power over the health care providers.

(2) The department of attorney general shall approve a petition under subsection 27-67-8(c) if: (i) The procompetitive and other benefits of the contract terms outweigh any anticompetitive effects; (ii) The contract terms are consistent with other applicable laws and regulations.

(3) The procompetitive and other benefits of joint negotiations or negotiated provider contract terms may include, but shall not be limited to: (i) restoration of the competitive balance in the market for health care services; (ii) protections for access to quality patient care; (iii) improved communications between health care providers and health care insurers.

(4) When weighing the anticompetitive effects of provider contract terms, the attorney general may consider whether the terms: (i) provide for excessive payments; or (ii) contribute to the escalation of the cost of providing health care services.

(c) Supplemental information. - For the purpose of enabling the attorney general to make the findings and determinations required by this section, the attorney general may require the submission of such supplemental information as it may deem necessary or proper to enable him to reach a determination.

(2) To prohibit or require governmental approval of or otherwise restrict activity by health care providers that is not prohibited under the federal antitrust laws;

(3) To require approval of provider contracts terms to the extent that the terms are exempt from state regulation under section 514 of the Employee Retirement Income Security Act of 1974 (Public Law 93-406, 88 Stat. 829);

(4) To expand a health care provider's scope of practice or to require a health care insurer to contract with any type or specialty of health care providers.

(b) Nothing contained in this act shall permit a health care insurer to: (i) exclude; (ii) limit the participation or reimbursement of; or (iii) otherwise discriminate against a class of health care professionals acting within the scope of their licensure under Rhode Island law based on such licensure.

(1) Medical payment coverage issued as part of a motor vehicle insurance policy;

1. Medicare supplemental;
3. Civilian Health and Medical Program of the Uniformed Services (CHAMPUS);
4. Accident only;
5. Long-term care insurance;
6. Disability insurance;
7. Credit insurance.