BILL NUMBER: AB 1600	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 24, 2001
	AMENDED IN ASSEMBLY  MAY 15, 2001
	AMENDED IN ASSEMBLY  APRIL 30, 2001
	AMENDED IN ASSEMBLY  APRIL 23, 2001

INTRODUCED BY   Assembly Member Keeley
   (Coauthor:  Assembly Member Richman)

                        FEBRUARY 23, 2001

   An act to add Section 1373.22 to the Health and Safety Code,
relating to health care service plans.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1600, as amended, Keeley.  Health care service plans:  provider
contracts.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the regulation and licensure of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act's provisions a crime.  The act, among other
matters, requires that a plan's contracts with providers be fair,
reasonable, and consistent with the act's objectives, which include
ensuring that high-quality health care coverage is provided in the
most efficient and cost-effective manner possible.
   This bill would authorize health care providers on a class basis
and health care service plans to negotiate any contract term or
condition and upon an impasse, as defined, to submit the dispute to
 mediation   facilitated negotiation  and,
if unsuccessful, to refer the matter to  advisory 
arbitration and would require the filing of the contract, 
mediation   facilitated negotiation  agreement, or
 advisory  arbitration award with the department.  The bill
would require the department to confirm, modify, or vacate the
contract, agreement, or award and would also require it to adopt
regulations prior to July 1, 2002, pertaining to these 
mediation   facilitated negotiation  and 
advisory  arbitration processes.
   Because this bill would specify requirements for the 
mediation   facilitated negotiation  and 
advisory  arbitration processes, the violation of which would be
punishable as a misdemeanor offense, it would expand the scope of an
existing crime, thereby imposing a state-mandated local program.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  (a) The Legislature finds and declares the following:
   (1) The principal priorities of the Legislature for health care
are the following:
   (A) The citizens of this state have access to the highest quality
health care.
   (B) Patients have the opportunity for continuing access to their
own health care providers.
   (C) Health care costs be reasonable and affordable.
   (D) Administrative costs in the health care service plan and
health care provider relationship be as low as possible in order to
keep health care costs affordable.
   (E) Health care service plans and health care providers remain
financially solvent in order to provide the highest quality care and
to retain patients' continuing access to their own health care
providers.
   (2) The current health care service plan and health care provider
relationship is not satisfactorily meeting the state's health care
priorities for the following reasons:
   (A) There is evidence that some health care providers are choosing
not to practice in California because of this relationship, thereby
threatening the quality of, and access to, health care in this state.

   (B) Some patients have not been able to have continuing access to
their own health care providers because health care service plans and
health care providers have been unable to reach agreement on
contract extensions.
   (C) Administrative costs in the health care service plan and
health care provider relationship are still high, resulting in higher
health care costs for both health care service plans and health care
providers.
   (D) A large number of providers have been economically failing,
threatening the quality of, and access to, health care in this state
and the continuity of care for patients.
   (E) Too much of a health care provider's time is spent in the
administrative aspects of the relationship, determining what care may
be provided to patients and settling claims, thereby reducing the
amount of time that providers spend with patients, increasing the
cost of health care, reducing patient access to health care, and
impairing the quality of care available.
   (F) The negotiating relationship between health care service plans
and health care providers is imbalanced.
   (b) It is the intent of the Legislature to implement a solution to
achieve the state's health care priorities, given the unsatisfactory
relationship between health care service plans and health care
providers. This solution would allow competing health care providers
to renegotiate contracts with health care service plans, thereby
allowing an improved balance in the contracting relationship that
should result in improvements in the state's priorities because of
the interests of health care service plans and health care providers
to resolve issues that are consistent with the interests of the
state.  This solution would displace unfair competitive practices and
have an actively supervised state program to ensure that health care
service plan contracts with health care providers are fair,
reasonable, and provide appropriate reimbursement, consistent with
the best interests of the patients and this act.  The Legislature
intends that this solution is consistent with the state action
immunity doctrine, which establishes immunity from federal and state
antitrust laws for conduct taken or supervised by a state.   This
solution does not authorize the health care providers to conduct a
group boycott or to strike. 
  SEC. 2.  Section 1373.22 is added to the Health and Safety Code, to
read:
   1373.22.  (a) Health care providers, on a class basis, and health
care service plans may agree to negotiate  and mediate
 any contract term or condition upon renewal of a contract
or during the contract term, if there is no provision for
renegotiation.  Any contract negotiated pursuant to this section
shall be subject to the confirmation process set forth in subdivision
(e).  In the event a health care service plan declines to
participate in  those   these  voluntary
negotiations, no further action by the class that is reasonably
related to the subject of the requested negotiations shall be
permitted.
   (b) In the event the parties reach an impasse during the
negotiations, the parties, upon mutual agreement, may submit the
issues in dispute to  mediation   facilitated
negotiation .  For the purposes of this subdivision, an "impasse"
means that the parties to a dispute have reached a point in meeting
and negotiating where their differences in position are so
substantial or prolonged that future meetings would be futile.
   (c) In the event  mediation   facilitated
negotiation  is unsuccessful, the matter may, upon mutual
agreement by the parties, be referred to  advisory
arbitration.  No  advisory  arbitration conducted pursuant
to this section shall limit the rights and remedies otherwise
available to the parties under common or statutory law.  In addition,
the arbitrator may order a party, the party's attorney, or both, to
pay reasonable expenses, including attorney's fees, incurred by
another party as a result of bad faith actions or tactics that are
frivolous or that are solely intended to cause unnecessary delay.
   (d) The Department of Managed Health Care shall adopt regulations
by July 1, 2002, that ensure that the  mediation 
 facilitated negotiation  and  advisory 
arbitration processes described in this section are fair and
effective.  These regulations shall include a provision requiring
that the  mediator   facilitator  and
arbitrator be neutral and specify factors to be considered by the
mediator or arbitrator when resolving the issues that shall include,
but not be limited to, the following:
   (1) The stipulations of the parties.
   (2) The interest and welfare of patients.
   (3) The patient's access to care.
   (4) The ability of health care providers to render quality health
care services.
   (5) The cost of providing the services, taking into consideration
the increasing age of the population, new pharmaceuticals, the
increasing sophistication of medical technology, and the medical
demographics of the population of the plan's enrollees  ,
including risk adjustment for high concentrations of diseases with
high treatment costs such as diabetes, multiple sclerosis, human
immunodeficiency virus, and acquired immune deficiency syndrome 
.
   (6) The reasonableness of the reimbursement rates.
   (e) Upon negotiation of a contract, the parties, or upon 
successful mediation, the mediator, or if the parties agrees to
arbitration, the arbitrator, shall file a copy of the contract,
mediation agreement, or arbitration award, a statement of 
 successful facilitated negotiation, the facilitator, or if the
parties agree to advisory arbitration, the arbitrator, shall file a
copy of the contract, facilitated negotiation agreement, or advisory
arbitration award, a statement of  reasons, and submitted
evidence to the department for review.  The department, after making
an independent review of the evidence and considering the factors set
forth in subdivision (d), shall confirm, modify, or vacate the
contract, agreement, or award.  
   (f) For purposes of this section, the following definitions apply:

   (1) "Health care provider" means any health care provider licensed
under Division 2 (commencing with Section 500) of the Business and
Professions Code.
   (2) "Health care service plan" means any fully-licensed health
care service plan or specialized health care service plan that is
licensed pursuant to this chapter.
   (g) The Legislature does not intend for the dispute resolution
procedures described in this section to have any application or legal
effect other than as described in this section. 
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.