BILL ANALYSIS
AB 1600
Page 1
ASSEMBLY THIRD READING
AB 1600 (Keeley)
As Amended June 4, 2001
Majority vote
HEALTH 13-2 JUDICIARY 8-2
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|Ayes:|Thomson, Aanestad, Chan, |Ayes:|Steinberg, Corbett, |
| |Chavez, Frommer, Koretz, | |Dutra, Harman, Jackson, |
| |Negrete McLeod, Richman, | |Longville, Shelley, Wayne |
| |Salinas, Steinberg, | | |
| |Wayne, Wesson, Zettel | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Bates, Runner |Nays:|Robert Pacheco, Bates |
| | | | |
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APPROPRIATIONS 15-3
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|Ayes:|Migden, Alquist, Aroner, | | |
| |Cedillo, Corbett, Correa, | | |
| |Goldberg, Papan, Pavley, | | |
| |Simitian, Thomson, | | |
| |Wesson, Wiggins, Wright, | | |
| |Zettel | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Ashburn, Robert Pacheco, | | |
| |Runner | | |
| | | | |
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SUMMARY : Permits health care providers, on a class basis, and
health plans to agree to negotiate any contract term or
condition upon renewal of a contract or during the contract
term, if there is no provision for renegotiation. Sunsets this
bill July 1, 2004. Specifically, this bill :
1)Permits health care providers, on a class basis, and health
care service plans and specialized health care service plans
to agree to negotiate any contract term or condition upon
renewal of a contract or during the contract term, if there is
no provision for renegotiation.
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2)Requires any contract negotiated pursuant to this bill to be
subject to the confirmation process set forth in 10) and 11)
below.
3)Prohibits, in the event a health care service plan declines to
participate in these voluntary negotiations, no further action
by the class that is reasonably related to the subject of the
requested negotiations to be permitted.
4)Requires, prior to commencing any negotiations authorized
under this bill, health care providers to submit a statement
to the Department of Managed Health Care (DMHC) indicating who
will represent the providers, type of provider licensure, and
number of providers to be represented.
5)Requires DMHC, if it finds that the nature of such
representation is not in the best interest of patients or is
otherwise inconsistent with the Knox-Keene Act (the body of
law governing health plans), to indicate why it is
inconsistent and recommend how such representation can be
changed to protect the best interest of patients and conform
with the provisions of the Knox-Keene Act.
6)Permits, in the event the parties reach an impasse during the
negotiations, the parties, upon mutual agreement, may submit
the issues in dispute to facilitated negotiation. Defines an
"impasse" as when 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.
7)Permits, in the event facilitated negotiation is unsuccessful,
the matter may, upon mutual agreement by the parties, be
referred to advisory arbitration.
8)Prohibits the advisory arbitration conducted pursuant to this
bill from limiting the rights and remedies otherwise available
to the parties under common or statutory law. Permits the
arbitrator to 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.
9)Requires DMHC to adopt regulations by July 1, 2002, that
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ensure that the facilitated negotiation and advisory
arbitration processes described in this bill are fair and
effective. Requires these regulations to include a provision
requiring that the facilitator and arbitrator be neutral and
specify factors to be considered by the mediator or arbitrator
when resolving the issues that are required to include, but
not be limited to, the following:
a) The stipulations of the parties;
b) The interest and welfare of patients;
c) The patient's access to care;
d) The ability of health care providers to render quality
health care services;
e) 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; and,
f) The reasonableness of the reimbursement rates.
1)Requires, upon negotiation of a contract, the parties, or upon
successful facilitated negotiation, the facilitator, or if the
parties agree to advisory arbitration, the arbitrator, to file
a copy of the contract, facilitated negotiation agreement, or
advisory arbitration award, a statement of reasons, and
submitted evidence to DMHC for review.
2)Requires DMHC, after making an independent review of the
evidence and considering the factors set forth in 9) above, to
confirm, modify, or vacate the contract, agreement, or award.
3)Defines "health care provider" as any health care provider
licensed under specified provisions of the Business and
Professions Code, which includes but is not limited to
physicians, dentists, nurses, psychologists, pharmacists,
chiropractors, marriage and family therapists, social workers
and optometrists.
4)States the Legislature does not intend for the dispute
resolution procedures described in this bill to have any
application or legal effect other than as described in this
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bill.
5)States the Legislature's intent that this bill's solution is
consistent with the state action immunity doctrine, which
establishes immunity from federal antitrust laws for conduct
taken or supervised by a state.
6)Sunsets this bill on July 1, 2004, and repeals its provisions
on January 1, 2005, unless a later enacted statute extends or
deletes those dates.
EXISTING FEDERAL LAW declares to be illegal every contract,
combination in the form of trust or otherwise, or conspiracy in
restraint of trade or commerce among the several states.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis:
1)Costs to the DMHC-about $500,000 (Managed Health Care Fund)
annually-to develop regulations and review negotiated
contracts. Actual costs will depend on the number of
contracts submitted for review.
2)To the extent health premiums paid by CalPERS increase,
additional annual state costs to purchase health coverage for
state employees. For every 1% increase in premiums, annual
state costs will increase by $3 million.
COMMENTS :
1)According to the author, at present, the goal of ensuring that
Californians receive high-quality health care coverage in the
most efficient and cost-effective manner possible is not being
achieved. The author argues that part of the problem is
market imbalance in that several plans control over 80% of the
market, and for chiropractors, one plan controls over 90% of
the market. Another major factor is the dominance of
capitated managed care as costs have risen while capitated
rates have stayed static or declined.
2)This bill is supported by associations representing health
care providers. This bill's sponsor, the California Medical
Association (CMA), states this bill will allow providers to
obtain contracts that are fair, reasonable and sufficient to
assure patient access. The University of California writes in
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support that this bill provides an important tool to level the
playing field for health care providers who are often forced
to accept unreasonable contracts from health plans that
prescribe terms on a "take-it-or-leave-it" basis. The
California Psychological Association (CPA) and the California
Chiropractic Association (CCA) write that the disproportionate
market dominance of specialized health care service plans has
led to contracting relationships between plans and providers
which are unfair because of the economically lopsided market,
making the existing contract dispute resolution processes
ineffective. CPA and CCA state this bill will prevent a
health plan from imposing contract terms that are not in the
best interest of patients.
3)This bill is opposed by health plans, agents, the California
Chamber of Commerce, and the Consumer Federation of
California. Generally, opponents are concerned about allowing
otherwise competing providers to join together to bargain with
health plans and the effect this will have on health care
costs. Opponents argue this bill would protect the interest
of health care providers to the disadvantage of health plans,
payors and consumers, and that competition in health care
promotes innovation and cost containment, and this bill would
endanger both.
4)Existing federal law declares every contract, combination in
the form of trust or otherwise, or conspiracy in restraint of
trade or commerce among the several states to be illegal. To
establish anti-trust immunity under the "state action"
doctrine, an activity that would otherwise violate anti-trust
law must be clearly articulated and affirmatively expressed as
state policy and be actively supervised by the state itself.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
FN: 0001490