Outside Section 51

Health Care Affordability 2

SECTION 51. Chapter 176A of the General Laws is hereby amended by striking out section 6, as appearing in the 2014 Official Edition, and inserting in place thereof the following section:-

Section 6. Approval of nongroup contracts
(a)          Nongroup contracts, except contracts providing supplemental coverage to Medicare subject to the provisions of chapter 176K , issued and rates charged by nonprofit hospital service corporations to its subscribers for hospital care and reimbursement for other health services shall be subject to the provisions of chapter 176M , and any regulations promulgated thereunder. To the extent that this section is inconsistent with the provisions of chapter 176K or chapter 176M , and any regulations promulgated thereunder, Medicare supplement insurance plans as defined in said chapter 176K shall be subject to the provisions of said chapter 176K , and non-group agreements shall be subject to chapter 176M .

(b)          The subscriber contracts, rates and evidence of coverage shall be subject to the disapproval of the commissioner of insurance (in this section, the "commissioner"). No such contracts shall be approved if the benefits provided therein are unreasonable in relation to the rate charged, nor if the rates are excessive, inadequate or unfairly discriminatory. Classifications shall be fair and reasonable.

(c)          The commissioner shall require every such corporation to keep its books, records, statistics, accounts and vouchers in such manner that he or his authorized representatives may readily verify its annual statements and ascertain whether the corporation has complied with the law.

(d)          At least once in 3 years, and whenever he determines it to be prudent, he shall personally, or by his deputy or examiner, visit each non-profit hospital service corporation and thoroughly inspect and examine its affairs to ascertain its financial condition, its ability to fulfill its obligations, whether it has complied with the law, and any other facts relating to its business methods and management, and the equity of its dealings with its subscribers.

(e)          A report of examination of any corporation made under this section shall as far as material and relevant be admitted in the discretion of the court in any judicial proceedings brought by or in behalf of the commissioner or any subscriber, non-profit hospital service corporation or other person as evidence tending to prove the facts stated in such report, but nothing in this paragraph shall be construed to require the commissioner to make an examination under this section before bringing such a proceeding.

(f)          The commissioner may investigate, in such manner and to such extent as he may deem expedient, any complaint under any subscriber's contract.

(g)          Except for coverage under a Medicare Part C arrangement or under the MassHealth program, for all insured health benefit plan rates intended to be effective on and after July 1, 2018, the carrier's health benefit plan rates are to be filed with the commissioner and considered presumptively disapproved as excessive, and subject to a mandatory rate hearing, if the carrier's network provider reimbursement rates are not set in accordance with the following requirements established by the division of insurance (in this section, the "division"), in consultation with the executive office of health and human services and the center for health information and analysis:


1)          Acute Hospitals: the weighted average rate of reimbursement for inpatient and outpatient services for contracting network acute hospitals is reviewed in relation to the average Medicare hospital rate for the service and assigned to one of three tiers and the weighted average rate of reimbursement change for a hospital in the tier does not exceed the annual rate of change identified in the following clauses:

(i)          Tier 1: The weighted average rate of change is not limited;
(ii)          Tier 2: The weighted average rate of change may not increase in the future rate year by more than 1 per cent above the weighted average rate for the current year;
(iii)          Tier 3: The weighted average rate of change may not increase in the future rate year above the weighted average rate for the current year;

2)          Professional Services: the weighted average rate of reimbursement for services delivered by non- primary care and non- behavioral health providers is reviewed in relation to the weighted average Medicare fee schedule for the service and the provider is assigned to one of three tiers, and the average weighted rate of reimbursement change for a provider in the tier does not exceed the annual rate of change identified in the following clauses:

(i)          Tier 1: The weighted average rate of change is not limited;
(ii)          Tier 2: The weighted average rate of change may not increase in the future rate year by more than 1 per cent above the weighted average rate for the current year;
(iii)          Tier 3: The weighted average rate of change may not increase in the future rate year above the weighted average rate for the current year;

(h)          Notwithstanding the generality of paragraphs (1) and (2) above, the division, in consultation with the executive office of health and human services and the center for health information and analysis, shall establish a methodology for assigning providers to an appropriate tier if the provider does not receive sufficient Medicare reimbursement due to the services the provider delivers.

(i)          The division, in consultation with the executive office of health and human services, may review and make recommendations to revise the growth rates established in this section every 3 years.

(j)          The health benefit plan weighted average rates of reimbursement for services delivered by primary care providers and behavioral health providers are exempt from, and shall not be impacted by, the provisions of subsection (g) of this section.

(k)          In preparing rates, carriers may exercise flexibility in the administration of the growth rate restrictions set forth in subsection (g) provided that they do so in a nondiscriminatory manner that isconsistent with regulations promulgated by the division.

(l)          Notwithstanding the provisions of subsection (g) of this section, if a provider that has an alternative payment contract such as an accountable care organization or other value based payment arrangement with the carrier that includes both significant downside risk and significant participation from the carrier's enrollees, based on minimum standards established by the division, in consultation with the executive office of health and human services, then the carrier, when developing its health benefit plan rates, may allow for up to a 1 per cent higher increase in the average weighted rate of reimbursement for that provider than is permitted under subsection (g) of this section.

(m)          The division, in consultation with the executive office of health and human services, shall establish standards for eliminating administrative facility fees for services provided in clinics, including but not limited to satellite clinics operating under a hospital license. Notwithstanding the generality of the foregoing, the division may promulgate regulations that allow for administrative facility fees under appropriate circumstances. Rates will be presumptively disapproved if carriers have any arrangement with a provider that allows the carriers to pay for an administrative facility fee inconsistent with such standards or which permits the provider to balance bill a covered member for any such administrative facility fees. The division, in consultation with the executive office of health and human services, shall also establish requirements that carriers reinvest a portion of the savings into higher rates of reimbursement for standalone professional services including, but not limited to, primary care or behavioral health services or into reduced premiums for health benefit plan members.

(n)          The division, in consultation with the executive office of health and human services and the center for health information and analysis, shall promulgate regulations to implement the provisions of this section.



Summary:
This is one of four sections that establish tiered caps on the rate of growth for all acute hospitals and professional service providers, except behavioral health and primary care providers. These sections also authorize the Division of Insurance and the Executive Office of Health and Human Services to establish standards for eliminating administrative facility fees and requiring health plans to reinvest savings into reduced premiums for consumers or higher rates for professional services, including behavioral health and primary care services.