Current Status Introducing Body:House Bill Number:4775 Ratification Number:509 Act Number:437 Primary Sponsor:Hodges Type of Legislation:GB Subject:Health Care Cooperation Act Date Bill Passed both Bodies:19940518 Computer Document Number:CYY/15751AC.94 Governor's Action:S Date of Governor's Action:19940525 Introduced Date:19940217 Date of Last Amendment:19940518 Last History Body:------ Last History Date:19940525 Last History Type:Act No. 437 Scope of Legislation:Statewide All Sponsors:Hodges Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
---- ------ ------------ ------------------------------ --- ------------
4775 ------ 19940525 Act No. 437
4775 ------ 19940525 Signed by Governor
4775 ------ 19940524 Ratified R 509
4775 Senate 19940518 Concurred in House amendment,
enrolled for ratification
4775 House 19940518 Senate amendments amended,
returned to Senate
4775 Senate 19940511 Amended, read second time,
ordered to third reading with
notice of general amendments
4775 Senate 19940510 Committee Report: Favorable 13
with amendment
4775 Senate 19940329 Introduced, read first time, 13
referred to Committee
4775 House 19940325 Read third time, sent to
Senate
4775 House 19940324 Read second time, unanimous
consent for third reading on
next Legislative day
4775 House 19940217 Introduced, read first time,
placed on Calendar without
reference
View additional legislative information at the LPITS web site.
(A437, R509, H4775)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 4, CHAPTER 7, TITLE 44 SO AS TO ENACT THE HEALTH CARE COOPERATION ACT, WHICH PROVIDES FOR HEALTH CARE COOPERATIVE AGREEMENTS AND FOR THE DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL TO CERTIFY, REGULATE, AND MONITOR THESE AGREEMENTS; AND TO ESTABLISH A TASK FORCE UNDER THE HEALTH CARE PLANNING AND OVERSIGHT COMMITTEE TO STUDY OPEN-HEART SURGERY AND THERAPEUTIC CARDIAC CATHETERIZATION SERVICES; TO PROVIDE CRITERIA THAT MUST BE MET TO PERFORM CATHETERIZATIONS UNTIL THE TASK FORCE ISSUES ITS FINDINGS AND RECOMMENDATIONS; TO DIRECT THE SOUTH CAROLINA BOARD OF MEDICAL EXAMINERS TO CONDUCT REVIEWS OF THESE SERVICES; TO DIRECT THE OFFICE OF RESEARCH AND STATISTICAL SERVICES OF THE BUDGET AND CONTROL BOARD TO STUDY FACILITIES PERFORMING THESE SERVICES AND TO PATIENT OUTCOMES; TO AUTHORIZE THE DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL TO TAKE SANCTIONS IF PATIENT CARE IS BEING COMPROMISED; AND TO PROHIBIT DISCOVERY OF INFORMATION OBTAINED FROM THESE STUDIES.
Be it enacted by the General Assembly of the State of South Carolina:
Health care cooperative agreements defined, regulated, and monitored
SECTION 1. Chapter 7 of Title 44 of the 1976 Code is amended by adding:
Section 44-7-500. This article may be known and cited as the `Health Care Cooperation Act'.
Section 44-7-505. The General Assembly makes the following findings:
(1) that the cost of improved health technology and scientific methods contributes significantly to the increasing cost of health care;
(2) that cooperative agreements among hospitals health care purchasers, and other health care providers would foster improvements in the quality of health care for South Carolinians, moderate cost increases, improve access to needed services in rural areas, and enhance the likelihood that rural hospitals can remain open;
(3) that federal and state antitrust laws may prohibit or discourage cooperative agreements that are beneficial to South Carolinians and that such agreements should be encouraged; and
(4) that competition as currently mandated by federal and state antitrust laws should be supplanted by a regulatory program to permit and encourage cooperative agreements between hospitals, health care purchasers, or other health care providers when the benefits outweigh the disadvantages caused by their potential adverse effects on competition.
Section 44-7-510. As used in this article:
(1) `Affected persons' means a health care provider or purchaser:
(a) who provides or purchases the same or similar health care services in the geographic area served or to be served by the applicants for a certificate of public advantage: or
(b) who has notified the department of his interest in applications for certificates of public advantage and has a direct economic interest in the decision. Other than health insurers licensed in South Carolina, persons from other states who would otherwise be considered `affected persons' are not included unless that state provides for similar involvement of persons from South Carolina in a similar process in that state.
(2) `Certificate of public advantage' means the formal approval, including any conditions or modifications, by the department of a contract, business or financial arrangement, or other activities or practices between two or more health providers, health provider networks, or health care purchasers that might be construed to be violations of state or federal antitrust laws.
(3) `Cooperative agreement' means an agreement between two health providers, health provider networks, or purchasers or among more than two health care providers, health provider networks, or purchasers for the sharing, allocation, or referral of patients or the sharing or allocation of personnel, instructional programs, support services and facilities, medical, diagnostic or laboratory facilities, procedures, equipment, or other health care services traditionally offered by health care facilities or other health care providers or the acquisition or merger of assets among or by two or more health providers, health provider networks, or health care purchasers, provided the agreement does not involve price-fixing or predatory pricing or illegal tying arrangements.
(4) `Department' means the Department of Health and Environmental Control.
(5) `Health care provider' means a health care professional licensed, certified, or registered under the laws of this State, an organization licensed pursuant to Section 44-69-30 or Section 44-71-30, or a facility licensed pursuant to Section 44-7-260 or Section 44-89-40 to provide health care services or any other person as defined in Section 44-7-130(15) who provides health services in a freestanding or mobile facility.
(6) `Health care purchaser' means a person or organization that purchases health care services on behalf of an identified group of persons, regardless of whether the cost of coverage of services is paid for by the purchaser or by the person receiving coverage or services including, but not limited to:
(a) health insurers as defined by Section 38-71-92;
(b) employee health plans offered by self-insured employers;
(c) group health coverage offered by fraternal organizations, professional associations, or other organizations;
(d) state and federal health care programs; and
(e) state and local public employee health plans.
(7) `Health provider networks' means an organization of health care providers which offers health services to residents of this State. An organization may be a partnership, corporation including an association, a joint stock company, or any other legal entity recognized by the State.
(8) `Federal or state antitrust laws' means a federal or state law prohibiting monopolies or agreements in restraint of trade, including the Federal Sherman Act and Clayton Act, the Federal Trade Commission Act, and Chapters 3 and 5 of Title 39 of the 1976 Code.
Section 44-7-520. (A) It is the intent of this article to require the State to provide direction, supervision, regulation, and control over approved cooperative agreements through the department and the Attorney General. This state direction, supervision, regulation, and control of cooperative agreements will provide immunity for health care providers, health provider networks, or purchasers who participate in discussions or negotiations authorized by this article from civil liability and criminal prosecution under federal or state antitrust laws.
(B) A health care provider, health provider network, or health care purchaser may negotiate, enter into, and conduct business pursuant to a cooperative agreement without being subject to damages, liability, or scrutiny under any state antitrust law. In addition, conduct in negotiating and entering into a cooperative agreement for which an application for a certificate of public advantage is filed in good faith is immune from challenge or scrutiny under state antitrust laws, regardless of whether a certificate is issued. It is the intention of the General Assembly that this article immunizes covered activities from challenge or scrutiny under federal antitrust laws. Nothing in this subsection creates immunity for a person for conduct in negotiating or entering into a cooperative agreement for which an application for a certificate of public advantage is not filed.
Section 44-7-530. A health care provider, health care purchaser, or health provider network may negotiate and enter into cooperative agreements with other health care providers or health provider networks or health care purchasers if the likely benefits resulting from the agreements outweigh any likely disadvantages resulting from the agreements. Parties to a cooperative agreement may apply to the department for a certificate of public advantage. The application must include an executed written copy of the cooperative agreement and describe the nature and scope of the cooperation in the agreement and any monetary or other consideration passing to a party under the agreement including change of ownership, merger, or other change in control of the assets of either party. Information obtained by the department under this section must be available to the public unless the department certifies the information as being proprietary. The department may make this certification where a person shows to the satisfaction of the department that the information should be proprietary. The department may require an application fee from the submitting parties sufficient to cover the cost of processing the application.
Section 44-7-540. Upon receipt of an application, the department shall publish in the State Register notice of receipt of the application. The department shall review the application in accordance with the standards set forth in Section 44-7-560 and if requested by an affected person within thirty days of the department's receipt of a completed application, may hold a public hearing in accordance with regulations promulgated by the department. Within thirty days of receipt of the application, the department may request additional information as may be necessary to complete the application. The applicant has thirty days from the date of the request to submit the additional information. If the applicant fails to submit the requested information within the thirty-day period, the application is considered withdrawn. However, the department may grant one fifteen-day extension for the applicant to submit this information. The department shall grant or deny the application within sixty days after receipt of a completed application or from the date of the public hearing, if one is requested, and that decision must be in writing and must set forth the basis for the decision. The department shall furnish a copy of the decision to the applicants and any affected persons who have asked to be notified. The department shall publish its decisions in the State Register.
Section 44-7-550. (A) Upon receipt of a completed application the department shall forward a copy of the application to the Attorney General. The Attorney General shall review the request not later than thirty days after receiving the completed application. The Attorney General may advise the department, in writing, to approve or deny the application. Failure by the Attorney General to notify the department within thirty days of receiving a completed application constitutes a recommendation for approval of the request. Advisement by the Attorney General to the department to deny a request shall set forth the reasons for the denial.
(B) Upon receipt of the advice of the Attorney General or at the end of the review period outlined in Section 44-7-540, the department shall issue an order approving or denying the application for a certificate of public advantage. Upon request from the applicant or an affected person, the department's order to approve or deny the application for the certificate is entitled to judicial review in accordance with the Administrative Procedures Act.
Section 44-7-560. (A) The department shall issue a certificate of public advantage for a cooperative agreement if it determines that:
(1) the applicants have demonstrated that the likely benefits resulting from the agreement outweigh the likely disadvantages from the agreement;
(a) in evaluating the benefits likely to result from the cooperative agreement, the department shall consider, but is not limited to:
(i) enhancement of the quality of health and health related care provided to South Carolina citizens;
(ii) preservation of health care providers close to communities traditionally served by those providers;
(iii) gains in the cost-efficiency of the services offered by the health care providers or purchasers involved;
(iv) improvements in the use of health care provider resources and equipment;
(v) avoidance or elimination or reduction of duplication of health care resources;
(vi) improvement in access to health care for citizens in the community;
(vii) support of the agreement by purchasers and payers in the health service area;
(viii) the extent of financial risk-sharing by the parties as a result of the agreement;
(ix) the provision or enhancement of health care services to Medicaid, indigent, or charity care patients by the parties to the agreement. (b) In evaluating the disadvantages likely to result from the agreement, the department shall consider, but is not limited to:
(i) the likely adverse impact, if any, on the ability of the health care purchasers to negotiate optimal payment and service arrangements with the health care providers or health provider networks;
(ii) the extent of any reduction in competition among health care providers, purchasers, or other persons furnishing goods or services to or in competition with health care providers or purchasers that is likely to result directly or indirectly from the health care cooperative agreement;
(iii) the likely adverse impact, if any, on patients in the quality, availability, and price of health care services;
(iv) the extent to which the agreement may increase the costs of prices of health care at a hospital or other health care provider which is a party to the agreement;
(v) the extent to which services to Medicaid, indigent, or charity care patients are adversely impacted by the agreement; and
(2) reduction in competition likely to result from the agreement is reasonably necessary to obtain the benefits likely to result. In evaluating whether the reduction in competition is necessary to obtain the likely benefits, the department shall consider, but is not limited to:
(a) the availability of arrangements that:
(i) are less restrictive to competition and achieve the same benefits; (ii) offer a more favorable balance of benefits over disadvantages attributable to a reduction in competition likely to result from the agreement.
(b) the ease with which health care providers or health care purchasers may obtain contracts with other health plans;
(c) the difficulty in establishing new competing health plans in the relevant geographic market, including the ability to offer services requiring a certificate of need or purchasing these services from another health care provider or health provider network; and
(d) the sufficiency of the number or type of providers under contract with the health plan available to meet the needs of plan enrollees.
(B) The department also may establish conditions for approval that are reasonably necessary to ensure that the cooperative agreement and the activities engaged under it are consistent with this article and its purpose to promote cooperation and limit health care costs, protect against abuse of private economic power, and to ensure that the activity is appropriately supervised and regulated by the State.
Section 44-7-570. (A) The department shall actively monitor and regulate agreements approved under this article and may request information whenever necessary to ensure that the agreements remain in compliance with the conditions of approval. The department shall charge an annual fee to cover the cost of monitoring and regulating these agreements. During the time the certificate is in effect, a report on the activities pursuant to the cooperative agreement must be filed with the department every two years so that the department shall determine that the cooperative agreement continues to comply with the terms of the certificate of public advantage. The department may revoke a certificate upon a finding that:
(1) the agreement is not in substantial compliance with the terms of the application or the conditions of approval; or
(2) the likely benefits resulting from the certified agreement no longer outweigh any disadvantages attributable to any potential reduction in competition resulting from the agreement; or
(3) the department's certification was obtained as a result of intentional material misrepresentation to the department or as the result of coercion, threats, or intimidation toward any party to the cooperative agreement.
(B) A decision by the department to revoke a certificate of public advantage is entitled to judicial review in accordance with the Administrative Procedures Act.
(C) Nothing in this article limits the authority of the Attorney General to initiate civil enforcement action or criminal prosecution upon the determination that health care providers, health provider networks, or health care purchasers have exceeded the scope of the certificate of public advantage approved by the department. A review by the Attorney General must be conducted according to the standards set forth in this article.
(D) The department shall promulgate regulations to implement the provisions of this article including any fees and application costs associated with the monitoring and oversight of cooperative agreements approved under this article.
Section 44-7-580. The department shall maintain on file all cooperative agreements for which certificates of public advantage remain in effect. A dispute among the parties to a cooperative agreement concerning its meaning or terms is governed by normal principles of contract or other applicable law. A party to a cooperative agreement who terminates the agreement shall notify the department within fifteen days of the termination. If all parties terminate their participation in the cooperative agreement, the department shall revoke the certificate of public advantage for the agreement.
Section 44-7-590. Nothing in this article exempts health care providers or purchasers from compliance with the provisions of Article 3 of this chapter concerning certificates of need."
Open-heart surgery and therapeutic cardiac catheterization services studies
SECTION 2. A. There is established a task force under the Health Care Planning and Oversight Committee which shall conduct a study regarding open-heart surgery and therapeutic cardiac catheterization services for residents of South Carolina counties that are included in the Federal Bureau of Census' Metropolitan Statistical Areas (MSA) of another state. The study shall consider access to open-heart surgery to citizens of this State, the total cost of care to the patient and the patient's family, the impact on the economy of South Carolina, the impact on health care economics of South Carolina; quality of care available based upon physician volume, population trends, and projections of the South Carolina community.
The task force must be appointed by the Governor and must be composed of:
(1) one South Carolina citizen residing in an MSA to be studied;
(2) one member of the General Assembly representing an MSA to be studied;
(3) the Chairman of the State Health Planning Committee;
(4) a physician recommended by the South Carolina Medical Association;
(5) a representative of the hospital industry recommended by the South Carolina Hospital Association;
(6) the Commissioner of the South Carolina Department of Health and Environmental Control; and
(7) the Director of the Department of Insurance.
Members of the task force shall receive the mileage, subsistence, and per diem allowed by law for members of state boards, committees, and commissions. The findings and recommendations of the task force must be submitted to the Health Care Planning and Oversight Committee and the state health planning committee, established pursuant to Section 44-7-180, no later than January 1, 1995. In the manner provided for in Section 44-7-180 of the 1976 Code, the findings and recommendations submitted to the health planning committee become part of the State Health Plan in effect at the time the findings and recommendations are submitted to the committee.
B. Until the task force established under subsection A. issues its findings and recommendations, a facility may provide therapeutic cardiac catheterizations if that facility:
(1) has obtained a Certificate of Need for diagnostic cardiac catheterization before July 10, 1992, and filed to obtain a Certificate of Need for open-heart surgical services before January 1, 1993; and
(2) has a written open-heart surgery back-up agreement with a facility that provides an open-heart surgery service located within a thirty-minute one-way drive.
If the findings and recommendations of the task force do not provide for continued performance of therapeutic cardiac catheterization at a facility performing these services under this provision, the facility shall cease performing therapeutic cardiac catheterizations services within thirty days of the issuance of the findings and recommendations. If the findings and recommendations of the task force provide for continued performance of cardiac catheterizations at a facility performing this service under this provision and the facility applies for a Certificate of Need within thirty days, the facility may continue to provide the services until a final agency decision on the application for a Certificate of Need is issued, unless continued service is otherwise prohibited by Section 44-7-180 of the 1976 Code.
C. A committee appointed by the South Carolina Board of Medical Examiners shall conduct an annual review of the provision of therapeutic cardiac catheterization services and related physician practice at any hospital providing these services as authorized under subsection B. The committee must be composed of one physician specializing in cardiology from each congressional district and one cardiologist selected by the Board of Medical Examiners from the Medical University of South Carolina Cardiology Department who shall serve as chairman of the committee. None of the members of the committee may practice or reside in the Metropolitan Statistical Area (MSA) in which a facility to be reviewed is located. If the committee finds action by any physician at a facility where a review is being conducted creates an unreasonable risk to any patient, the State Board of Medical Examiners may take such action against the physician it considers necessary. In addition, the committee shall forward its findings to the Department of Health and Environmental Control and the department may take such action against the facility it considers necessary.
D. Upon this act's effective date, the Office of Research and Statistical Services of the State Budget and Control Board immediately shall initiate a study of facilities providing therapeutic cardiac catheterizations without on-site open-heart surgery services. The study shall compare patient outcomes between these facilities and facilities with on-site open-heart surgery and determine if there is a statistically significant difference in patient outcomes. If the study concludes that patients of a facility conducting therapeutic cardiac catheterization without on-site open-heart surgery services have a statistically significant unfavorable outcome compared to patients at facilities with open-heart surgery services, the facility without open-heart surgery services immediately shall discontinue performing therapeutic cardiac catheterizations. The Office of Research and Statistical Services shall issue its findings no later than twelve months from this act's effective date. Any facility which is the subject of this study shall provide the office with all data and information sufficient to complete its work.
E. If the department has reason to believe that patient care is being compromised, it may impose sanctions and take action authorized under Article 3, Chapter 7, Title 44 of the 1976 Code.
F. All proceedings of a person or entity conducting a review described in subsections C. or D. are not subject to discovery, subpoena or introduction into evidence in any civil action for damages for injury to the person arising out of any medical or surgical treatment, omission, or operation by a licensed health care provider as defined in Article 5, Chapter 79, Title 38. Further, there is no monetary liability on the part of and no cause of action for damages arising against a person or entity conducting or participating in a review described in subsection C. Nothing in Article 3, Chapter 7, Title 44 of the 1976 Code is intended to provide immunity to a person or entity in a civil action for damages.
G. Nothing in this section negates or may be construed to prohibit any enforcement action taken by the department against a facility for initiating a therapeutic cardiac service without a Certificate of Need.
H. Except as otherwise provided for in this section, the provisions of this section apply prospectively only.
Time effective
SECTION 3. This act takes effect upon approval by the Governor.
Approved the 25th day of May, 1994.