[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3897 Introduced in House (IH)]

  2d Session
                                H. R. 3897

 To ensure and foster continued patient safety and quality of care by 
   clarifying the application of the antitrust laws to negotiations 
between groups of health care professional and health plans and health 
                        care insurance issuers.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 7, 2002

    Mr. Barr of Georgia (for himself, Mr. Conyers, Mr. Norwood, Mr. 
Hoeffel, Mr. Ganske, Mr. Nadler, and Mr. Weldon of Florida) introduced 
    the following bill; which was referred to the Committee on the 
                               Judiciary

_______________________________________________________________________

                                 A BILL


 
 To ensure and foster continued patient safety and quality of care by 
   clarifying the application of the antitrust laws to negotiations 
between groups of health care professional and health plans and health 
                        care insurance issuers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Health Care 
Antitrust Improvements Act of 2002''.
    (b) Findings.--Congress finds the following:
            (1) A large number of Americans receive their health care 
        coverage from managed health care plans. This represents a 10-
        fold increase over the last 20 years.
            (2) The market power of insurance companies has increased 
        tremendously since the early 1990's. Since 1995, there have 
        been 321 announced managed care mergers and acquisitions. This 
        unprecedented consolidation has provided health plans with 
        significant leverage over health care professionals and 
        patients in determining the scope, coverage, and quality of 
        health care in this country.
            (3) Health plans, because of the concentration and exertion 
        of market and economic power, systematically and improperly 
        manipulate the practice of medicine through such mechanisms as 
        inappropriately making medical necessity determinations, down-
        coding and bundling, knowingly denying and delaying payment, 
        and engaging in a variety of practices that may affect the 
        continuity and quality of patient care.
            (4) In 1992, Congress considered legislation addressing 
        various antitrust issues within the health care industry that 
        were problematic for health care providers and patients. Most 
        of the legislation was incorporated into the revised Statements 
        of Antitrust Enforcement Policy in Health Care, issued by the 
        Department of Justice and the Federal Trade Commission in 
        August 1996. While the ``safe harbor'' guidance for physicians 
        contained in the Statements was a good first step in addressing 
        this market imbalance, it does not provide adequate parameters 
        for the roughly 54 percent of self-employed and small physician 
        group practices to interact, share information, and effectively 
        and fairly negotiate with health plans.
            (5) The intent of the antitrust laws is to encourage 
        competition and protect the consumer, and the current per se 
        standard for enforcing the antitrust laws in the health care 
        field frequently does not achieve these objectives.
            (6) An application of the rule of reason to health care 
        professionals' business activities and interactions with health 
        care plans will tend to promote both competition and high-
        quality patient care.
            (7) An application of the rule of reason to health care 
        professionals' business activities and interactions with health 
        plans will not change the professionals' ethical duty to 
        continue to provide medically necessary care to their patients.

SEC. 2. APPLICABILITY OF RULE OF REASON STANDARD.

    In any action under the antitrust laws challenging the efforts of 2 
or more physicians or other health care professionals to negotiate with 
a health plan, the conduct of such physicians or health care 
professionals shall not be deemed illegal per se, but shall be judged 
on the basis of its reasonableness, taking into account all relevant 
factors affecting competition, including patient access to health care, 
the quality of health care received by patients, and contract terms or 
proposed contract terms.

SEC. 3. AWARD OF ATTORNEY'S FEES AND COSTS OF SUIT.

    Notwithstanding sections 4(a) and 16 of the Clayton Act (15 U.S.C. 
15(a), 26), in any action under the antitrust laws brought against a 
health care cooperative venture based on its negotiations with a health 
plan, the court at the conclusion of the action shall include an 
attorney's fee in the award of costs to a substantially prevailing 
plaintiff only if the defendant's conduct during litigation of the 
claim was frivolous, unreasonable, without foundation, or in bad faith.

SEC. 4. NOTIFICATIONS UNDER ANTITRUST LAW FOR HEALTH CARE COOPERATIVE 
              VENTURES.

    (a) Notifications.--
            (1) Submission of notification by venture.--Any party to a 
        health care cooperative venture (acting on behalf of such 
        venture) that intends, or has begun, to negotiate with a health 
        plan may file with the Attorney General of the United States a 
        written notification disclosing--
                    (A) the identities of the parties to such venture, 
                and the name and address of each agent representing 
                such venture;
                    (B) the identity of each health plan with which 
                such venture is or may be negotiating; and
                    (C) the general nature and objectives of the 
                negotiations.
            (2) Submission of information on changes to venture.--A 
        health care cooperative venture for which a notification is in 
        effect under this section shall submit information on any 
        change in the membership of the venture not later than 90 days 
        after such change occurs.
            (3) Publication of notification.--Except as provided in 
        paragraph (4), not later than 30 days after receiving a 
        notification with respect to a health care cooperative venture 
        under paragraph (1), the Attorney General shall publish in the 
        Federal Register a notice with respect to such venture that 
        identifies the parties to the venture, the name and address of 
        each agent representing the venture, and generally identifies 
        the purpose and planned activity of the venture. Prior to its 
        publication, the contents of the notice shall be made available 
        to the agents of the venture.
            (4) Restriction on disclosure of other information.--All 
        information submitted pursuant to notification and all 
        information and documentary material obtained by the Attorney 
        General in the course of any investigation with respect to a 
        potential violation of the antitrust laws by the health care 
        cooperative venture shall be exempt from disclosure under 
        section 552 of title 5, United States Code, and shall not be 
        made publicly available by any agency of the United States to 
        which such section applies except in a judicial proceeding in 
        which such information and material are subject to any 
        protective order.
            (5) Withdrawal of notification.--Any person who files a 
        notification pursuant to this section may withdraw such 
        notification before a publication by the Attorney General 
        pursuant to paragraph (3).
            (6) No judicial review permitted.--Any action taken or not 
        taken by the Attorney General with respect to notifications 
        filed pursuant to this subsection shall not be subject to 
        judicial review.
            (7) Restrictions on admissibility of information.--
                    (A) In general.--Any information disclosed in a 
                notification submitted under paragraph (1) and the fact 
                of the publication of a notification by the Attorney 
                General under paragraph (3) shall only be admissible 
                into evidence in a judicial or administrative 
                proceeding for the sole purpose of establishing that a 
                party to a health care cooperative venture is entitled 
                to the protections described in subsection (b).
                    (B) Actions of attorney general.--No action taken 
                by the Attorney General pursuant to this subsection 
                shall be admissible into evidence in any judicial or 
                administrative proceeding for the purpose of supporting 
                or answering any claim under the antitrust laws.
    (b) Protections for Ventures Subject to Notification.--
            (1) In general.--
                    (A) Protections described.--The provisions of 
                paragraph (2) shall apply with respect to any action 
                under the antitrust laws challenging conduct within the 
                scope of a notification which is in effect pursuant to 
                subsection (a)(1).
                    (B) Timing of protections.--The protections 
                described in this subsection shall apply to a venture, 
                and any party to such venture that has made a 
                notification under subsection (a)(1) as of the 
                postmarked date of the notification.
            (2) Limitation on recovery to actual damages and 
        interest.--Notwithstanding section 4 of the Clayton Act, any 
        person who is entitled to recovery under the antitrust laws for 
        conduct that is within the scope of a notification filed under 
        subsection (a) shall recover only the actual damages sustained 
        by such person and interest calculated at the rate specified in 
        section 1961 of title 28, United States Code, for the period 
        beginning on the earliest date for which injury can be 
        established and ending on the date of judgment, unless the 
        court finds that the award of all or part of such interest is 
        unjust under the circumstances.

SEC. 5. TYING ARRANGEMENTS.

    Any rule, policy, agreement, or other action of a health plan that 
has the effect of requiring a health care professional to participate 
in a product, all products, or product lines offered by the health plan 
in order to participate in a particular product or product line, shall 
be construed to be an illegal tying arrangement under the antitrust 
laws unless the health plan demonstrates that it lacks market power in 
the market for the tying product or product lines.

SEC. 6. DEMONSTRATION PROJECTS ALLOWING HEALTH CARE PROFESSIONALS TO 
              NEGOTIATE WITH HEALTH PLANS.

    (a) Establishment of Demonstration Projects.--The Attorney General, 
in accordance with the recommendations of the advisory committee 
appointed under subsection (b), shall establish demonstration projects 
(in this section referred to as ``projects'') under which health care 
professionals in the States designated as project sites may act 
together to jointly negotiate contracts and agreements with health 
plans to provide health care items and services for which benefits are 
provided under such health plans. Projects shall be established for the 
purpose of testing various options in the health care market to allow 
negotiations and agreements by health care professionals that will 
enhance efficiency, quality, and availability of health care, while 
promoting competition in the health care market.
    (b) Advisory Committee.--(1) Not later than 180 days after the date 
of the enactment of this Act, the Attorney General shall appoint an 
Advisory Committee on Health Plan Negotiations to advise the Attorney 
General with respect to the carrying out of the Attorney General's 
functions under this section. The duties of the Advisory Committee 
shall include, but not be limited to, providing recommendations 
regarding implementation and design of projects and monitoring and 
reporting on the impact of projects as required under subsection (e).
    (2) The Advisory Committee shall consist of 13 members, appointed 
without regard to the civil service laws. Seven members shall be 
representatives of health care professional organizations, 2 of whom 
shall be self-employed physicians (allopathic or osteopathic). The 
remaining members shall have expertise in health care quality, 
economics, or insurance, but at least 1 of such remaining members shall 
be a representative of consumers.
    (3) The Attorney General shall furnish to the Advisory Committee an 
executive secretary and such secretarial, clerical, and other services 
as may be necessary to conduct its business, and may call upon other 
agencies of the Government for statistical data, reports, and other 
information which will assist the Advisory Committee in the performance 
of its duties.
    (4) Members of the Advisory Committee, while serving on business of 
the Advisory Committee (inclusive of travel time), shall be entitled to 
receive the daily equivalent of the annual rate of basic maximum rate 
of pay payable from time to time under section 5376 of title 5, United 
States Code, for each day and, while so serving away from their homes 
or regular places of business, may be allowed travel expenses, 
including per diem in lieu of subsistence, in the same manner as 
provided in section 5703 of title 5, United States Code, for 
individuals in the Government employed intermittently.
    (5) The members shall serve until submission of the report pursuant 
to subsection (e)(2), at which time the Advisory Committee shall 
terminate. A vacancy arising in the Advisory Committee shall be filled 
in the same manner as the original appointment is made. A majority of 
members shall constitute a quorum, and action shall be taken only by a 
majority vote of those present and voting.
    (c) Application for States To Participate in Projects.--
            (1) In general.--Not later than 180 days after appointment 
        of the Advisory Committee, the Attorney General shall 
        establish, taking into consideration the recommendations of the 
        Advisory Committee, an application process that shall allow 
        health care professional organizations to apply for 1 or more 
        States to be designated as a site for 1 project to be 
        implemented under subsection (d). Such health care professional 
        organizations shall be permitted a 3-month period to submit 
        applications. At the end of the 3-month application period, the 
        Attorney General shall have 3 months to designate not fewer 
        than 6 States in which projects shall be implemented regardless 
        of the number of applications submitted.
            (2) Criteria for selection.--The Attorney General shall 
        determine the States to be designated in accordance with the 
        recommendations of the Advisory Committee, and taking into 
        account the level of managed care penetration in the particular 
        State, as well as other factors that demonstrate a need to 
        address unfair negotiations, based upon factual information 
        submitted by the applicants or otherwise found by the Advisory 
        Committee. The designated States shall represent an appropriate 
        environment for a study on the imbalance in contractual 
        negotiations between health care providers and health plans.
    (d) Project Implementation.--
            (1) In general.--Not later than 18 months after the date of 
        the enactment of this Act the Attorney General shall implement 
        not fewer than 6 projects, limited to 1 project in each State 
        designated under subsection (c) and satisfying subparagraphs 
        (A) and (B).
                    (A) Quality health care coalition demonstration.--
                For not fewer than 3 of such States, the following 
                provisions shall apply to projects in such States:
                            (i) In general.--Notwithstanding the 
                        antitrust laws (except as provided in clause 
                        (ii)), health care professionals may act 
                        jointly to negotiate and enter into contracts 
                        and agreements with health plans to provide 
                        health care items and services for which 
                        benefits are provided under such health plans.
                            (ii) Limitation.--
                                    (I) No new right for collective 
                                cessation of service.--Clause (i) shall 
                                not provide health care professionals 
                                with any new right to participate in 
                                any collective cessation of service to 
                                patients not already permitted by 
                                existing law.
                                    (II) Other conduct under antitrust 
                                law unaffected.--Nothing in this 
                                section shall exempt from the 
                                application of the antitrust laws any 
                                agreement or otherwise unlawful 
                                conspiracy that excludes, limits the 
                                participation or reimbursement of, or 
                                otherwise limits the scope of services 
                                to be provided by any health care 
                                professional or group of health care 
                                professionals with respect to the 
                                performance of services that are within 
                                their scope of practice as defined or 
                                permitted by relevant law or 
                                regulation.
                            (iii) Protection for good faith actions.--
                        Actions taken by health care professionals in 
                        good faith reliance on clause (i) shall not be 
                        subject under the antitrust laws to criminal 
                        sanctions or civil damages, fees, or penalties 
other than actual damages.
                    (B) Quality health care cooperative 
                demonstration.--For any remaining States designated 
                under subsection (c), the following provisions shall 
                apply to projects in such States:
                            (i) In general.--Notwithstanding the 
                        antitrust laws, any health care professionals 
                        may act jointly to negotiate and enter into 
                        contracts and agreements with health plans to 
                        provide health care items and services for 
                        which benefits are provided under such health 
                        plans.
                            (ii) Oversight.--(I) If the Attorney 
                        General has reason to believe that 2 or more 
                        health care professionals have jointly engaged 
                        in conduct described in clause (i) with a 
                        health plan, that is intended to substantially 
                        harm both competition and the quality of health 
                        care received by patients, the Attorney General 
                        shall serve upon such health care professionals 
                        a complaint alleging such conduct.
                            (II) The complaint shall accompany a notice 
                        of hearing to be held not less than 60 days 
                        after the date of service, requiring the health 
                        care professionals to show cause why an order 
                        should not be made directing them to cease and 
                        desist from engaging in such conduct.
                            (iii) Administrative adjudication.--(I) The 
                        Attorney General shall make a determination of 
                        the charge alleged in the complaint based on 
                        the record after an opportunity for a hearing.
                            (II) If the Attorney General determines 
                        that such health care professionals have 
                        jointly engaged in conduct described in clause 
                        (i) with a health plan that is intended to 
                        substantially harm both competition and the 
                        quality of health care received by patients, 
                        the Attorney General shall issue and cause to 
                        be served upon such health care professionals, 
                        an order reciting the facts on which the 
                        determination is made and directing such health 
                        care professionals to cease and desist from 
                        engaging in such conduct.
                            (III) A health care professional aggrieved 
                        by such determination may commence a civil 
                        action in an appropriate district court of the 
                        United States, not later than 60 days after 
                        receiving such order, for review of such 
                        determination on the record of the Attorney 
                        General.
                            (IV) As part of the answer to the 
                        complaint, the Attorney General shall file in 
                        such court a certified copy of the record on 
                        which such determination is based. The findings 
                        of fact of the Attorney General may be set 
                        aside only if found to be unsupported by 
                        substantial evidence in such record taken as a 
                        whole.
                            (iv) Judicial review.--(I) The district 
                        courts of the United States shall have 
                        jurisdiction to review in accordance with this 
                        subparagraph determinations made and orders 
                        issued under clause (iii).
                            (II) Contempt.--Failure to obey any such 
                        order may be punished by such courts as a 
                        contempt thereof.
                    (C) No effect on title vi of civil rights act of 
                1964.--Nothing in this section shall be construed to 
                affect the application of title VI of the Civil Rights 
                Act of 1964.
    (e) Monitoring and Report.--
            (1) Monitoring impact.--During the effective period of 
        projects implemented under this section, the Attorney General 
        shall, in accordance with the recommendations of the Advisory 
        Committee, closely monitor and measure the impact of projects 
        in each State on the quality of and access to health care 
        services, choice of health plans, changes in health plan 
        enrollment, and other relevant factors. The Attorney General 
        shall, in accordance with the recommendations of the Advisory 
        Committee, determine the criteria for evaluating the impact on 
        the quality of health care services.
            (2) Report.--Not earlier than 3 years and not later than 4 
        years after commencement of all of the projects implemented 
        pursuant to subsection (d), the Attorney General shall submit 
        to the Committee on the Judiciary of the Senate and the 
        Committee on the Judiciary of the House of Representatives 1 
        report on the progress of all of the projects implemented under 
        this section, including a comparison of the matters monitored 
        under paragraph (1) among the different designated States and 
        as compared to the Nation as a whole.
            (3) Project termination.--Unless the report submitted 
        pursuant to paragraph (2) demonstrates by factual evidence that 
        consumers have been harmed by a decrease in quality of or 
        access to health care services as a direct result of a project 
        implemented under this section and without any offsetting 
        benefits, the Attorney General may not terminate such project. 
        Projects that are implemented under this section and that are 
        not terminated under this paragraph shall be extended by the 
        Attorney General to additional States.

SEC. 7. NO APPLICATION TO FEDERAL PROGRAMS.

    Nothing in this Act shall apply to negotiations, agreements, or 
other obligations between health care professionals and health plans 
that pertain to benefits provided under any of the following:
            (1) The Medicare Program under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).
            (2) The Medicaid Program under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.).
            (3) The SCHIP program under title XXI of the Social 
        Security Act (42 U.S.C. 1397aa et seq.).
            (4) Chapter 55 of title 10, United States Code (relating to 
        medical and dental care for members of the uniformed services).
            (5) Chapter 17 of title 38, United States Code (relating to 
        veterans' medical care).
            (6) Chapter 89 of title 5, United States Code (relating to 
        the Federal Employees' Health Benefits Program).
            (7) The Indian Health Care Improvement Act (25 U.S.C. 1601 
        et seq.).

SEC. 8. DEFINITIONS.

    In this Act, the following definitions shall apply:
            (1) Antitrust laws.--The term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition; and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A).
            (2) Health plan.--The term ``health plan'' means a group 
        health plan or a health insurance issuer that is offering 
        health insurance coverage.
            (3) Group health plan.--The term ``group health plan'' 
        means an employee welfare benefit plan to the extent that the 
        plan provides medical care (including items and services paid 
        for as medical care) to employees or their dependents (as 
        defined under the terms of the plan) directly or through 
        insurance, reimbursement, or otherwise.
            (4) Medical care.--The term ``medical care'' means amounts 
        paid for--
                    (A) the diagnosis, cure, mitigation, treatment, or 
                prevention of disease, or amounts paid for the purpose 
                of affecting any structure or function of the body;
                    (B) transportation primarily for and essential to 
                medical care referred to in subparagraph (A); and
                    (C) insurance covering medical care referred to in 
                subparagraphs (A) and (B).
            (5) Health insurance coverage.--The term ``health insurance 
        coverage'' means benefits consisting of medical care (provided 
        directly, through insurance or reimbursement, or otherwise and 
        including items and services paid for as medical care) under 
        any hospital or medical service policy or certificate, hospital 
        or medical service plan contract, or health maintenance 
        organization contract offered by a health insurance issuer.
            (6) Health insurance issuer.--The term ``health insurance 
        issuer'' means an insurance company, insurance service, or 
        insurance organization (including a health maintenance 
        organization) that is licensed to engage in the business of 
        insurance in a State and that is subject to State law 
        regulating insurance. Such term does not include a group health 
        plan.
            (7) Health maintenance organization.--The term ``health 
        maintenance organization'' means--
                    (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of the 
                Public Health Service Act (42 U.S.C. 300e(a)));
                    (B) an organization recognized under State law as a 
                health maintenance organization; or
                    (C) a similar organization regulated under State 
                law for solvency in the same manner and to the same 
                extent as such a health maintenance organization.
            (8) Group health plan, health insurance issuer.--The terms 
        ``group health plan'' and ``health insurance issuer'' include a 
        third-party administrator or other person acting for or on 
        behalf of such plan or issuer.
            (9) Health care cooperative venture.--The term ``health 
        care cooperative venture'' means 2 or more health care 
        professionals who are engaged in negotiations with a health 
        plan, including any attempts to enter into negotiations with a 
        health plan, regarding the provision of health care services to 
        insureds, enrollees, or beneficiaries of a health plan.
            (10) Health care services.--The term ``health care 
        services'' means any services for which payment may be made 
        under a health plan, including services related to the delivery 
        or administration of such services.
            (11) Health care professional.--The term ``health care 
        professional'' means any individual or entity that provides 
        health care items or services, treatment, assistance with 
        activities of daily living, or medications to patients and who, 
        to the extent required by State or Federal law, possesses 
        specialized training that confers expertise in the provision of 
        such items or services, treatment, assistance, or medications.
            (12) Health care professional organization.--The term 
        ``health care professional organization'' means any nonprofit 
        association, society, or organization whose membership consists 
        of health care professionals.
            (13) Person.--The term ``person'' includes a State or unit 
        of local government.
            (14) State.--The term ``State'' includes the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands of the United States, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.
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