Banning anticompetitive terms in facility and insurance contracts that limit access to higher quality, lower cost care

(a)

In general

(1)

PHSA

(A)

In general

Section 2799A–9 of the Public Health Service Act (42 U.S.C. 300gg–119) is amended—(i)in the heading, by striking

by removing

and all that follows through

information

and inserting

; prohibition on anticompetitive agreements

;(ii)in subsection (a)(5), in the first sentence, by striking section and inserting subsection; and(iii)by adding at the end the following:

(b)

Protecting health plans network design flexibility

(1)

In general

A group health plan or a health insurance issuer offering group or individual health insurance coverage may not enter into an agreement with a covered entity if such agreement, directly or indirectly—(A)restricts (including by operation of any agreement in effect between such covered entity and another covered entity) the group health plan or health insurance issuer from—(i)directing or steering participants or beneficiaries to other health care providers who are not subject to such agreement; or(ii)offering incentives to encourage participants or beneficiaries to utilize specific health care providers;(B)requires the group health plan or health insurance issuer to enter into any additional agreement with an affiliate of the covered entity;(C)requires the group health plan or health insurance issuer to agree to payment rates or other terms for any affiliate of the covered entity not party to the agreement; or(D)restricts other group health plans or health insurance issuers not party to the agreement from paying a lower rate for items or services than the plan or issuer involved in the agreement pays for such items or services.(2)

Exceptions for certain provider group and value-based network designs

Paragraph (1)(A) shall not apply to a group health plan or health insurance issuer offering group or individual health insurance coverage with respect to—(A)a health maintenance organization, if such health maintenance organization operates primarily through exclusive contracts with multi-specialty physician groups, nor to any arrangement between such a health maintenance organization and its affiliates; or(B)a value-based network arrangement, such as an exclusive provider network, accountable care organization, center of excellence, a provider sponsored health insurance issuer that operates primarily through aligned multi-specialty physician group practices or integrated health systems, or such other similar network arrangements as determined by the Secretary through guidance or rulemaking.(3)

Covered entity defined

For purposes of this subsection, the term covered entity means a health care provider, network or association of providers, third-party administrator, or other service provider offering access to a network of providers.(4)

State grandfathering option

An applicable State authority may make a determination that the prohibitions under paragraph (1)(A) (relating to conditions that would direct or steer enrollees to, or offer incentives to encourage enrollees to use, other health care providers) will not apply in the State with respect to any specified agreement executed on June 19, 2019, and any agreements related to such specified agreement executed on or before December 31, 2020, for a maximum length of nonapplicability of up to 10 years from the date of execution of the contract if the applicable State authority determines that the contract is unlikely to significantly lessen competition. With respect to a specified agreement for which an applicable State authority has made a determination under the preceding sentence, an applicable State authority may determine whether renewal of the contract, within the applicable 10-year period, is allowed.(5)

Rule of construction

Except as provided in paragraph (1), nothing in this subsection shall be construed to limit network design or cost or quality initiatives by a group health plan or health insurance issuer, including accountable care organizations, exclusive provider organizations, networks that tier providers by cost or quality or steer enrollees to centers of excellence, or other pay-for-performance programs.

(B)

Regulations

Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services, in consultation with the Secretary of Labor and the Secretary of the Treasury, shall promulgate regulations to carry out the amendments made by this paragraph.(2)

Employee Retirement Income Security Act of 1974

(A)

In general

Section 724 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1185m) is amended—(i)in the heading, by striking

by removing

and all that follows through

information

and inserting

; prohibition on anticompetitive agreements

;(ii)in subsection (a)(4), in the first sentence, by striking section and inserting subsection; and(iii)by adding at the end the following:

(b)

Protecting health plans network design flexibility

(1)

In general

A group health plan or a health insurance issuer offering group health insurance coverage may not enter into an agreement with a covered entity if such agreement, directly or indirectly—(A)restricts (including by operation of any agreement in effect between such covered entity and another covered entity) the group health plan or health insurance issuer from—(i)directing or steering participants or beneficiaries to other health care providers who are not subject to such agreement; or(ii)offering incentives to encourage participants or beneficiaries to utilize specific health care providers;(B)requires the group health plan or health insurance issuer to enter into any additional agreement with an affiliate of the covered entity;(C)requires the group health plan or health insurance issuer to agree to payment rates or other terms for any affiliate of the covered entity not party to the agreement; or(D)restricts other group health plans or health insurance issuers not party to the agreement from paying a lower rate for items or services than the plan or issuer involved in the agreement pays for such items or services.(2)

Exceptions for certain provider group and value-based network designs

Paragraph (1)(A) shall not apply to a group health plan or health insurance issuer offering group health insurance coverage with respect to—(A)a health maintenance organization, if such health maintenance organization operates primarily through exclusive contracts with multi-specialty physician groups, nor to any arrangement between such a health maintenance organization and its affiliates; or(B)a value-based network arrangement, such as an exclusive provider network, accountable care organization, center of excellence, a provider sponsored health insurance issuer that operates primarily through aligned multi-specialty physician group practices or integrated health systems, or such other similar network arrangements as determined by the Secretary through guidance or rulemaking.(3)

Covered entity defined

State grandfathering option

Rule of construction

(B)

Clerical amendment

The table of contents in section 1 of such Act is amended, in the entry relating to section 724, by amending such entry to read as follows:

Sec. 724. Increasing transparency; prohibition on anticompetitive agreements.

(C)

Regulations

Not later than 1 year after the date of the enactment of this Act, the Secretary of Labor, in consultation with the Secretary of Health and Human Services and the Secretary of the Treasury, shall promulgate regulations to carry out the amendments made by this paragraph.(3)

IRC

(A)

In general

Section 9824 of the Internal Revenue Code of 1986 is amended—(i)in the header, by striking

by removing

and all that follows through

information

and inserting

; prohibition on anticompetitive agreements

;(ii)in subsection (a)(4), in the first sentence, by striking section and inserting subsection; and(iii)by adding at the end the following:

(b)

Protecting health plans network design flexibility

(1)

In general

A group health plan may not enter into an agreement with a covered entity if such agreement, directly or indirectly—(A)restricts (including by operation of any agreement in effect between such covered entity and another covered entity) the group health plan from—(i)directing or steering participants or beneficiaries to other health care providers who are not subject to such agreement; or(ii)offering incentives to encourage participants or beneficiaries to utilize specific health care providers;(B)requires the group health plan to enter into any additional agreement with an affiliate of the covered entity;(C)requires the group health plan to agree to payment rates or other terms for any affiliate of the covered entity not party to the agreement; or(D)restricts other group health plans not party to the agreement from paying a lower rate for items or services than the plan involved in the agreement pays for such items or services.(2)

Exceptions for certain provider group and value-based network designs

Paragraph (1)(A) shall not apply to a group health plan with respect to—(A)a health maintenance organization, if such health maintenance organization operates primarily through exclusive contracts with multi-specialty physician groups, nor to any arrangement between such a health maintenance organization and its affiliates; or(B)a value-based network arrangement, such as an exclusive provider network, accountable care organization, center of excellence, a provider sponsored health insurance issuer that operates primarily through aligned multi-specialty physician group practices or integrated health systems, or such other similar network arrangements as determined by the Secretary through guidance or rulemaking.(3)

Covered entity defined

State grandfathering option

Rule of construction

Except as provided in paragraph (1), nothing in this subsection shall be construed to limit network design or cost or quality initiatives by a group health plan, including accountable care organizations, exclusive provider organizations, networks that tier providers by cost or quality or steer enrollees to centers of excellence, or other pay-for-performance programs.

(B)

Clerical amendment

The table of contents in section 1 of such Act is amended, in the entry relating to section 9824, by amending such entry to read as follows:

Sec. 9824. Increasing transparency; prohibition on anticompetitive agreements.

(C)

Regulations

Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services and the Secretary of Labor, shall promulgate regulations to carry out the amendments made by this paragraph.(b)

Effective date

The amendments made by subsection (a) shall apply with respect to any contract entered into, amended, or renewed on or after the date that is 18 months after the date of enactment of this Act.