H*4775 Session 110 (1993-1994)
H*4775(Rat #0509, Act #0437) General Bill, By J.H. Hodges
Similar(S 1233, H 4401)
A Bill 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.-amended title
02/17/94 House Introduced, read first time, placed on calendar
without reference HJ-14
03/24/94 House Debate interrupted HJ-28
03/24/94 House Read second time HJ-32
03/24/94 House Unanimous consent for third reading on next
legislative day HJ-33
03/25/94 House Read third time and sent to Senate HJ-3
03/29/94 Senate Introduced and read first time SJ-16
03/29/94 Senate Referred to Committee on Medical Affairs SJ-16
05/10/94 Senate Committee report: Favorable with amendment
Medical Affairs SJ-5
05/11/94 Senate Amended SJ-102
05/11/94 Senate Read second time SJ-102
05/11/94 Senate Ordered to third reading with notice of
amendments SJ-102
05/12/94 Senate Amended SJ-123
05/12/94 Senate Read third time and returned to House with
amendments SJ-126
05/18/94 House Senate amendment amended HJ-49
05/18/94 House Returned to Senate with amendments HJ-50
05/18/94 Senate Concurred in House amendment and enrolled SJ-56
05/24/94 Ratified R 509
05/25/94 Signed By Governor
06/14/94 Effective date 05/25/94
06/14/94 Copies available
(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:
"Article 4
Health Care Cooperation Act
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. |