Pennsylvania

SUMMARY

Pennsylvania has a robust set of healthcare inspection and transparency laws. Notwithstanding, initiatives to adopt other measures, including a most favored nations clause ban for healthcare contracts, a certificate of needs program, and a state-run health exchange have not gained traction in the legislature. Like several other eastern states, Pennsylvania is currently investigating alternative payment structures and healthcare models to increase access to quality, affordable care.

 

LEGISLATION/REGULATION

Legislative Calendar

Pennsylvania’s current regular legislative session runs from 1/3/2017 – 11/30/2017.

 

Recent Legislative Developments

Healthcare Transparency

2015-2016 HB1042 PHARMACEUTICAL PRICE TRANSPARENCY: would allow health insurance policies and government programs to refuse to provide benefits for prescription drugs that (1) have an average wholesale price of $5,000 or more annually or per course of treatment and (2) the drug manufacturer does not does not file the proper report, as required by subsection (b) of the bill. Subsection (b) requires that, by March 1 of each year, a drug manufacturer whose drug has an average wholesale price of $5,000 or more, annually or per course of treatment, file with the Insurance Department: (i) research and development costs, (ii) clinical trial and other regulatory costs, (iii) materials, manufacturing, and administration costs attributable to the drug, (iv) costs paid my another entity, including but not limited to governmental programs, subsidies, grants, or other support, (v) other costs to acquire the drug (e.g., patents, etc.), and (iv) marketing and advertising costs for the promotion of the drug directly to consumers. Inactive — Died.
HB774 PATIENT MEDICAL ACCESS AND AFFORDABILITY ACT: would require health care providers to establish, and post publicly on the Internet, set prices for all services, supplies, and charges. In addition, third party payors would be required to establish, and post publicly on the Internet, a fee schedule applicable to all covered individuals. Individuals would be responsible to pay the remaining balance between after the third payor has submitted the established fee for any service, supply, or charge to the health care provider.

Services provided by health care providers for programs administered, regulated, or paid for by government entities would be exempt from the requirements of the Act.

Inactive — Died.

 

Healthcare Cost

  • None identified.

 

Healthcare Markets

  • None identified.

 

Key Statutes

We compile state statutes relate to healthcare price and competition, including healthcare transparency, markets, and costs. For a complete listing of all health related statutes visit the State Health Practice Database for Research.

 

Transparency in Healthcare

  • 35 Pa. Stat. Ann §§ 449.1-449.19, the “Health Care Cost Containment Act,” implements a number of cost containment, transparency, and health care reform measures designed to study and increase consumer access to quality and affordable care. The Act was set to expire on June 30, 2014, but the Governor made the Act effective indefinitely by Executive Order until it is reauthorized by the General Assembly.

 

  • 35 Pa. Stat. Ann §§ 449.4-449.5 creates the Pennsylvania Health Care Cost Containment Council (PHC4), an independent state agency charged with increasing access to health care and reducing costs. The Council is comprised of representatives from the business community, organized labor, consumers, hospitals, physicians, nurses, Blue Cross and Blue Shield of Pennsylvania, commercial insurance carriers, HMOs, and a representative of the Governor. The duties and functions of the counsel include operating the state’s APCD, creating a unified claims and billing form for the collection of data from providers, issuing reports on data collected from providers, conducting studies and issuing repots on the cost consequences of alternative health care delivery systems, and to generally promote competition in the health care and insurance markets.

 

  • 35 Pa. Stat. Ann. § 449.6 authorizes the PHC4 to collect data on provider quality and provider services under the Uniform Claims and Billing Form that the PHC4 maintains. The Council is required to collect, among other things, patient demographic information, procedure information, health care facility identifiers, physician identifiers, total charges broken down by category, actual payments to the health care facility and physician receives, and the identity of the primary payer. According to the APCD Council, Pennsylvania is actively working on developing a product to better deploy the payment data online. This section also mandates that providers must submit, in addition to the foregoing, audited annual financial statements, Medicare cost reports, and any other data the council requires to carry out its responsibilities. Implementing regulations under this section can be found here.

 

  • 35 Pa. Stat. Ann. § 449.7 requires that the PHC4 issue certain public reports (see here) using the data collected under § 449.6 (see above). The reports must contain information on provider quality and service effectiveness ranked against performance and cost indicators such as the length of stay, complication rates, readmission rates, and other comparative outcomes that will allow consumers to make purchasing decisions based upon quality and price. The Council is also charged with making the raw computer data available to purchasers, subject to some restrictions.

 

  • 35 Pa. Stat. Ann. § 449.9 creates a Mandated Benefits Review Panel to review mandated benefits proposals in the legislature to determine the fiscal, economic, and social impact of such initiatives based on data submitted by proponents and opponents of the measure. Principally, the review panel would consider the extent to which the proposed benefit would increase or decrease cost for treatment or services.

 

  • 35 Pa. Stat. Ann. § 449.10, providers that information collected by the PHC4 is for the benefit of the public and public officials, and that determinations on whether the information should be released under the states Right-to-Know Law should be made in favor of providing access. The law provides, however, that payer discounts and allowances are considered confidential proprietary information and are not subject to disclosure under the Right-to-Know law. The Council is also instructed to implement outreach programs designed to make their information more accessible and to help the general public make more informed health care choices. Data Requests can be submitted here.

 

  • 35 Pa. Stat. Ann. § 449.11 allows any Pennsylvanian agency “to study and report on the short-term and long-term fiscal and programmatic impact on the health care consumer of changes in ownership of hospitals from nonprofit to profit, whether through purchase, merger or the like.” The agency may also study and report on factors which have the effect of either reducing provider revenue or increasing provider cost, and other factors beyond a provider’s control which reduce provider competitiveness in the marketplace.

 

  • 65 Pa. Stat. Ann. § 67.101-67.3104, the “Right to Know Law,” provides that public records, unless otherwise protected by law, shall be available for inspection and duplication by the public in accordance with the law. The Right to Know Law applies to any state agency. The Health Care Cost Containment Act states that requests made to the PHC4 shall be granted in favor of access (see above).

 

 

Healthcare Markets

 

  • 40 Pa. Stat. Ann. §§ 1171.10-1171.15, the “Unfair Insurance Practices Act,” prohibits unfair methods of competition and unfair or deceptive acts or practices in the provision of insurance. The Insurance Department Commissioner has investigative powers related to determining whether insurance companies are complying with the Act.

 

  • 40 Pa. Stat. Ann. §§ 323.1-323.8 authorized the Insurance Department to inspect the books, records, accounts, papers, computers, property, assets, business and affairs of an insurance company as often as the commissioner deems necessary to determine regulatory compliance. The Department shifts the costs of such examinations onto the company being investigated.

 

  • 40 Pa. Stat. Ann. §§ 3801.303 requires insurance companies to file individual rates and rates for small group health insurance policies to establish a base rate, and proposed changes affecting an increase or decrease of 10% annually must also be filed and approved by the department. Hospital plan corporations, professional health services plan corporations, and HMOs are similarly regulated. Notices related to rate reviews can be found here.

 

2017-2018 BUDGET

Pennsylvania’s budget operates on a twelve month cycle beginning July 1 and ending June 30 of the following calendar year.  The Governor is expected to sign the new FY budget at the end of June 2017. To view Pennsylvania’s Department of Health and Human Services 2017-2018 budget proposal, click here.

 

LITIGATION/ENFORCEMENT

  • In October 2016, the FTC won its appeal in the Third Circuit, and obtained a preliminary injunction temporarily blocking the merger of the two largest hospital systems in the Harrisburg, Pennsylvania, area.  The FTC sued to block the merger of Penn State Hershey Medical Center and Pinnacle Health System in December, but in May a district court judge denied the FTC’s motion for a preliminary injunction. Read more about the case in our blog post.

 

  • In October 2013, Attorney General Kathleen G. Kane announced that her office had reached an agreement with Geisinger Health System Foundation over antitrust concerns that the acquisition of Lewistown Hospital and its employed physician group may have substantially lessened or eliminated competition in the region.  The eight-year agreement placed several conditions on the merger.

 

  • In April 2012, the Department of Justice’s Antitrust Division announced that it was closing its investigation into the affiliation agreement between insurer Highmark and provider West Penn Allegheny health system. DOJ determined that the vertical combination of Highmark and West Penn Allegheny would not negatively affect horizontal competition in the relevant market. For more context on the interplay among West Penn Allegheny, Highmark, and University of Pittsburgh Medical Center, see the 2010 Third Circuit opinion on West Penn’s case against Highmark and UPMC, alleging that the insurer and another provider had conspired to put West Penn out of business through anticompetitive conduct.

 

  • Enforcement Actions, Market Conduct Actions and Market Surveillance reports conducted by the Department of Insurance can be found here.

 

KEY RESOURCES

Pennsylvania General Assembly

Pennsylvania Office of the Attorney General

Pennsylvania Insurance Department