Health Care Consolidation and Contracting Fairness Act of 2021.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law regulates contracts between health care service plans or health insurers and health care providers or health facilities, including requirements for reimbursement and the cost-sharing amount collected from an enrollee or insured.
This bill, the Health Care Consolidation and Contracting Fairness Act of 2021, would prohibit a contract issued, amended, or renewed on or after January 1, 2022, between a health care service plan or health insurer and a health care provider or health facility from containing terms that, among other things, restrict the plan or insurer from steering an enrollee or insured to another provider or facility or require the plan or insurer to contract with other affiliated providers or facilities. The bill would authorize the appropriate regulating department or licensing board to refer a contract to the Attorney General. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.
Existing law requires a health care service plan that intends to merge with, consolidate with, or enter into an agreement resulting in its purchase, acquisition, or control by, an entity to give notice to, and secure prior approval from, the Director of the Department of Managed Health Care. Existing law authorizes the director to disapprove the transaction or agreement if the director finds it would substantially lessen competition in health care service plan products or create a monopoly in this state.
This bill would additionally require a health care service plan that intends to acquire or obtain control of an entity, as specified, to give notice to, and secure prior approval from, the director. Because a willful violation of this provision would be a crime, the bill would impose a state-mandated local program. The bill would also authorize the director to disapprove a transaction or agreement if it would substantially lessen competition in the health system or among a particular category of health care providers, and would require the director to provide information related to competition to the Attorney General.
Existing law requires a nonprofit corporation that operates or controls a health facility to obtain the written permission of the Attorney General before entering an agreement to dispose of its assets or transfer control of a material amount of its assets. Existing law requires the Attorney General to notify the corporation within 90 days of receiving notice the request of the Attorney General’s decision to consent to, give conditional consent to, or not consent to the agreement, and authorizes that period to be extended by 45 days if specified conditions are met.
This bill would require a medical group, hospital or hospital system, health care service plan, or health insurer that intends to purchase, merge, or consolidate with, initiate a corporate affiliation with, or enter into an agreement resulting in its purchase, acquisition, or control by, another entity, to provide written notice to the Attorney General at least 90 days before entering an agreement with a value of $3,000,000 or more. The bill would authorize the Attorney General to consent to, give conditional consent to, or not consent to that agreement, and would require the Attorney General to notify the entity of the decision within 90 days, which may be extended by one 45-day period if specified conditions are met.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.