GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 926

Short Title:  Preferred Provider Contracts.	(Public)

─────────────────────────────────────── 
Sponsors: Representatives Brawley; Carpenter, Clary, Dockham, Eddins, Hurley, McAllister, McMahan, and Tallent.

─────────────────────────────────────── 
Referred to:  Insurance.

─────────────────────────────────────── 

April 14, 1997

A BILL TO BE ENTITLED
AN ACT PERTAINING TO PREFERRED PROVIDER CONTRACTS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 58-50-55 reads as rewritten:
"§ 58-50-55.  Preferred provider contracts.
(a)	Notwithstanding any other provisions of law, except the second and third paragraphs of G.S. 58-50-30, corporations organized pursuant to Articles 1 through 64 of this Chapter are authorized to enter into preferred provider contracts in addition to all other contracts authorized by Articles 1 through 64 of this Chapter, or to enter other cost containment arrangements approved by the Commissioner, with persons, entities or organizations for the purpose of reducing the cost of providing health care services. Such preferred provider contracts may be entered into with licensed institutions and practitioners of all types without regard to specialty of services or limitation to a specific type of practice.
(b)	The Department shall have authority to make rules applicable to persons offering preferred provider plans, policies, or contracts pursuant to this section. These rules shall be designed to provide for (i) accessibility of preferred provider services to individuals comprising the insured or contracted group, (ii) the adequacy of the number and locations of institutions and practitioners, (iii) the availability of services at reasonable times, (iv) financial solvency, and (v) product limitations.  Rules adopted for product limitations shall be similar in substance to rules governing HMO point-of-service products.
(c)	The Department shall require each preferred provider plan to provide summary data regarding the financial reimbursement offered to providers of health care. All such plans shall disclose annually the following information:
(1)	The name by which the preferred provider plan policy or arrangement is known, and its business address;
(2)	The name, address and nature of any separate organization which administers the plan, policy or arrangement on behalf of the preferred provider; and
(3)	The names and addresses of all providers of health care designated by the preferred provider and the terms of the agreements entered into with those providers.
	(e)	Upon the initial offering of a preferred provider plan to the public, any potential provider institutions and practitioners shall be allowed the opportunity to submit a proposal for participation in accordance with the terms of the plan. The health care providers shall have at least thirty (30) days to submit a proposal for participation. Subsequent to the initial offering of a preferred provider plan, any provider seeking to submit a proposal may be permitted to do so, and the plan shall consider all pending applications for participation and give reasons for any rejections on at least an annual basis. Any provider seeking to participate in the plan, whether upon the initial offering or subsequently, may be permitted to do so in the discretion of the preferred provider plan. The second and third paragraphs of G.S. 58-50-30 are specifically made applicable to preferred provider plans.
(f)	Any provision of a contract between a preferred provider plan and a health care provider restricting the health care provider's right to enter into preferred provider arrangements with other parties is prohibited. Any such restriction in a preferred provider contract between a preferred provider plan and a provider of health care services is null and void and shall not be enforceable. The existence of any such unenforceable restriction shall not invalidate any other provision of the preferred provider contract.
(g)	A list of the current participating health care providers in the geographic area in which a substantial portion of health care services will be available shall be provided to enrollees and contracting parties.
(h)	Publications or advertisements of preferred providers plans or arrangements shall not refer to the quality or efficiency of the services of non-participating providers."
Section 2.  G.S. 58-65-140 reads as rewritten:
"§ 58-65-140.  Preferred provider contracts.
(a)	Notwithstanding any other provisions of law, except the second and third paragraphs of G.S. 58-50-30, corporations organized for the purposes of this Article and Article 66 of this Chapter are authorized to enter into preferred provider contracts in addition to all other contracts authorized by this Article and Article 66 of this Chapter, or to enter other cost containment arrangements approved by the Commissioner of Insurance, with persons, entities or organizations for the purpose of reducing the costs of providing health care services. Such preferred provider contracts may be entered into with licensed institutions and practitioners of all types without regard to speciality of services or limitation to a specific type of practice.
(b)	The Department of Insurance shall have authority to make rules applicable to corporations offering preferred provider plans, policies, or contracts pursuant to this section. These rules shall be designed to provide for (i) accessibility of preferred provider services to individuals comprising the insured or contracted group, (ii) the adequacy of the number and locations of institutions and practitioners, (iii) the availability of services at reasonable times, (iv) financial solvency, and (v) product limitations.  Rules adopted for product limitations shall be similar in substance to rules governing HMO point-of-service products.
(c)	The Department of Insurance shall require each corporation developing preferred provider plans, policies or contracts under this section to provide summary data regarding the financial reimbursement offered to providers. Any corporation which proposes to offer preferred provider plans, contracts or policies authorized by this section shall furnish annually to the Department of Insurance the following information:
(1)	The name by which the preferred provider plan, policy or contract will be known, and its business address;
(2)	The name, address and nature of any separate organization which administers the plan, policy or contract on behalf of the insured; and
(3)	The names and addresses of all providers designated by the corporation and the terms of the agreements with these providers.
	(e)	Upon the initial offering of a preferred provider plan to the public, any potential provider institutions and practitioners shall be allowed the opportunity to submit a proposal for participation in accordance with the terms of the plan. The health care providers shall have at least thirty (30) days to submit a proposal for participation. Subsequent to the initial offering of a preferred provider plan, any provider seeking to submit a proposal may be permitted to do so, and the plan shall consider all pending applications for participation and give reasons for any rejections on at least an annual basis. The second and third paragraphs of G.S. 58-50-30 are specifically made applicable to preferred provider plans.
(f)	Any provision of a contract between a corporation and a provider restricting the provider's right to enter into preferred provider arrangements with other parties is prohibited. Any such restriction in a preferred provider contract between a corporation and a provider of health care services is null and void and shall not be enforceable; however, the existence of any such unenforceable restriction shall not invalidate any other provision of the preferred provider contract.
(g)	Any corporation marketing a preferred provider plan to subscribers or contracting parties must provide to the same a written list of the then current participating institutions and practitioners in the geographic area in which it is anticipated that the substantial portion of health care services will be provided prior to entering into a preferred provider plan contract with the actual or potential subscriber or contracting party.
(h)	Publications or advertisements of preferred providers shall not refer to the quality or efficiency of the health care services of nonparticipating providers."
Section 3.  This act is effective when it becomes law.