December 16, 2008 |
2008-R-0700 | |
PA 08-126 AND NCOIL RENTAL NETWORK CONTRACT ARRANGEMENTS MODEL ACT | ||
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By: Janet L. Kaminski Leduc, Senior Legislative Attorney | ||
You asked for a comparison of Connecticut's PA 08-126, An Act Concerning Regulation of the Secondary Market in Physician Discounts (effective January 1, 2009), and the National Conference of Insurance Legislators (NCOIL) Rental Network Contract Arrangements Model Act (adopted November 21, 2008).
SUMMARY
Both the Connecticut law and the NCOIL model act establish criteria for accessing contracted health care provider networks and discount rates, set out “contracting entity” rights and responsibilities, and require disclosure to providers of third party rental arrangements. Both require a third party that has been granted access to a provider's contracted services and discounts to stop using them when the underlying provider contract terminates.
The NCOIL model act also provides for registration of contracting entities, prohibits and penalizes unauthorized access to provider contracts under a state's unfair insurance practices act, includes a confidentiality provision, and allows physicians to refuse a network discount without a contractual basis. It also requires a contracting entity to give a third party (1) enough information to enable it to comply with all relevant terms, limitations, and conditions of the provider contract and (2) prior notice of a provider contract's termination.
The NCOIL model act permits a third party who is accessing a contracting entity's networks and discounts to further grant the same access to other entities, but it requires transparency of such “downstream” renting. Although Connecticut's law does not explicitly prohibit a third-party that has been granted access to a provider network from subsequently renting the network to another entity, it appears to allow only the original contracting entity to rent out a network.
Additionally, definitions and exceptions differ between the two, as shown in Table 1, which provides a side-by-side comparison of PA 08-126 and the NCOIL model act.
Table 1: Side-by-Side Comparison of PA 08-126 and NCOIL Model Act
PA 08-126 |
NCOIL Model Act | |
Definition: Contracting Entity |
An entity that contracts directly with a health care provider for (1) the delivery of health care services or (2) selling, leasing, renting, assigning, or granting access to a contract or its terms. A contracting entity does not sell, lease, rent, assign, or grant access to a contract or contract terms when it administers the benefit plan that pays for the health care services rendered under the plan. A provider is not a contracting entity. |
An entity that contracts directly with a provider for the delivery of health care services in the ordinary course of business. |
Definition: Provider |
A physician, physician group, physician network, independent practice association, physician organization, or physician hospital organization. |
A physician, physician organization, or physician hospital organization acting exclusively as an administrator on a provider's behalf to facilitate the provider's participation in health care contracts. Excludes a physician organization or physician hospital organization that leases or rents its network to a third party. |
-Continued-
PA 08-126 |
NCOIL Model Act | |
Definition: Contracted Entity and Third Party |
“Contracted Entity.” An entity that (1) has not contracted directly with a health care provider but buys, leases, rents, is assigned, or accesses a provider's contract or contract terms and (2) is responsible for paying for or coordinating health care services or establishing or extending health care provider networks. |
“Third Party.” An organization that contracts with a contracting entity or with another third party to gain access to a provider network contract. |
Registration |
None specified. |
A contracting entity must register with the state within 30 days of starting business in the state unless it is already a state-licensed insurer. Entities that are not insurers but, upon the act's passage, are already doing business in the state as a contracting entity must register within 90 days of the act's effective date. |
Contracting Entity Requirements |
● include a provision in the provider contract that it may sell, lease, rent, assign, or grant access to the provider's services, discounted rates, or fees set forth in the contract ● give a provider who requests it upon initial contracting a list of all known covered entities ● maintain a website or toll-free telephone number through which a provider can obtain a listing of covered entities ● include the website address or toll-free telephone number on member ID cards |
● include a provision in the provider contract that it may enter into agreements with a third party to obtain the contracting entity's rights and responsibilities under the provider contract ● contractually obligate a third party to comply with all applicable terms, limitations, and conditions of the provider contract ● lease, rent, or otherwise grant access to a provider network contract, only to a third party that is (1) a payer, third party administrator, or other entity that administers or processes claims on behalf of a payer; (2) a preferred provider organization or preferred provider network, including a physician organization or physician-hospital organization; or (3) engaged in the electronic claims transport between the contracting entity and a payer that does not provide access to the provider's services and discount to any other third party ● give a provider who requests it upon initial contracting a list of all known third parties ● maintain a website or other means through which a provider can obtain a listing, which is updated at least every 90 days, of third parties ● give each third party sufficient information to enable it to comply with all relevant terms, limitations, and conditions of the provider contract ● require a third party to include the source of any discount taken on each remittance or explanation of payment form given to a provider ● notify the third party of the provider contract's termination within a specified number of days before the termination ● require the third party to stop using the discounts and other contracted rights or obligations for services rendered after the provider contract terminates ● upon a provider's request, give the provider “access information” by telephone or direct notification |
Covered Entity/Third Party Requirements |
● pay the discounted rates or fees set forth in the provider's contract with the contracting entity ● include the contracting entity's website address or toll-free telephone number on member ID cards ● stop accessing a provider's services, rates, or fees when the contracting entity's provider contract terminates, except for any applicable continuity of care requirements, agreements, or contractual provisions ● include on all written and electronic remittance advices (payment notices sent to providers) the name of the (1) covered entity responsible for paying the provider and (2) contracting entity whose payment rates and discounts apply |
● stop accessing a provider's services and contractual discounts when the contracting entity's provider contract terminates, except for any applicable continuity of care requirements, agreements, or contractual provisions ● if subsequently granting access to another third party, comply with the rights and responsibilities imposed on contracting entities ● inform the contracting entity and the providers of a website, toll-free telephone number, or other means to identify the name of any person or entity to which the third party has granted access ● update the website routinely as the third party grants access to others and at least every 90 days. |
-Continued-
PA 08-126 |
NCOIL Model Act | |
Provider Requirements |
None specified. |
May refuse a discount taken on a remittance advice (RA) or explanation of payment (EOP) if the discount is taken without a contractual basis or in violation of the model act. But an error on an RA or EOP may be corrected within 30 days of the provider's notification. |
Confidentiality |
None specified. |
Information made available to a provider under the model act is confidential and may not be disclosed outside the provider's practice without prior written consent from the contracting entity. But the model act does not prohibit a contracting entity from requiring a provider to enter into a reasonable confidentiality agreement. |
Penalties |
None specified. |
It is an unfair insurance practice to knowingly access or use a provider's contractual discounts without being a party to contract with the provider, a contracting entity, or a third party. |
Enforcement |
None specified. |
As found in a state's unfair insurance practices act. (This infers that the insurance commissioner enforces the act.) |
Exceptions |
The act does not apply to: ● workers' compensation benefits ● entities under common ownership or control ● entities under the same licensee program and brand ● an entity providing or receiving administrative services or insurance to or from the contracting entity, entity under common ownership or control, or entity operating under the same licensee program or brand. |
The model act does not apply to: ● Medicaid, Medicare, state children's health insurance plan (e.g., HUSKY) ● contracts between a contracting entity and a discount medical plan organization ● entities under the same brand licensee program A drafting note says that each state will determine if the legislation should apply to self-funded employer-sponsored health benefit plans and third-party administrators of such plans. |
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