2016 -- S 2873

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LC005614

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO HEALTH AND SAFETY- LICENSING OF HEALTH CARE FACILITIES

     Introduced By: Senator Joshua Miller

     Date Introduced: March 31, 2016

     Referred To: Senate Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 23-17-28 of the General Laws in Chapter 23-17 entitled "Licensing

of Health Care Facilities" is hereby amended to read as follows:

      23-17-28.  Health care cost containment. -- (a) Each health care facility licensed under

this chapter shall take any action consistent with the continued delivery of quality health care

services that it deems appropriate to reduce, limit, or contain health care costs and improve the

efficiency with which health care services are delivered to the citizens of this state. In furtherance

of these goals, health care facilities licensed under this chapter may, to the extent not inconsistent

with chapter 15 of this title, enter into agreements with other health care facilities, associations of

health care facilities, suppliers, third-party payers, and/or agencies or branches of government

providing, without limitation, for group planning, individual or group expenditure ceilings,

allocation of services and/or specialties, and group purchasing and/or service sharing. 

     (b) It is the policy of this state to promote compensation arrangements between hospitals

and insurers that reward hospitals for improving quality and reducing costs. The state takes

notice of the fact that the largest hospital systems in the state each provide unique services that

are not regularly available at unaffiliated hospitals. The inability of one hospital system to

provide all of the reasonably foreseeable medical services its patients need inhibits the

development of innovative compensation arrangements and encourages large capital expenditures

that are necessary competitively, but not medically. Therefore, in order to make unduplicated

services affordably available to risk bearing hospitals, and to discourage competitively motivated

large capital expenditures to eliminate unduplicated services, a charging hospital may not charge

a risk bearing hospital, its affiliates, or the insurer(s) from which the risk bearing hospital is

accepting direct or indirect financial risk, more than one hundred ten percent (110%) of the

lowest rate the charging hospital accepts from any insurer from which the charging hospital

accepts direct or indirect financial risk for the same unduplicated service.

     (c) As used in this section:

     (1) "Affiliate" means a legal entity that is in control of, is controlled by or is in common

control with, another legal entity.

     (2) "Charging hospital" means a hospital that is charging a risk bearing hospital directly

or indirectly, including through an arrangement with an insurer, for the cost of an unduplicated

service provided at the charging hospital. Direct or indirect financial risk exists when the amount

a risk bearing hospital is ultimately paid by an insurer varies with the cost or quality of care for

one or more unduplicated services provided at an unaffiliated hospital. For example, direct or

indirect financial risk includes payments for unduplicated services provided by an unaffiliated

hospital that are based on shared savings, global budgets, per case reimbursement, capitation,

percentage of premium and/or achieving quality or utilization measures. Purely fee-for-service

payments do not involve direct or indirect financial risk.

     (3) "Insurer" has the same meaning as set forth in §27-18.4-1.

     (4) "Risk bearing hospital" means a hospital that has direct or indirect financial risk for

one or more unduplicated services provided by a charging hospital.

     (5) "Unaffiliated hospital" means a hospital that is not an affiliate of another hospital.

     (6) "Unduplicated service" means a hospital service that is routinely provided at the

charging hospital but not at the risk bearing hospital.

     (d) The department of health shall have the discretion to penalize violations of this

section by either imposing fines on the violating charging hospital that exceed the financial

benefit the charging hospital derived from the violation, or assessing such sanctions on the

violating hospital's license as the department considers appropriate.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO HEALTH AND SAFETY- LICENSING OF HEALTH CARE FACILITIES

***

     This act prohibits a charging hospital from charging a risk bearing hospital or the

insurer(s) for the cost of an unduplicated service provided at the charging hospital, more than one

hundred ten percent (110%) of the lowest rate the charging hospital accepts from any insurer

from which the charging hospital accepts direct or indirect financial risk for the same

unduplicated services.

     This act would take effect upon passage.

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LC005614

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