Revision: Feb. 19, 2010, midnight
SB 505-FN-A – AS INTRODUCED
2010 SESSION
01/10
SENATE BILL 505-FN-A
AN ACT establishing the New Hampshire health services cost review commission and continually appropriating a special fund.
SPONSORS: Sen. Hassan, Dist 23; Sen. DeVries, Dist 18; Sen. Cilley, Dist 6; Sen. Gallus, Dist 1; Sen. Houde, Dist 5; Sen. Fuller Clark, Dist 24; Rep. Butler, Carr 1; Rep. Schlachman, Rock 13; Rep. Rosenwald, Hills 22; Rep. Dokmo, Hills 6
COMMITTEE: Commerce, Labor and Consumer Protection
This bill establishes the New Hampshire health care services cost review commission. The bill establishes an assessment on certain hospitals to fund the operation of the commission.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
10-2960
01/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT establishing the New Hampshire health services cost review commission and continually appropriating a special fund.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; New Hampshire Health Services Cost Review Commission. Amend RSA by inserting after chapter 151-G the following new chapter:
CHAPTER 151-H
NEW HAMPSHIRE HEALTH SERVICES COST REVIEW COMMISSION
151-H:1 Findings and Purpose.
I. The general court finds as follows:
(a) The market for health insurance in the state is highly concentrated. This is due, in large part, to the barrier to market entry created by the need for each insurer to negotiate provider payment rates with each hospital in the state.
(b) The fee-for-service system of payment for hospital services creates incentives to increase the amount and the unit cost of services and fails to reward the delivery of efficient and effective care.
(c) The pricing of hospital services is characterized by substantial price discrimination among different commercial payers and the uninsured. Under the existing system, the uninsured are charged the highest prices for health care services.
(d) The burden of uncompensated care is disproportionately distributed among hospitals.
(e) In order to improve the quality and effectiveness of care, payment reform must align incentives by coordinating payment policies across payers.
II. The purpose of this chapter is to promote the development of a payment system for hospital services that is fair and that will:
(a) Promote competition among health insurers by reducing the barriers to market entry;
(b) Eliminate price discrimination among commercial payers;
(c) Ensure that the uninsured have access to health care services at a reasonable cost;
(d) Fairly allocate the burden of uncompensated care across hospitals and protect the solvency of efficient and well-performing hospitals that provide a disproportionate amount of free or subsidized care;
(e) Promote transparency as to the cost of care; and
(f) Coordinate health care payments from different payers in a way that creates uniform and consistent incentives to improve the quality and effectiveness of care.
III. Therefore, the payment system for hospital services shall:
(a) Be based on a common payment methodology that is structured in such a manner as to ensure that each commercial payer and individual purchaser of healthcare services shall be responsible for a uniformly established cost without discrimination or preference given to any payer;
(b) Allocate each hospital’s costs, including the costs of uncompensated care, fairly across all commercial payers and individual purchasers who pay for services provided by that hospital;
(c) Be structured to encourage the use of common incentives among the different payers that will improve efficiency and quality, including, but not limited to global payment systems, medical homes, episodes of care payment, evidenced-based reimbursement strategies, blended capitation rates, accountable care organizations, and pay for performance programs: and
(d) Recognize and compensate hospitals for differences in their direct and indirect costs, including, but not limited to, the provision of uncompensated care.
151-H:2 Definitions. In this chapter:
I. “Commission” means the New Hampshire health services cost review commission.
II. “Commercial payers” means third-party administrators or insurers, other than public payers who pay for hospital services.
III. “Department” means the department of health and human services.
IV. “Fund” means the health services cost review commission fund established in RSA 151-H:6.
V. “Hospital” means “hospital” as defined in RSA 151-C:2, but not including government facilities.
VI. “Hospital services” means:
(a) Inpatient hospital services as enumerated in Medicare regulation 42 C.F.R. section 409.10, as amended;
(b) Emergency services; and
(c) Outpatient services that are billed to commercial payers or individual purchasers as hospital services.
VII. “Public payer” means the Medicaid or Medicare program.
VIII. “Individual purchaser” means a person who purchases hospital services on a self-pay basis and without coverage from a commercial or public payer.
151-H:3 Health Services Cost Review Commission Established.
I. There is established the New Hampshire health services cost review commission.
II. The commission shall be composed of 3 commissioners who shall be full- time employees and who shall not engage in other gainful employment during their terms as members. Commissioners shall be appointed by the governor with the advice and consent of the council.
III. The 3 commissioners shall be individuals who do not have any connection with the management of any hospital or commercial payer. Each member shall have a demonstrated interest and competency in health care delivery systems and financing.
IV. Except for the initially appointed commissioners, the term of a commissioner shall be 6 years. The terms of the initially appointed commissioners shall be staggered and shall end as follows:
(a) One on June 30, 2013;
(b) One on June 30, 2015; and
(c) One on June 30, 2017.
V. A commissioner who is appointed to a term to fill a vacancy shall serve only the remaining portion of the term.
VI. The initial appointments of the 3 commissioners shall be made by October 1, 2010 or as soon as practicable thereafter. Commencing in 2013, and in each odd numbered year thereafter, one commissioner shall be appointed to take office on July 1 of that year.
VII. The governor, with the advice and consent of the council, shall appoint the chair person. The chair of the commission shall be the administrative head of the commission.
VIII. With the approval of the governor and council, the commissioners shall appoint an executive director, who shall act as the chief administrative officer of the commission. The executive director shall serve at the pleasure of the commission and shall perform any duty or function required by the commission.
IX. The commission shall employ such staff and obtain such office space as is necessary to carry out its functions. The commission, in consultation with the executive director, shall determine the required staffing. The staff of the commission, as well as the executive director and the commissioners, shall be considered state employees and shall be compensated in accordance with the appropriate job classifications for the position. The commissioner of administrative services shall submit a proposed letter grade recommendation for the position of commissioner of the health services cost review commission as provided in RSA 94:1-d.
X. Commission action shall require a majority vote with all 3 commissioners voting.
151-H:4 General Powers and Duties.
I. In addition to the powers set forth elsewhere in this chapter, the commissioners shall, by majority action, establish the regulatory requirements of the commission, select the professional staff of the commission, and establish the practices and procedures of the commission. The commissioners may also:
(a) Create committees from among its members.
(b) Appoint advisory committees, which may include individuals and representatives of interested public or private organizations.
(c) Apply for and accept any funds, property, or services from any person or government agency.
(d) Make agreements with a grantor or payer of funds, property, or services, including an agreement to make any study, plan, demonstration, or project.
(e) Publish and give out any information that relates to the financial aspects of health care and is considered desirable and in the public interest.
(f) Enter into contracts with qualified, independent third parties for any service necessary to carry out the powers and duties of the commission.
(g) Sue or be sued, including taking any legal action necessary or proper to carry out the powers and duties of the commission.
(h) Subject to the limitations of this chapter, exercise any other power that is reasonably necessary to carry out the purposes of this chapter.
II. In addition to the duties set forth elsewhere in this chapter, the commission shall:
(a) Adopt rules, pursuant to RSA 541-A, relative to its meetings, procedures, and transactions.
(b) Keep minutes of each meeting.
(c) Prepare state budget requests that include the estimated income of the commission and proposed expenses for its administration and operation.
(d) Within a reasonable time after the end of each hospital’s fiscal year or more often as the commission determines, prepare from the information filed with the commission a summary, compilation, or other report that will advance the purposes of this chapter.
(e) Periodically participate in or do analyses and studies that relate to:
(1) Health care costs;
(2) The effect of mandated consumer protections in commercial insurance policies on health care and insurance premium costs.
(3) The effect of medical malpractice litigation on health care costs.
(4) The financial status of any facility; or
(5) Any other matter within the authority of the commission.
(f) On or before October 1 of each year, submit to the governor, the president of the senate, and the speaker of the house of representatives an annual report on the operations and activities of the commission during the preceding fiscal year, including:
(1) A summary or compilation, of each report required by this chapter;
(2) Budget information regarding fund, including:
(A) Any balance remaining in the fund at the end of the previous fiscal year; and
(B) The percentage of the total annual costs of the commission that is represented by the balance remaining in the fund at the end of the previous fiscal year;
(3) A summary of the commission’s work to promote and approve payment methodologies that are not based on fee-for-service and that create incentives to improve the quality, effectiveness and coordination of healthcare services;
(4) A summary of the commission’s work to coordinate its payment reform initiatives with other payment reform projects in the state that are consistent with the purposes of this chapter;
(5) The commission’s recommendations for extending the common payment methodology to include public payers, including a plan under which the state would seek a waiver from federal Medicare and Medicaid rules to facilitate the implementation of the common payment system across all payers. These recommendations shall include recommendations for interim measures that can be implemented without a federal waiver and that would increasingly bring medicaid reimbursement rates into parity with the common payment system;
(6) The commission’s recommendations, if any, for extending the common payment methodology to include health care providers other than hospitals to further the purposes of this chapter;
(7) The commission’s recommendations, if any, for eliminating or restructuring the certificate of need process, which recommendations may include the assumption by the commissioner of a process to replace the certificate of need process.
(8) Any other policy recommendation that the commission considers necessary to accomplish the purposes of this chapter.
(g) Except for confidential information under RSA 91-A, the commission shall make each report filed and each summary, compilation, and report required under this chapter available for public inspection at the office of the commission during regular business hours.
151-H:5 Administrative Assessment on Hospitals Authorized.
I. It is the intent of the general court that the commission shall be adequately funded to carry out the purposes of this chapter. The commission shall assess and collect an administrative assessment as defined in this section on hospitals for the purpose of funding its operations.
II. The first assessment shall be made on September 1, 2010 and shall be in the aggregate amount of $1,500,000. For this first assessment only, the amount of each hospital’s assessment liability shall be determined by the commissioner of the department of administrative services pursuant to the standard set out in RSA 151-H: 5, IV(a) and payment shall be made directly to the department of administrative services. Payment of the first assessment shall be made no later than November 1, 2010. This assessment shall fund organizational work and operations prior to fiscal year 2012. If necessary, the commission may borrow funds for the purpose of funding its organizational work.
III. For each of fiscal years 2012 and 2013, the total budget appropriation for the commission may not exceed $3,500,000 per year.
IV. The commission shall:
(a) Assess each hospital in an amount equal to the total assessment for all hospitals times the ratio of net operating revenue of that hospital to total net operating revenues of all hospitals;
(b) Establish the amount of the assessment; and
(c) Assess each hospital on or before July 1 of each year commencing with fiscal year 2012.
V. On or before September 1 of each year commencing with fiscal year 2012, each hospital assessed shall make payment to the commission. Any assessment not paid within 30 days of the due date may be subject to an interest penalty to be determined by the commission. The commission shall pay all funds collected from the assessment into the fund.
151-H:6 Health Services Cost Review Commission Fund Established. There is hereby established in the state treasury a health services cost review commission fund which shall be comprised of moneys from the assessments on hospitals under this chapter. Moneys from any other source may also be deposited in the fund. The fund shall be non-lapsing and continually appropriated to the commission. The fund shall be invested and reinvested in the same manner as other state funds. Any investment earnings shall be retained to the credit of the fund. The fund shall be used only to provide funding for the commission and for the purposes authorized under this chapter. In the event the commission terminates its existence, any money remaining in the fund shall be refunded to the hospitals in proportion to each hospital’s net operating revenue for the year preceding the year in which the funds are distributed.
151-H:7 Uniform Reporting System.
I. The commission shall adopt, by rule pursuant to RSA 541-A, a uniform reporting system that shall specify hospital reporting formats and requirements and that shall include the requirements for:
(a) Monthly and annual financial statements submitted by hospitals;
(b) A reporting rate compliance;
(c) Reporting comparisons of revenues and volumes;
(d) Reporting revenues, cost, expenses and volumes;
(e) Reporting inpatient and outpatient uncompensated care and bad debts;
(f) Rate review reports and schedules to be submitted and maintained by the hospitals;
(g) Maintaining and submitting a balance sheet that details a hospital’s assets, liabilities and net worth; and
(h) An annual statement of income and expenses.
II. The uniform reporting system shall include a specification of the cost allocation method that the commission shall use to review rates.
III. The uniform reporting system shall not take effect until such time as the commission’s rules are in force. The rules shall establish a time line for implementing the uniform reporting system that shall reasonably account for the time required for hospitals to make any system adjustments needed to comply with the reporting requirements.
IV. Each hospital shall adopt the uniform reporting system established by the commission.
V. The commission may allow and provide for modifications in the uniform reporting system upon application by a hospital if the commission determines that modifications are required to accurately reflect any unique difference in a hospital’s size, financial structure, or scope or type of services provided.
VI. The commission shall set deadlines for the filing of each report required under this chapter. The deadlines shall be established by rule.
VII. The commission shall adopt rules pursuant to RSA 541-A that impose penalties for failure to file a report as required. Penalties may include, but shall not be limited to, an administrative fine in an amount not to exceed $2,500 per day for each day a report is overdue, the withholding of any rate increase, or a request to the department for license suspension or revocation.
VIII. The amount of any penalty assessed under paragraph VII shall not be included as a cost by the hospital in its financial reporting to the commission.
151-H:8 Review and Approval of Hospital Rates.
I. To carry out its responsibilities under this chapter, the commission shall have the authority to review and approve or disapprove hospital rates and rate schedules. The commission’s review and approval or disapproval of rates shall be based on objective standards of efficiency and effectiveness, including, but not limited to, standards established by reference to the best performing systems, states or regions in the country. Rates shall not be approved unless they are designed to bring costs, over a reasonable period of time, in line with the best performing systems, states, or regions.
II. In reviewing hospital rate approval requests, the commission shall consider reports and other documents filed pursuant to the uniform reporting system and shall make any investigation that it believes is necessary to ensure that the rates for all services offered by or through a hospital are reasonable. Rates shall be considered reasonable if:
(a) The rates meet the cost containment standard set out in RSA 151-H:8, I;
(b) The rate for each individual service is related reasonably to the cost of providing that service;
(c) The aggregate revenues resulting from the rates of the hospital are related reasonably to its aggregate costs;
(d) The rates are equitable and uniform for all commercial payers and individual purchasers without discrimination or preference given to any single payer;
(e) The rates fairly compensate hospitals for differences in their direct and indirect costs, including, but not limited to, uncompensated care;
(f) The rates fairly allocate the burden of uncompensated care across hospitals and protect the solvency of efficient and well-performing hospitals that provide a disproportionate amount of free or subsidized care or that serve a disproportionate number of persons sponsored by public payers;
(g) The rates will allow the hospital to provide, on a solvent basis, effective and efficient service that is in the public interest; and
(h) The rates are established pursuant to payment methodologies that are common across payers and that create and align incentives for improving the quality, efficiency, effectiveness, and coordination of care.
III. A hospital may vary its unit rates for its inpatient services provided that the variation does not change the average charge per unit of service approved by the commission. The hospital may not vary the rate for any service where the commission has established the rate for that service based on a unit rate for that service.
IV. In determining the sufficiency of rates under RSA 151-H:8, II(g), the commission shall consider the following:
(a) Trend data concerning medical costs, including, but not limited to, the medical consumer price index and hospital cost inflation indices;
(b) The cost of investments in health information technology that are designed to reduce medical errors and enable coordination of care;
(c) The direct and indirect costs of the hospital, including medical education costs, the subsidization of physician practices, and the mix of services provided by a hospital;
(d) The relative burden of uncompensated care borne by each hospital as well as any moneys paid under RSA 84-A and uncompensated care reimbursements received under RSA 167; and
(e) The shortfall, if any, between the amounts paid to each hospital by public payers and the costs incurred for patient care.
V. In reviewing rates or considering a request for change in rates, the commission shall permit a hospital to charge rates that, in the aggregate, will produce enough total revenue to enable the facility to meet reasonably each requirement specified in this chapter.
VI. As part of its rate review process, the commission shall promote the development of and approve payment methodologies that create incentives for improving the quality, efficiency, effectiveness, and coordination of care. These methodologies may be approved on a pilot basis or otherwise and may include, but shall not be limited to, global payment systems, medical homes, episodes-of-care payments, evidenced based reimbursement strategies, blended capitation rates, accountable care organizations, and pay for performance programs. In addition, the commission shall coordinate its payment reform initiatives with other payment reform projects in the state that are consistent with the purposes of this chapter.
151-H:9 Rate Review and Approval Procedures.
I. In order to have the information needed for rate review and approval, the commission shall compile all relevant financial information. The information shall include but not be limited to:
(a) Necessary operating expenses;
(b) Expenses for uncompensated care;
(c) Incurred interest charges; and
(d) Reasonable depreciation expenses that are based on the expected useful life of property or equipment.
II. The commission shall define by rule, adopted pursuant to RSA 541-A, the types and classes of rates that may not be changed except as specified in RSA 151-H:10.
III. The commission shall obtain from each hospital its current rate schedule and each subsequent change in the schedule that the commission requires.
151-H:10 Change of Rate Structures or Charges.
I. A hospital shall not change its approved rates unless it files a written notice of the proposed change that is supported by any information that the hospital considers supports the need for a change to the rate schedule, and obtains approval from the commission for a rate change. A hospital seeking a change to its approved rate schedule shall file a notice in accordance with this section. The effective date of the change in the rate shall be at least 60 days after the date on which the notice is filed with the commission. Commission review of a proposed change may not exceed 45 days after the notice is filed.
II. The commission may hold a public hearing to consider the notice. If the commission decides to hold a public hearing, the commission:
(a) Shall set a place and date for the hearing within 20 days after the filing of the notice;
(b) May suspend the effective date of any proposed change until 30 days
after conclusion of the hearing;
(c) May conduct the public hearing without complying with formal rules
of evidence; and
(d) Shall allow any interested party to introduce evidence that relates to
the proposed change, including testimony by witnesses.
III. The commission may permit a facility to change any rate temporarily, if the commission considers it to be in the public interest. An approved temporary change becomes effective immediately on filing. Under the review procedures of this section, the commission promptly shall consider the reasonableness of the temporary change.
IV. If the commission modifies a proposed change or approves only part of a proposed change, a hospital, without losing its right to appeal the part of the commission order that denies full approval of the proposed change, may charge its patients according to the decision of the commission and accept any benefits under that decision.
V. If a change in any rate or charge increase becomes effective because a final determination is delayed because of an appeal or otherwise, the commission may order the facility to keep a detailed and accurate account of funds received because of the change; and the persons from whom these funds were collected. For any funds received because of a change that later is held excessive or unreasonable the commission may order the facility to refund the funds with interest or if a refund of the funds is impracticable, to charge over and amortize the funds through a temporary decrease in charges or rates.
VI. A decision by the commission on any contested change under this section shall comply with RSA 541-A and shall be only prospective in effect.
151-H:11 Hearings and Investigations.
I. In any matter that relates to the cost of services in facilities, the commission may:
(a) Hold a public hearing;
(b) Conduct an investigation;
(c) Require the filing of any information; or
(d) Subpoena any witness or evidence.
II. If the commission determines that further investigation is required, it may examine the records or accounts of the hospital, in accordance with its rules.
III. The examination under this section may include a full or partial audit of the records or accounts of the hospital that are required to be maintained under the commission’s uniform reporting system.
151-H:12 License Denial, Suspension, or Revocation
I. Hospital compliance with the provisions of this chapter shall be a condition of licensure under RSA 151, and violation of any of the provisions of this chapter shall be considered grounds for denial, suspension, or revocation of licensure.
II. Upon notification by the commission that a hospital is not in compliance with any of the provisions of this chapter, the department shall take action to deny, suspend, or revoke licensure under RSA 151:7.
151-H:13 Appeals.
I. A hospital that is aggrieved by a final decision of the commission under this chapter may take a direct judicial appeal. The appeal shall be made as provided in RSA 541.
II. An appeal from a final decision of the commission under this section shall be taken in the name of the hospital aggrieved as appellant and against the commission as appellee.
III. The commission is a necessary party to an appeal at all levels of the appeal.
IV. On grant of leave by the court, an aggrieved person may intervene or participate in an appeal.
151-H:14 Promoting Transparency with Respect to the Cost of Hospital Services.
I. The commission shall disseminate hospital services cost data to consumers, health care providers, and insurers by establishing a consumer health information web site. The website shall provide comparative cost information on hospital services and other health care information as the commission deems appropriate.
II. The commission shall enter into an interagency agreement with the department to utilize claims data collected pursuant to RSA 420-G:10-a and hospital discharge data collected pursuant to RSA 126:25 as necessary to perform its duties and to support the consumer health information website.
III. The website shall be designed to assist consumers in making informed decisions regarding their medical care and informed choices among health care providers. Information shall be presented in a format that is understandable to the average consumer. The commission shall take appropriate action to publicize the availability of its website.
IV. The commission shall determine, for each service, the comparative information to be included on the consumer health information website, including whether to:
(a) List services separately or as part of a group of related services; or
(b) Combine the cost information for each facility and its affiliated clinicians and physician practices or to list facility and professional services separately.
V. The website shall provide updated information on a regular basis, at least annually, and additional comparative cost information shall be published as determined by the commission.
151-H:15 Rulemaking Authority. In addition to the rules required under RSA 151-H:4, 151-H:7, and 151-H:10, the commission may adopt, under RSA 541-A, such other rules as may be necessary to carry out the purposes of this chapter.
2 New Subparagraph; Health Services Cost Review Commission Fund. Amend RSA 6:12, I(b) by inserting after subparagraph (299) the following new subparagraph:
(300) Moneys deposited in the health services cost review commission fund established in RSA 151-H:6.
3 Effective Date. This act shall take effect July 1, 2010.
LBAO
10-2960
Revised 02/16/10
SB 505-FN-A - FISCAL NOTE
AN ACT establishing the New Hampshire health services cost review commission and continually appropriating a special fund.
FISCAL IMPACT:
Due to time constraints, the Office of Legislative Budget Assistant is unable to provide a fiscal note for this bill at this time. When completed, the fiscal note will be forwarded to the Senate Clerk's Office.