23-17.5 Health Care Provider Cooperative Agreements

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CHAPTER 23-17.5HEALTH CARE PROVIDER COOPERATIVE AGREEMENTS23-17.5-01. Definitions. In this chapter, unless the context otherwise requires:1.&quot;Active supervision&quot; means actual state direction, supervision, or control that results<br>in the exercise of power by the department or the attorney general to review<br>anticompetitive conduct that results from, or is authorized by, a cooperative<br>agreement for which a certificate of public advantage has been issued pursuant to<br>this chapter. The term includes the authority granted the department or attorney<br>general by this chapter to terminate or cancel a certificate of public advantage or to<br>investigate or enjoin a cooperative agreement, and other conditions to the certificate<br>provided under section 23-17.5-03.1.2.&quot;Cooperative agreement&quot; means:a.An agreement among two or more health care providers or third-party payers<br>for the sharing, allocation, or referral of patients, personnel, instructional<br>programs, support services and facilities, or medical, diagnostic, or laboratory<br>facilities or procedures or other services traditionally offered by health care<br>providers; orb.An agreement among two or more health care providers for acquisition of<br>control, consolidation, merger, or sale of assets of those health care providers.3.&quot;Department&quot; means the state department of health.4.&quot;Health care provider&quot; means any person who delivers, administers, or supervises<br>health care products or services, for profit or otherwise, in the ordinary course of<br>business or professional practice.5.&quot;Third-party payer&quot; means any insurer or other entity responsible for providing<br>payment for health care services, including workforce safety and insurance, the<br>comprehensive health association of North Dakota, and any self-insured entity.23-17.5-02. Discussions or negotiations - Certificate of public advantage. A healthcare provider may discuss preliminary matters toward, or may negotiate, a cooperative<br>agreement with another health care provider or third-party payer if the likely benefits to health<br>care consumers which may result from the agreement outweigh the disadvantages attributable to<br>a potential reduction in competition that may result from the agreement.The parties to acooperative agreement may apply to the department for a certificate of public advantage<br>governing the agreement. Although a health care provider or third-party payer is not required to<br>apply for a certificate of public advantage, a party that does not apply for a certificate does not<br>receive the exclusion from state antitrust enforcement and intended federal antitrust immunity<br>provided by section 23-17.5-10.The application must include an executed copy of thecooperative agreement and must describe the nature and scope of the cooperation in the<br>agreement and any consideration passing to any party under the agreement. The applicants<br>shall file a copy of the application and related materials with the attorney general and the<br>department. The department shall review the application and shall hold a public hearing on the<br>application. The department shall grant or deny the application within ninety days of the date of<br>filing of the application. The decision must be in writing and must set forth the basis for the<br>decision. The department shall furnish a copy of the decision to the applicants, the attorney<br>general, and any intervenor.23-17.5-03. Standards for certification. The department shall issue a certificate ofpublic advantage for cooperative agreement if the department determines that the applicants<br>have demonstrated by clear and convincing evidence that the likely benefits to health care<br>consumers which may result from the agreement outweigh the disadvantages attributable to aPage No. 1potential reduction in competition that may result from the agreement. The department shall<br>consult with the attorney general regarding its evaluation of a potential reduction in competition<br>which may result from a cooperative agreement.1.In evaluating the likely benefits of a cooperative agreement to health care<br>consumers, the department shall consider whether any of the following benefits may<br>result from the cooperative agreement:a.Enhancement of the quality of health care services provided to residents of this<br>state;b.Preservation of health care facilities or services in geographical proximity to the<br>communities traditionally served by those facilities or services;c.Gains in the cost efficiency of services provided by the parties involved;d.Improvements in the utilization of health care resources and equipment;e.Avoidance of duplication of health care resources; andf.Enhancement of the ability to cooperatively provide services to underserved or<br>low-income patients.2.The department's evaluation of the disadvantages attributable to a potential<br>reduction in competition which may result from the agreement may include the<br>following factors:a.The extent of any likely adverse impact on the bargaining power of health<br>maintenance organizations, preferred provider organizations, managed health<br>care service agents, or other health care payers in negotiating payment and<br>servicearrangementswithhospitals,physicians,alliedhealthcareprofessionals, or other health care providers;b.The extent of any reduction in competition among physicians, allied health<br>professionals, other health care providers, or persons furnishing goods or<br>services to or in competition with providers or third-party payers that is likely to<br>result directly or indirectly from the cooperative agreement;c.The extent of any likely adverse impact on patients in the quality, availability,<br>and price of health care services; andd.The availability of arrangements that are less restrictive to competition and<br>achieve the same benefits or a more favorable balance of likely benefits to<br>health care consumers over disadvantages attributable to a potential reduction<br>in competition which may result from the agreement.23-17.5-03.1. Active supervision. The decision granting an application for a certificateof public advantage must include conditions for active supervision. The active supervision must<br>be sufficient for the department to determine periodically whether circumstances may be present<br>to meet the criteria for certificate termination pursuant to section 23-17.5-04 and must otherwise<br>be structured to provide a reasonable basis for state action immunity from federal antitrust laws<br>as interpreted by applicable laws, judicial decisions, opinions of the attorney general, and<br>statements of antitrust enforcement policy issued by the United States department of justice and<br>the federal trade commission. The conditions for active supervision, except the authority granted<br>the department or attorney general by this chapter, may be modified or terminated by agreement<br>between the parties to the cooperative agreement and the department.23-17.5-04. Certificate termination. The department may, after notice and hearing,terminate a certificate of public advantage if the department determines that:Page No. 21.The likely or actual benefits to health care consumers that result, or may result, from<br>the certified agreement no longer outweigh the disadvantages attributable to a<br>potential or actual reduction in competition which results, or may result, from the<br>agreement; or2.Performance by the parties under the certified agreement does not conform to the<br>representations made by the parties in the application or to the provisions of any<br>conditions attached to the certificate of public advantage by the department at the<br>time the application was granted.23-17.5-05. Records. The department shall maintain all cooperative agreements forwhich the certificates of public advantage remain in effect. Any party to a cooperative agreement<br>who terminates the agreement shall file a notice of termination with the department within thirty<br>days after termination.23-17.5-06. Investigation by attorney general. The attorney general, at any time afteran application is filed under section 23-17.5-02, may require by subpoena the attendance and<br>testimony of witnesses and the production of documents in the county in which the applicants are<br>located for the purpose of investigating whether the cooperative agreement satisfies the<br>standards set forth in section 23-17.5-03. The attorney general may seek an order from the<br>district court compelling compliance with a subpoena issued under this section.23-17.5-07.Cooperative agreement enjoined - Automatic stay - Standards foradjudication.The attorney general may seek to enjoin the operation of a cooperativeagreement for which an application for certificate of public advantage has been filed by filing suit<br>against the parties to the cooperative agreement in district court. The attorney general may file<br>an action before or after the department acts on the application for a certificate, but the action<br>must be brought no later than forty days following the department's approval of an application for<br>certificate of public advantage. Upon the filing of the complaint, the department's certification, if<br>previously issued, must be stayed and the cooperative agreement is of no further force unless<br>the court orders otherwise or until the action is concluded. The attorney general may apply to the<br>court for ancillary temporary or preliminary relief necessary to stay the cooperative agreement<br>pending final disposition of the case. In any action, the applicants for a certificate bear the<br>burden of establishing by clear and convincing evidence that the likely benefits to health care<br>consumers which may result from the cooperative agreement outweigh the disadvantages<br>attributable to a potential reduction in competition which may result from the agreement. The<br>court shall review whether the agreement constitutes an unreasonable restraint of trade under<br>state or federal law in assessing the disadvantages attributable to a potential reduction in<br>competition which may result from the agreement.23-17.5-08. Cancellation of a certificate of public advantage. If, at any time followingthe forty-day period specified in section 23-17.5-07, the attorney general determines that, as a<br>result of changed circumstances, the benefits to health care consumers which result from a<br>certified agreement no longer outweigh the disadvantages attributable to a reduction in<br>competition resulting from the agreement, the attorney general may file suit in district court<br>seeking to cancel the certificate of public advantage. In an action brought under this section, the<br>attorney general has the burden of establishing by a preponderance of the evidence that, as a<br>result of changed circumstances, the likely or actual benefits to health care consumers which<br>result, or may result, from the agreement and the unavoidable costs of canceling the agreement<br>are outweighed by the disadvantages attributable to a potential or actual reduction in competition<br>which results, or may result, from the agreement. If the attorney general first establishes by a<br>preponderance of the evidence that the department's certification was obtained as a result of<br>material misrepresentation to the department or the attorney general as the result of coercion,<br>threats, or intimidation toward any party to the cooperative agreement, the parties to the<br>agreement bear the burden of establishing by clear and convincing evidence that the likely or<br>actual benefits to health care consumers which result, or may result, from the agreement and the<br>unavoidable costs of canceling the agreement are outweighed by the disadvantages attributable<br>to a potential or actual reduction in competition which results, or may result, from the agreement.Page No. 323-17.5-09. Resolution by consent decree - Attorney's fees. The district court mayresolve any action brought by the attorney general under section 23-17.5-07 or 23-17.5-08 by<br>entering an order that, with the consent of the parties, modifies the cooperative agreement.<br>Upon the entry of the order, the parties to the cooperative agreement have the protection<br>specified in section 23-17.5-10 and the cooperative agreement has the effectiveness specified in<br>section 23-17.5-10.If the attorney general prevails in an action under section 23-17.5-06,23-17.5-07, or 23-17.5-08, the attorney general is entitled to an award of the reasonable costs of<br>the investigation or litigation and reasonable attorney's fees, expert witness fees, and court costs<br>incurred in litigation.23-17.5-10. Exclusion from state antitrust enforcement - Federal antitrust immunityintended - Application.A health care provider or third-party payer who participates in thediscussion or negotiation of a cooperative agreement for which an application is filed is engaged<br>in conduct for which no action may be brought pursuant to chapter 51-08.1 for penalties,<br>damages, injunctive enforcement, or other remedies. A health care provider or third-party payer<br>who participates in the implementation of a cooperative agreement, for which a certificate of<br>public advantage was issued, is engaged in conduct for which no action may be brought<br>pursuant to chapter 51-08.1 for penalties, damages, injunctive enforcement, or other remedies.<br>The intent of this section is that the conduct be provided state action immunity from federal<br>antitrust laws. This exclusion from state antitrust enforcement and intended federal antitrust<br>immunity applies unless the discussion or negotiation exceeds the scope of a cooperative<br>agreement as authorized by this chapter or the implementation exceeds the scope of the<br>cooperative agreement for which a certificate of public advantage was issued. This section does<br>not exempt hospitals or other health care providers from compliance with laws governing hospital<br>cost reimbursement.23-17.5-11. Assessment - Health care cooperative agreement fund. The departmentshall establish an assessment to be paid by each party to a cooperative agreement.Theaggregate amount of the assessment for a cooperative agreement may not exceed forty<br>thousand dollars, unless the department determines that an extraordinary need exists for an<br>additional amount to ensure effective evaluation of the application or supervision under section<br>23-17.5-03.1.The parties may require that the determination of the need for an additionalamount is subject to approval by the state health council. An appeal may be taken under chapter<br>28-32 from a determination of the health council.After consultation with the parties, thedepartment may require the payment of the assessment on an incremental basis and may<br>require separate payments for the process of evaluating the application or for the process of<br>active supervision. The assessment may be modified by agreement between the department<br>and the parties to the cooperative agreement.The department shall deposit the moneysreceived under this section in the health care cooperative agreement fund of the state treasury.23-17.5-12. Health care cooperative agreement fund - Appropriation. The funds inthe health care cooperative agreement fund are available to the state department of health,<br>subject to legislative appropriation, for evaluation and active supervision of cooperative<br>agreements among health care providers or third-party payers and for reimbursement to the<br>attorney general for expenses incurred pursuant to this chapter. Any amounts reimbursed to the<br>attorney general under this section are hereby appropriated.Page No. 4Document Outlinechapter 23-17.5 health care provider cooperative agreements