6124 - Rates and contracts.

     § 6124.  Rates and contracts.        (a)  General rule.--The rates charged to subscribers by     hospital plan corporations, all rates of payments to hospitals     made by such corporations pursuant to the contracts provided for     in this chapter, all acquisition costs in connection with the     solicitation of subscribers to such hospital plans, the reserves     to be maintained by such corporations, the certificates issued     by such corporations representing their agreements with     subscribers, and any and all contracts entered into by any such     corporation with any hospital, shall, at all times, be subject     to the prior approval of the department.        (b)  Procedure.--Every application for such approval shall be     made to the department in writing and shall be subject to the     provisions of subsections (c) through (f) of section 6102 of     this title (relating to certification of hospital plan     corporations) except that the department may substitute     publication in the Pennsylvania Bulletin of notice of reasonable     opportunity to submit written comments for publication of     opportunity for hearing in any case where the right to an oral     hearing is not conferred by the Constitution of the United     States or the Constitution of Pennsylvania. Within 60 days after     the filing of the application the department shall approve or     refuse such application.        (c)  Maintenance of contractual relationships.--            (1)  Declaration of necessity.--It is hereby found that        many subscribers to nonprofit hospital plans make payments        over long periods of time prior to becoming entitled to        benefits under such a plan and that it is important in the        public interest that the reasonable expectations of such        subscribers as to coverage should be fulfilled if possible.        It is hereby declared to be essential for the maintenance of        the health of the residents of this Commonwealth that        subscribers to nonprofit hospital plans be assured receipt of        the hospitalization and related health benefits prepaid by        them through payment of the rates approved under this chapter        and charged by a hospital plan corporation and that to        accomplish this essential purpose termination of contracts        between hospital plan corporations and hospitals entered into        pursuant to section 6121 (relating to eligible hospitals) and        this section be subject to prior approval by the department        as provided in this subsection.            (2)  Notification period.--No contract between a hospital        plan corporation and any hospital providing for the rendering        of hospitalization to subscribers to the hospital plan shall        be terminated unless the party seeking such termination gives        90 days advance written notice to the other party to the        contract and to the department of the proposed termination.            (3)  Hearing period.--Whenever a termination subject to        paragraph (2) involves contracts with hospitals having more        than 5% of the beds in the area served by a hospital plan        corporation, the department shall hold public hearings on at        least 15 days notice for the purpose of investigating the        reasons for the termination. Pending completion of said        investigation by the department, termination of the hospital        contracts shall be suspended for a period not to exceed six        months from the expiration of the period provided for in        paragraph (2). All terms and conditions of the contract        between the hospital plan corporation and the hospital or        hospitals shall continue in full force and effect during said        investigation by the department. Based on the record made        during the hearings, the department shall make specific        findings as to the facts of the dispute and shall either        approve termination of the contracts or recommend such terms        for continuation of the contract as are in the public        interest, based upon the facts, the right of a hospital to be        paid its costs for hospitalization services to subscribers        and the need of subscribers for efficient, reliable        hospitalization at a reasonable cost.            (4)  Negotiation period.--If the department recommends        terms for continuation of the contract, the hospital plan        corporation and the hospitals involved shall renew their        negotiations in order to determine whether a new agreement        can be reached substantially on the basis of the terms for        continuation recommended by the department and pending such        negotiations, the termination of the hospital contracts shall        be suspended for a further period not to exceed 90 days from        the date of the decision of the department. If the hospital        plan corporation and the hospitals are unable to consummate a        new contract within said further period of 90 days, they        shall so advise the department. The department shall in that        event approve termination of the contracts effective at the        end of a further period of 30 days and shall prescribe the        form and extent of notice which the hospital plan corporation        shall use in advising its subscribers that hospitalization in        the hospitals involved is not covered by a contract between        the hospital plan corporation and such hospitals.            (5)  Retroactivity.--Upon the settlement of any dispute        between a hospital plan corporation and any hospital pursuant        to paragraphs (2) and (4), the terms and conditions of any        new contract shall be retroactive to the date of expiration        of the contract previously in effect between the parties.     (Aug. 2, 1975, P.L.293, No.94, eff. imd.)        1996 Partial Repeal.  Section 14 of Act 159 of 1996, known as     the Accident and Health Filing Reform Act, provided that subsec.     (a) is repealed insofar as it provides for the approval of rates     and contracts.        1975 Amendment.  Act 94 added subsec. (c). See sections 2 and     3 of Act 94 of 1975 in the appendix to this title for special     provisions relating to applicability and effective date and     retroactivity.