Senate Bill 2850

AN ACT ENTITLED THE "RURAL HEALTH AVAILABILITY ACT" TO ESTABLISH A PROCEDURE FOR HOSPITALS AND OTHER BUSINESS ENTITIES TO ENTER INTO COOPERATIVE AGREEMENTS TO ENHANCE HOSPITAL CARE, PROVIDE COST EFFICIENCIES AND PRESERVE HOSPITAL FACILITIES; TO AUTHORIZE THE STATE DEPARTMENT OF HEALTH TO ISSUE A CERTIFICATE OF PUBLIC ADVANTAGE TO APPROVE SUCH COOPERATIVE AGREEMENTS; TO PROVIDE THAT SUCH COOPERATIVE AGREEMENTS ARE EXEMPT FROM ANTI-TRUST STATUTES BUT NOT EXEMPT FROM CERTIFICATE OF NEED STATUTES; TO PROVIDE FOR JUDICIAL REVIEW OF DECISIONS OF THE DEPARTMENT OF HEALTH; TO PROVIDE IMMUNITY FOR HOSPITAL OFFICERS FOR ACTING IN GOOD FAITH PURSUANT TO THIS ACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Rural Health Availability Act."

SECTION 2. Definitions. For the purposes of this act, the following words shall have the meanings ascribed herein, unless the context otherwise requires:

(a) "Act" means the Rural Health Availability Act.

(b) "Affected person" with respect to any application for a certificate of public advantage, means (i) the applicant(s); (ii) any person residing within the geographic service area of an applicant; (iii) health care purchasers who reimburse health care facilities located in the geographic service area of an applicant; (iv) any other person furnishing goods and services to, or in competition with, an applicant; and (v) any other person who has notified the department, in writing, or his interest in applications for certificates of public advantage and has a direct economic interest in the decision. Notwithstanding the foregoing, other than health care purchasers licensed to do business in Mississippi, persons from other states who would otherwise be considered "affected persons" are not included unless that other state provides for similar involvement of persons from Mississippi in a similar process in that state.

(d) "Certificate of public advantage" means the formal written approval, including any conditions or modifications, by the department of a cooperative agreement.

(e) "Cooperative agreement" means a contract, business or financial arrangement, or other activities or practices among two or more rural hospitals for the sharing, allocation or referral of patients or the sharing or allocation of personnel, instructional programs, support services and facilities, medical, diagnostic or laboratory facilities, procedures, equipment or other health care services, or the acquisition or merger of assets among or by two or more rural hospitals, and includes agreements to negotiate jointly with respect to price or other competitive terms with suppliers and health care purchasers and agreements to set collective fee schedules with respect to health care purchasers. The term "cooperative agreement" shall include any amendments thereto with respect to which a certificate of public advantage has been issued or applied for or with respect to which a certificate of public advantage is not required, unless the context clearly requires otherwise.

(f) "Department" means the State Department of Health created under Section 41-3-15.

(g) "Federal and state antitrust laws" means federal and state laws prohibiting monopolies, agreements in restraint of trade or unfair trade practices, including the Federal Sherman Act and Clayton Act, the Federal Trade Commission Act.

(h) "Health care purchaser" means a person or organization that purchases health care services on behalf of an identified group of persons, regardless of whether the cost of coverage of services is paid for by the purchaser or by the person receiving coverage or services.

(i) "Hospital" shall have the meaning set forth in Section 41-9-3.

(j) "Rural area" means an area with a population density of less than 100 individuals per square mile, a municipality or county with a population of less than 7,500 individuals, or an area defined by the most recent United States Census as rural.

(k) "Rural hospital" means a private or community hospital with at least one but no more than 75 licensed acute-care beds that is located in a rural area.

(l) "State" means the State of Mississippi.

(m) "State Health Officer" means the State Health Officer elected by the State Board of Health pursuant to Section 41-3-5.

The use of a singular term herein shall include the plural of such term and use of a plural term herein shall include the singular of such term unless the context clearly requires another connotation.

SECTION 3. Cooperative Agreements - Certificate of public advantage. (1) A rural hospital and any corporation, partnership, joint venture or other entity all of whose principals are rural hospitals may negotiate and enter into cooperative agreements with other such persons in the state subject to receipt of a certificate of public advantage governing the agreement as provided in this Act.

(2) Parties to a cooperative agreement may apply to the department for a certificate of public advantage governing that cooperative agreement. The application must include an executed written copy of the cooperative agreement and describe the nature and scope of the cooperation in the agreement and any consideration passing to any party under the agreement. Within thirty (30) days of receipt of the application, the department may request additional information as may be necessary to complete the application. The applicant has thirty (30) days from the date of the request to submit the additional information. If the applicant fails to submit the requested information within the thirty-day period, or any extension of time granted by the department, the application is deemed withdrawn. The department may require an application fee from the submitting parties sufficient to cover the cost of processing the application.

(3) The department shall review the application in accordance with the standards set forth in subsection (4). The department shall give notice of the application to members of the public who reside in the service areas of the applicant hospitals, which may be provided through newspapers of general circulation or public information channels and, if requested by an affected person within thirty (30) days of the giving of such public notice, may hold a public hearing in accordance with the rules adopted by the department. The department shall grant or deny the application within sixty (60) days after receipt of a completed application or from the date of the public hearing, if one is held, and that decision, along with any conditions of approval, must be in writing and must set forth the basis for the decision. The department may establish conditions for approval that are reasonably necessary to ensure that the cooperative agreement and the activities engaged under it are consistent with the intent of this Act and to ensure that the activity is appropriately supervised and regulated by the State. The department shall furnish a copy of the decision to the applicants and any affected persons who have asked in writing to be notified.

(4) The department shall issue a certificate of public advantage for a cooperative agreement if it determines that:

(a) each of the parties to the cooperative agreement is a rural hospital or is a corporation, partnership, joint venture or other entity all of whose principals are rural hospitals.

(b) the geographic service area of the rural hospitals who are parties to the agreement do not overlap significantly. (c) the cooperative agreement is likely to result in one or more of the following benefits:

(i) Enhancement of the quality of hospital and hospital-related care provided to Mississippi citizens;

(ii) Preservation of hospital facilities and health care in rural areas;

(iii) Gains in the cost-efficiency of services provided by the hospital involved;

(iv) Encouragement of cost-sharing among the hospitals involved;

(v) Improvements in the utilization of hospital resources and equipment;

(vi) Avoidance or reduction of duplication of hospital resources or expenses, including administrative expenses; or

(vii) Improvement in rural hospitals' ability to receive reimbursement or payment for their reasonable fees and charges.

(5) The department shall actively monitor and regulate agreements approved under this Act and may request information whenever necessary to ensure that the agreements remain in compliance with the conditions of approval. The department may charge an annual fee to cover the cost of monitoring and regulating these agreements. During the time the certificate is in effect, a report on the activities pursuant to the cooperative agreement must be filed with the department every two years. The department shall review such report in order to determine that the cooperative agreement continues to comply with the terms of the certificate of public advantage.

(6) The department shall revoke a certificate of public advantage by giving written notice to each party to a cooperative agreement with respect to which such certificate is being revoked, if it finds that:

(a) The cooperative agreement or activities undertaken pursuant to it are not in substantial compliance with the terms of the application or the conditions of approval;

(b) The likely benefits resulting from the cooperative agreement no longer exist; or

(c) The department's approval was obtained as a result of intentional material misrepresentation to the department or as the result of coercion, threats or intimidation toward any party to the cooperative agreement.

(7) The department shall maintain on file all cooperative agreements for which certificates of public advantage remain in effect. A party to a cooperative agreement who terminates or withdraws from the agreement shall notify the department within fifteen (15) days of the termination or withdrawal. If all parties terminate their participation in the cooperative agreement, the department shall revoke the certificate of public advantage for the agreement.

(8) The parties to a cooperative agreement with respect to which a certificate of advantage is in effect must notify the department of any proposed amendment to the cooperative agreement, including an amendment to add an additional party (but excluding an amendment to remove or to reflect the withdrawal of a party), prior to such amendment taking effect. The parties must apply to the department for a certificate of public advantage governing the amendment and the department shall consider and rule on such application in accordance with the procedures applicable to cooperative agreements generally.

(9) The department may promulgate rules and regulations in accordance with the Administrative Procedures Law as in effect from time to time to implement the provisions of this Act, including any fees and application costs associated with the monitoring and oversight of cooperative agreements approved under this article.

(10) A dispute among the parties to a cooperative agreement concerning its meaning or terms is governed by the principles of contract or other law that is otherwise applicable.

SECTION 4. Judicial review. Any applicant aggrieved by a decision of the department pursuant to this Act shall be entitled to judicial review thereof in the Circuit Court of Hinds County, First Judicial District. In such review, the decision of the department shall be affirmed unless it is arbitrary, capricious, or it is not in compliance with this Act.

SECTION 5. Immunity. Any rural hospital, and any corporation, partnership, joint venture or other entity all of whose principals are rural hospitals, and their respective officers, directors, employees, attorneys, consultants or other agents, that negotiate, enter into or conduct business in accordance with a cooperative agreement with respect to which a certificate of public advantage is issued and in effect, or that in good faith participate in discussions or negotiations with a view to entering into a cooperative agreement and applying for a certificate of public advantage, will be immune from civil liability and criminal prosecution to which they might otherwise be subject to state antitrust law as a result of such activity. It is the intent of the Legislature that the state direction, supervision, regulation and control of cooperative agreements pursuant to this Act will likewise provide immunity to the described persons for the described activities under federal antitrust law. Revocation of a certificate of public advantage will not revoke the immunity hereby granted to any person for described activities occurring prior to that person's receipt of notice of the revocation.

SECTION 6. Exemption. Nothing in this Act exempts hospitals from compliance with the provisions of Section 41-7-171 et seq. concerning certificates of need.

SECTION 7. This act shall take effect and be in force from and after July 1, 2004.