Senate Bill S4417A

                                BILL NUMBER:S4417

TITLE OF BILL:  An act to amend the public authorities law, in
relation to authorizing the Westchester health care corporation to
enter into agreements for the creation and operation of a health care
delivery system network

PURPOSE OR GENERAL IDEA OF BILL:

To clarify that Westchester Health Care Corporation (WHCC) may
exercise its general and special powers regardless of whether such
exercise might have an impact on competition.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends § 3301 of the public authorities law by adding a new
subdivision 6 to state that:

1. As a free-standing health care provider, the corporation is at a
competitive disadvantage in the current and emerging health care
environment, yet it cannot become part of a larger system of corporate
entities while maintaining its public status.

2. Significant investments in the public assets of the corporation and
its efforts to provide high quality health care services to medically
underserved populations are jeopardized by the corporation's inability
              

to compete on its own and by potential limits on its ability to
collaborate with other public and private providers, entities and
individuals.

3. The state finds that the benefits of collaboration by the
corporation outweigh any adverse impact on competition.

4. The benefits of the corporation's collaborative efforts include
preserving and expanding needed health care services in its primary
service area; consolidating unneeded or duplicative health care
services; enhancing the quality of, and expanding access to, health
care delivered to medically underserved populations; lowering costs
and improving the efficiency of the health care services it delivers;
and achieving improved reimbursement from non-governmental payors.

5. Based on the findings in this section, the state hereby
affirmatively expresses a policy to allow the corporation to engage in
collaborative activities consistent with its health care purposes,
notwithstanding that those collaborations may have the effect of
displacing competition in the provision of hospital, physician or
other health care-related services.

6. With respect to the collaborative activities contemplated, the
corporation and the public or private entities and individuals with
which it collaborates shall be immunized from liability under the
federal and state antitrust laws.

Section 2 amends § 3306 of the public authorities law by adding a new
subdivision B to state that:


1. In carrying out its health purposes through the exercise of the
special powers exercised pursuant to this section and the general
powers exercised pursuant to section 3305 of this title, the
corporation is authorized to engage in arrangements, contracts,
information sharing and other collaborative activities with public or
private entities and individuals irrespective of the competitive
consequences of these activities and notwithstanding that these
activities may have the effect of displacing competition in provision
of hospital, physician, or other health care-related services.

2. These collaborative activities may include without limitation:
joint negotiations with physicians, hospitals and payors, whether such
negotiations result in separate or combined agreements; leases; and/or
agreements which involve delivery system network creation and
operation, provided that, the corporation shall exercise state
oversight by determining whether particular collaborations with public
or private entities and individuals further the interests of the state
as set forth in this subdivision and in section 3301(6) of this title.

3. In undertaking these collaborative activities, the corporation and
the public or private entities and individuals with which it
collaborates shall be immunized from liability under the federal and
state antitrust laws.

4. Notwithstanding the provisions of this section, the corporation and
its collaborators shall remain subject to generally applicable
provisions of the public health law and regulations thereunder.

5. The corporation shall file an annual report with the department of
health concerning the impact of the collaborations authorized under
this section on the advantages and disadvantages identified by the
department of health in its request for applications for HEAL NY Phase
21, entitled "Restructuring Initiatives in Medicaid Redesign," and
concerning the impact on reimbursement to the corporation's facilities
by managed care organizations with respect to commercial plan members,
including the extent to which rates haven't negotiated that more
fairly compensate the corporation's facilities for the cost of
providing services to commercial enrollees, without cross-subsidy from
Medicaid or other governmental programs.

6. The department of health shall have sixty days after the report has
been filed to request, in writing, that the corporation make changes
to its policies to ensure that the collaborations authorized under
this section further the interests of the state.

Section 3 establishes the effective date.

JUSTIFICATION:

The WHCC, created under the Public Authorities Law, assumed
responsibility for operation of the Westchester County Medical Center
- several facilities previously operated by Westchester County. WHCC's
facilities provide an extensive range of acute care and ambulatory
services to the indigent population in Westchester County including a
significant percentage of the Medicaid discharges. As a 'free-standing
public healthcare entity, WHCC faces unique challenges as it seeks to
carry out its mission as a safety-net facility. In particular, its


ability to collaborate with private entities and individuals is clear
in the general and special powers granted to it under Public
Authorities Law §§ 3404 and 3405. However, in the recent Supreme Court
decision, FTC v Phoebe Putney Health System, Inc., the Court held that
in order for state action immunity to apply the state must clearly
articulate and affirmatively express a policy to displace competition.
Therefore, WHCC seeks to clarify the state's intention that such
collaborations may be carried out regardless of whether they displace
competition and may otherwise be considered violations of state or
federal antitrust laws.

LEGISLATIVE HISTORY:

2013-14: S.5815-A referred to rules in 2013 and referred to
corporations, authorities and commissions in 2014; same as A.8034-A
(Abinanti)

FISCAL IMPLICATIONS:

None

EFFECTIVE DATE:

This act shall take effect immediately.