SF5103

Purpose

This bill aims to update state contract rules between hospitals and health plan companies to improve pricing transparency and patient choice. It creates new definitions and prohibits specific contract provisions that can limit competition or information sharing between payers and providers. It also sets fiduciary duties for health plan companies to act in the best interest of enrollees when engaging with providers and plans.

Main provisions

• Antisteering clause (Subd.1a)
  • Defines and prohibits provisions that stop a health plan from encouraging enrollees to get care from providers that may be outside a particular network or from offering incentives to use certain providers.
• Antitiering clause (Subd.1b)
  • Defines and prohibits provisions that restrict creating or changing a tiered network, or require all members of a provider to be placed in the same tier.
• Gag clause (Subd.2a)
  • Defines and prohibits clauses that restrict sharing price or quality information (such as allowed amounts, negotiated rates, discounts, or other cost data) with enrollees, providers, plan sponsors, or other entities.
• Hospital definition (Subd.6)
  • Uses a standard hospital definition based on another state statute (to clarify what counts as a hospital in this context).
• Most Favored Nation (MFN) clause (Subd.7)
  • Defines MFN provisions and prohibits clauses that would prevent a provider from contracting with other plans at lower rates or a plan from contracting with other providers at higher rates. It also targets provisions that force termination or renegotiation if such external rate changes occur, and requires disclosure of contractual reimbursement rates.

Prohibited provisions and enforceability

• Prohibited provisions (Sec.6, Subd.1)
  • Hospitals may not offer or enter into contracts with health plan clauses that include antisteering, antitiering, gag, or MFN language, and may not renew or amend contracts to add these clauses.
• Void and severable (Sec.6, Subd.2)
  • Any of these prohibited clauses are void and unenforceable; other parts of the contract remain valid.
• Health plan fiduciary duties (Sec.6, Subd.3)
  • Health plan companies owe fiduciary duties to enrollees and policyholders, acting for their primary benefit when steering patients, creating or modifying tiered networks, or assigning providers into tiers.

Additional transparency and disclosures

• Rate disclosure requirements (Sec.5)
  • When a provider agrees with another plan to accept a lower rate or a plan agrees with a provider to pay a higher rate, the parties must disclose the relevant contractual reimbursement rates to appropriate contracting entities or providers, supporting transparency around pricing.

Significant changes to existing law

• Adds explicit definitions for antisteering, antitiering, gag, and MFN clauses to Minnesota Statutes 62Q.733.
• Prohibits these clauses in hospital contracts with health plans and renders such clauses void and unenforceable.
• Establishes a fiduciary standard for health plan companies to protect enrollees when interacting with providers and networks.
• Introduces rate disclosure requirements to increase transparency in price negotiations between hospitals, providers, and health plans.
• Uses an existing hospital definition framework (Section 144.696) to clarify what counts as a hospital for these rules.

Practical impact for stakeholders

• Enrollees and patients: Likely greater freedom to choose providers and more transparent pricing.
• Hospitals and health plans: Restrictions on certain contract terms that can limit pricing strategies and disclosure, plus new duties to act in enrollees’ interests.
• Providers: More visibility into how rates are negotiated and disclosed, potentially affecting negotiation dynamics with plans.

Relevant terms will follow in the next section.

Relevant Terms - Antisteering clause - Antitiering clause - Gag clause - Most Favored Nation (MFN) clause - Tiered network - Enrollee - Health plan company - Hospital (as defined by statute) - Reimbursement rates - Negotiated rates - Price transparency - Fiduciary duties - Section 62Q.733 - Minnesota Statutes 2024