Session Laws

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately provide affordable health care to citizens of the commonwealth, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 6A of the General Laws is hereby amended by striking out section 31, as appearing in the 1990 Official Edition, and inserting in place thereof the following section:-

Section 31. As used in sections thirty-two to seventy-seven, inclusive, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

"Charge", the uniform price for each specific service within a revenue center of a hospital.

"Commission", the rate setting commission established under section thirty-two.

"Community health centers", health centers operating in conformance with the requirements of Section 330 of United States Public Law 95-626, as most recently amended by Public Law 97-35, and shall include all community health centers which file cost reports as requested by the commission.

"Eligible person", a person who qualifies for financial assistance from a governmental unit in meeting all or part of the cost of general health supplies, care or rehabilitative services and accommodations.

"General health supplies, care or rehabilitative services and accommodations", all supplies, care and services of medical, optometric, dental, surgical, podiatric, psychiatric, therapeutic, diagnostic, rehabilitative, supportive or geriatric nature, including inpatient and outpatient hospital care and services, and accommodations in hospitals, sanatoria, infirmaries, convalescent and nursing homes, retirement homes, facilities established, licensed or approved pursuant to the provisions of chapter one hundred and eleven B and providing services of a medical or health-related nature, and similar institutions including those providing treatment, training, instruction and care of children and adults; provided, however, that rehabilitative service shall include only rehabilitative services of a medical or health-related nature which are eligible for reimbursement under the provisions of Title XIX of the Social Security Act.

"Governmental unit", the commonwealth, any department, agency board or commission of the commonwealth, and any political subdivision of the commonwealth.

"Gross patient service revenue", the total dollar amount of a hospital's charges for services rendered in a fiscal year.

"Hospital", any hospital licensed under section fifty-one of chapter one hundred and eleven, the teaching hospital of the University of Massachusetts Medical School and any psychiatric facility licensed under section nineteen of chapter nineteen.

"Hospital agreement", an agreement between a nonprofit hospital service corporation and the hospital signatory thereto approved by the commission under section five of chapter one hundred and seventy-six A.

"Nonacute hospital", any hospital which is not an acute hospital.

"Patient", any natural person receiving health care service from a hospital.

"Provider of health care services", any person, corporation partnership, governmental unit, state institution or other entity which furnishes general health supplies, care or rehabilitative services and accommodations to an eligible person.

"Purchaser", a natural person responsible for payment for health care services rendered by a hospital.

"Revenue center", a functioning unit of a hospital which provides distinctive services to a patient for a charge.

"State institution", any hospital, sanatorium, infirmary, clinic and other such facility owned, operated or administered by the commonwealth, which furnishes general health supplies, care or rehabilitative services and accommodations.

SECTION 2. Section 32 of said chapter 6A, as so appearing, is hereby amended by striking out, in line 2, the word "shall" and inserting in place thereof the words:- except as provided in chapter six B, shall.

SECTION 3. Section thirty-two B of said chapter six A, inserted by section three of chapter twenty-three of the acts of nineteen hundred and eighty-eight, is hereby repealed.

SECTION 4. Section thirty-two C of said chapter six A is hereby repealed.

SECTION 5. Section 36 of said chapter 6A, as appearing in the 1990 Official Edition, is hereby amended by striking out, in line 1, the word "Any" and inserting in place thereof the words:- Except for rates established pursuant to chapter six B, any.

SECTION 6. Sections fifty-nine to sixty-four, inclusive, of said chapter six A are hereby repealed.

SECTION 7. The first paragraph of section 65 of said chapter 6A, as appearing in the 1990 Official Edition, is hereby amended by striking out the second and third sentences.

SECTION 8. Said section 65 of said chapter 6A, as so appearing, is hereby further amended by striking out the last paragraph.

SECTION 9. Sections sixty-five A to seventy, inclusive, of said chapter six A are hereby repealed.

SECTION 10. Section seventy-six of said chapter six A is hereby repealed.

SECTION 11. Sections seventy-eight to one hundred and two, inclusive, of said chapter six A are hereby repealed.

SECTION 12. The General Laws are hereby further amended by inserting after chapter 6A the following chapter:- `tuc CHAPTER 6B. ACUTE HOSPITAL FINANCE.

Section 1. As used in this chapter, the following words shall unless the context clearly requires otherwise have the following meanings:-

"Actual costs", all direct and indirect costs incurred by a hospital or a community health center in providing medically necessary care and treatment to its patients, determined in accordance with generally accepted accounting principles.

"Acute hospital", a hospital licensed under section fifty-one of chapter one hundred and eleven and the teaching hospital of the University of Massachusetts Medical School, which contains a majority of medical-surgical, pediatric, obstetric, and maternity beds, as defined by the department of public health.

"Case mix", the description and categorization of a hospital's patient population according to criteria approved by the commission including, but not limited to, primary and secondary diagnoses, primary and secondary procedures, illness severity, patient age and source of payment.

"Charge", the uniform price for each specific service within a revenue center of an acute hospital established in accordance with section seven.

"Commission", the rate setting commission established under section thirty-two of chapter six A.

"Community health centers", health centers operating in conformance with the requirements of section 330 of the United States Public Law 95-626, as most recently amended by Public Law 97-35, and shall include all community health centers which file cost reports as requested by the commission.

"Comprehensive cancer center", the hospital of any institution so designated by the national cancer institute under the authority of 42 USC sections 408(a) and 408(b) organized solely for the treatment of cancer, and offered exemption from the medicare diagnosis related group payment system under 42 C.F.R. 405.475(f).

"Disproportionate share hospital", any acute hospital that exhibits a payer mix where a minimum of sixty-three percent of the acute hospital's gross patient service revenue is attributable to Title XVIII and Title XIX of the federal Social Security Act other government payors and free care.

"DRG", a patient classification scheme which provides a means of relating the type of patients a hospital treats, such as its case mix, to the cost incurred by the hospital.

"Financial requirements", a hospital's requirement for revenue which shall include, but not be limited to, reasonable operating, capital and working capital costs, the reasonable costs of depreciation of plant and equipment and to reflect reasonable costs associated with changes in medical practice and technology.

"Fiscal year", the twelve month period with reference to which a hospital keeps its accounts and which ends in the calendar year by which it is identified.

"Free care", unpaid hospital charges of medically necessary services to (1) patients deemed financially unable to pay, in whole or in part, for their care, pursuant to regulations of the department of medical security; (2) uninsured patients who receive emergency care in a hospital emergency room or who receive other hospital care associated with such emergency care services, for which the costs have not been collected after reasonable efforts pursuant to regulations of the department of medical security; or (3) patients in situations of medical hardship where major expenditures for health care have depleted or can reasonably be expected to deplete the financial resources of the individual to the extent that medical services will be unpaid, as determined pursuant to the regulations of the department of medical security. For purposes of this section, "emergency care" shall include, but not be limited to, hospital services provided after sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity including, but not limited to, severe pain of which the absence of immediate medical attention could reasonably be expected to result in placing the patient's health in serious jeopardy, serious impairment to bodily functions or serious dysfunction of any bodily organ or part, examination or treatment for emergency medical condition or active labor in women or any such other service rendered to the extent required pursuant to 42 USC 1395(dd).

"Gross inpatient service revenue", the total dollar amount of a hospital's charges for inpatient services rendered in a fiscal year.

"Gross patient service revenue", the total dollar amount of a hospital's charges for services rendered in a fiscal year.

"Medically necessary services", medically necessary inpatient and outpatient services as mandated under Title XIX of the Federal Social Security Act; provided, however, that "medically necessary services" shall not include: (1) nonmedical services, such as social, educational, and vocational services; (2) cosmetic surgery; (3) canceled or missed appointments; (4) telephone conversations and consultations; (5) court testimony; (6) research or the provision of experimental or unproven procedures including, but not limited to, treatment related to sex-reassignment surgery, and pre-surgery hormone therapy; and (7) the provision of whole blood; provided, however, that administrative and processing costs associated with the provision of blood and its derivatives shall be payable.

"Patient", a person receiving health care services from a hospital.

"Publicly aided patient", a person who receives hospital care and services for which a governmental unit is liable, in whole or in part, under a statutory program of public assistance.

"Purchaser", a natural person responsible for payment for health care services rendered by a hospital.

"Sole community provider", any acute hospital which qualifies as a sole community provider under medicare regulations or under regulations promulgated by the rate setting commission.

"Specialty hospital", an acute hospital qualifying as exempt from the medicare prospective payment system regulations or any acute hospital which limits its admissions to patients under active diagnosis and treatment of eyes, ears, nose and throat or to children or patients under obstetrical care.

"State institution", a hospital, sanatorium, infirmary, clinic and other such facility owned, operated or administered by the commonwealth, which furnishes general health supplies, care or rehabilitative services and accommodations.

"Third party payer", an entity including, but not limited to, Title XVIII and Title XIX programs, other governmental payers, insurance companies, health maintenance organizations and nonprofit hospital service corporations; provided, however, that "third party payer" shall not include a purchaser responsible for payment, either to the purchaser or to the hospital, for health care services rendered by a hospital.

"Uninsured patient", a patient who is not covered by a health insurance plan as defined in section two of chapter one hundred and eighteen F, a self-insurance health plan, as defined in such section, or a medical assistance program, as defined in such section.

Section 2. (a) All rates of payment to acute hospitals under Title XIX of the Federal Social Security Act shall be established by contract between the provider of acute hospital services and the department of public welfare, except as provided in subparagraphs (b) and (c). All rates shall be subject to all applicable Title XIX statutory and regulatory requirements.

(b) For disproportionate share hospitals, the commission shall establish rates that equal the financial requirements of providing care to recipients of medical assistance.

(c) The commission shall establish rates of payment which shall apply to emergency services and continuing emergency care provided in acute hospitals to medical assistance program recipients, including examination or treatment for an emergency medical condition or active labor in women or any other care rendered to the extent required by 42 USC 1395(dd), unless such services are provided pursuant to an agreement between the department of public welfare and the acute hospital. Such rates of payment shall reflect the reasonable costs of providing such care and shall take into account the characteristics of the hospital in which such care is provided including, without limitation, its status as a teaching hospital, specialty hospital, disproportionate share hospital or sole community provider. An acute hospital shall, where a medical assistance program recipient requires, post emergency room care and, after screening and stabilizing the patient's condition, notify the department or its designated representative and assist said department, to the extent possible, in transferring the recipient to an appropriate medical setting in accordance with department's direction.

Nothing herein shall require the hospital to breach its obligation under, or require the recipient to forego any right to refuse transfer pursuant to 42 USC 1395(dd). Where an acute hospital is unable to or prohibited by law or regulation from transferring the patient in accordance with the department's direction, said department shall pay for any and all care associated with the patient's treatment including, but not limited to, care or services provided in the emergency room or inpatient or outpatient setting. Whenever the department is required to pay for such care rendered in a nonemergency room setting, said department shall pay all reasonable costs for such services in such hospital, as determined by the commission pursuant to this chapter and consistent with the provisions of Title XIX laws.

(d) No acute hospital may charge to a governmental unit for services provided to publicly aided patients at a rate higher than the rate payable by the department of public welfare under Title XIX for the same service, unless such service is provided by said department pursuant to a unique arrangement such as a selective contract or a managed care contract.

(e) Nothing in this chapter shall be construed to conflict with the provisions of a waiver of otherwise applicable federal requirements which the department of public welfare may obtain from the secretary of health and human services for the purpose of implementing a primary care case management system for delivering services, or for the purpose of implementing any other type of managed care service delivery system in which the eligible recipient is directed to obtain services exclusively from one provider or one group of providers.

(f) If the department of public welfare contracts with any third party payer for the provision of medical benefits for medical assistance recipients under Title XIX, said department shall assure that on a quarterly basis such contracted third party payers notify each acute hospital of the number of inpatient days of service provided by the hospital to such recipients covered by such contracts.

Section 3. No acute hospital shall deny access to care and services which the hospital would provide under chapter one hundred and eighteen E to recipients of benefits under chapter one hundred and seventeen A.

Section 4. Except to the extent prohibited by federal law or regulation, any third party payer shall have the option to require utilization review for acute hospital admissions and continued acute hospital stays, as well as ancillary services and outpatient services, if applicable. The payer shall have the option to contract with a medical peer review organization or the acute hospital to perform utilization review or to conduct its own utilization review. A medical peer review organization may also contract with acute hospitals to perform review on a delegated basis. In any such hospital performing reviews on a delegated basis, the medical peer review organization shall monitor the effectiveness of such hospital's review plans to determine whether continued delegation is warranted. The utilization review process shall provide for the timely notification of patients by the third party payer that further services are deemed inappropriate or not medically necessary. Such notification shall inform the patient that the patient's third party payer will cease coverage after a stated period from the date of such notification. No third party payer shall be liable for charges for acute hospital services provided subsequent to the end of the notification period, except that the Medicaid program under Title XIX shall be liable for appropriate payments consistent with the provisions of Title XIX for acute hospital services for Title XIX recipients.

Nothing contained in this section shall be construed to authorize a third party payer or other person, other than through the use of persons licensed to practice medicine, with or without the assistance of other licensed health care personnel, or through the use of licensed health care personnel under the guidance of persons licensed to practice medicine, to conduct utilization review.

Section 5. Nothing in this chapter shall be construed to authorize any person not licensed to practice medicine to exercise supervision or control over the practice of medicine or the manner in which medical services are provided, except as provided in section four.

Section 6. A hospital aggrieved by any action or failure to act by the commission under this chapter or the department of medical security, under chapter one hundred and eighteen F, may file an appeal pursuant to the provision of section thirty-six of chapter six A.

Section 7. All purchasers and third party payers may enter into contractual arrangements with acute hospitals for services. No such arrangement, including but not limited to prices or charges which may be charged for non-contracted services or which may be negotiated in individual contracts between such purchasers or third party payers and such acute hospitals, shall be subject to prior approval by any public agency; provided, however, that charges established by an acute hospital for health care services rendered shall be uniform for all patients receiving comparable services.

Section 8. There is hereby established the hospital payment system advisory commission, hereinafter known as "HospPAC", to be composed of seven members appointed by the governor one of whom shall be an attorney at law proficient in the areas of anti-trust and contract law; one of whom shall have knowledge and experience in the area of hospital financial management; and the remainder of whom shall be selected from among recognized experts in the fields of health economics, general management and economics, public health policy, or medical science and practice. The governor shall appoint one member to serve as chairman.

Two HospPAC members shall be first appointed to terms of one year. Two HospPAC members shall be first appointed to terms of two years, and three members first appointed shall be appointed to terms of three years. All subsequent appointments shall be for a term of three years.

HospPAC may appoint an executive director to serve at its pleasure, who may employ a qualified staff. Such director and staff shall not be subject to provisions of chapter thirty-one. HospPAC may point advisory committees of knowledgeable experts and interested parties to assist it in carrying out its duties and may enter into agreements for services of attorneys at law, accountants, financial experts and other consultants as it deems necessary and appropriate.

The annual budget of HospPAC and the compensation for its staff shall be set by appropriation. Any such appropriation shall be reimbursed, directly through assessments to acute hospitals and public and private grant funds as may be secured. Meetings shall be governed by section eleven A> of chapter thirty A. Records or reports shall be public records as defined by the twenty-sixth clause of section seven of chapter four and shall be disclosed in accordance with the provisions of chapter sixty-six.

The department of public health, department of public welfare, department of medical security, the rate setting commission and the division of insurance shall provide relevant data to HospPAC except where prohibited by law from releasing such data. Where necessary to perform its function, HospPAC may require the collection of additional data through the rate setting commission, or through other agencies pursuant to their data collection authority.

The principal duties of HospPAC shall be as follows:

(i) to oversee and evaluate in an advisory capacity to the rate setting commission the implementation of the hospital rates of payment for disproportionate share hospitals pursuant to section two;

(ii) to annually evaluate rates of payment contracted by the department of public welfare pursuant to section two to ensure that such rates do not jeopardize access to necessary hospital services of appropriate scope and quality in the commonwealth, with particular attention to services provided by facilities recognized by the rate setting commission as sole community providers, disproportionate share hospitals and specialty hospitals;

(iii) to assess adherence by payers and providers to recognized fair market contracting standards and to propose to the general court, whenever deemed appropriate, additional safeguards to prevent unfair or discriminatory contracting or pricing practices;

(iv) make an assessment of the determination of need program in the commonwealth and submit recommendations, as deemed necessary, by July fifteenth, nineteen hundred and ninety-two, to the legislature to repeal or modify such program to make it consistent with the hospital payment environment established by this act, including, but not limited to, the impact, if any, of the proximity to state borders on the competitive position of health care facilities.

Section 9. Each acute hospital shall pay to the commonwealth an amount for the estimated expenses of the commission. Such amount shall be equal to the amount appropriated by the general court for the purposes of the commission each year multiplied by the ratio of the hospital's gross patient service revenues to the total of all such hospital's gross patient service revenues. On October first of each year each acute hospital shall make a preliminary payment to the commission of an amount equal to one-half of the previous year's total assessment. Thereafter, each hospital shall pay, within thirty days notice from the commission, the balance of the total assessment for the current year based upon its most current projected gross patient service revenue. The commission shall subsequently adjust the assessment for any variation in actual and estimated expenses of the commission and for changes in hospital gross patient service revenue. Such estimated and actual expenses shall include an amount equal to the cost of fringe benefits as established by the commissioner of administration pursuant to section six B of chapter twenty-nine. In the event of late payment by any such hospital, the treasurer shall advance the amount of due and unpaid funds to the commission prior to the receipt of such monies in anticipation of such revenues up to the amount authorized in the then current budget attributable to such assessments, and the commission shall reimburse the treasurer for such advances upon receipt of such revenues. The provisions of this paragraph shall not apply to any state institution or to any acute hospital which is operated by a city or town.

Section 10. The commission shall, by regulation, designate information necessary to effect the purposes of this chapter including, without limitation, the filing of a charge book, the filing of cost data and audited financial statements, and the submission of merged billing and discharge data. Further, said commission shall, by regulation, designate standard systems for determining, reporting and auditing volume, case-mix, proportion of low income patients and any other information necessary to permit the commission to effect the purposes of this chapter and to prepare reports comparing acute care hospitals in terms of cost, utilization and outcome. Such regulations may not require information in excess of that which is necessary to serve reasonably the purpose of collection and shall avoid imposing duplicative or prohibitively expensive reporting requirements. Such regulations may require acute hospitals to file required information and data by electronic means; provided, however, that the commission shall allow reasonable waivers from such requirement.

The commission shall, at least annually, publish a report analyzing such comparative information for the purpose of assisting third-party payers and other purchasers of health services in making informed decisions. Such report shall contain comparative price and service information relative to outpatient mental health services.

The commission shall work with other agencies including, without limitation, the departments of public health, mental health and public welfare and the division of insurance to collect and disseminate data concerning the cost of health insurance in the commonwealth and the health status of individuals. Said commission shall work with such other agencies to publish such data and to make it available to the public.

Section 11. For purposes of this section, unless specifically noted otherwise, the terms used herein shall have the same definitions as provided in section two of chapter one hundred and eighteen F.

(1) There shall be a separate and identifiable uncompensated care fee assessed by acute hospitals on all accounts charged to purchasers and third party payers exclusive of Titles XVIII and XIX and publicly aided patients, payment of which shall be required in full, in addition to any other payments for services established pursuant to contract or otherwise. Such uncompensated care fee shall reflect the product of the uncompensated care percentage to be calculated by the commission and the charges for patient care services on such accounts; provided, however, that such charges shall appear on each such account notwithstanding the actual amount of payments for such services established pursuant to contract or otherwise. The proceeds of such fees shall be deposited into the fund established pursuant to section seventeen of chapter one hundred and eighteen F.

(2) For each fiscal year, the commission shall calculate the uncompensated care percentage on a prospective basis using available information and such percentage need not be recalculated thereafter except at the commission's discretion. The percentage so calculated shall equal the ratio of the uncompensated care liability of purchasers and third party payers for said fiscal year, as determined by the general court, to the estimated charges to purchasers and third party payers for patient care services for said fiscal year, exclusive of charges to Titles XVIII and XIX and publicly aided patients and eligible free care charges.

(3) In establishing the percentage on a prospective basis, the commission shall require each acute hospital to file a schedule thirty days before the beginning of the fiscal year with the rate setting commission, setting forth estimated patient care charges to purchasers and third party payors exclusive of Titles XVIII and XIX and publicly aided patients and eligible free care charges for said fiscal year. The commission shall review said projected charges for reasonableness, taking into account the hospital's actual charges to said purchasers and third party payers for the current fiscal year. The commission may update this percent as more current data becomes available throughout the year.

(4) The commission shall calculate for each hospital a cost to charge ratio which shall be used by the department of medical security in determining the uncompensated care pool's liability to the hospital in accordance with section fifteen of chapter one hundred and eighteen F. In the case of nondisproportionate share hospitals such calculation shall represent the ratio of the reasonable actual costs of patient care services, as determined by the commission, to gross patient service revenue for the most recent year for which audited financial statements for the hospital are available. In the case of disproportionate share hospitals, such calculation shall represent the ratio of the hospital's reasonable financial requirements, as determined by the commission, to gross patient service revenue for the most recent year for which audited financial statements for such hospital are available. The commission shall, throughout the year, update each acute hospital's ratio in the event more current audited financial statement information becomes available. Further, said commission shall further establish, for each nondisproportionate share acute hospital for any given fiscal year, a final ratio using the reasonable costs for patient care services and gross patient service revenues as appearing in the audited financial statements for fiscal year. For disproportionate share hospitals, said commission shall establish a final ratio based upon its reasonable financial requirements, as defined by the commission, and actual gross patient service revenues as appearing in the audited financial statements for the fiscal year.

Section 12. An acute hospital which makes a charge or accepts payment based upon a charge in excess of that filed with the commission under sections seven and ten or approved by the commission or which fails to file any data, statistics or schedules or other information required under this chapter or by any regulation promulgated by the commission or which falsifies same, shall be subject to a civil penalty of not more than one thousand dollars for each day on which such violation occurs or continues, which penalty may be assessed in an action brought on behalf of the commonwealth in any court of competent jurisdiction. The attorney general shall bring any appropriate action, including injunctive relief, as may be necessary for the enforcement of the provisions of this chapter.

Section 13. The commission, in carrying out its duties as set forth in this chapter and in relation to the establishment, review or approval of acute hospital rates and charges, shall not, in any computation involving such actions, consider the following as resources of such hospital: restricted and unrestricted grants, gifts, contributions, bequests, fund principle, term endowments and endowment balances, restricted gifts, unrestricted gifts and all income from any of the foregoing, including unrestricted income from endowment funds and income and gains from investment of unrestricted funds.

As used in this section, the following words shall have the following meanings:

"Income and gains from investment of unrestricted funds", interest, dividends, rents or other income on investments, including net gains or losses resulting from investment transactions.

"Term endowment", funds available upon termination of restrictions.

"Unrestricted gifts", gifts, grants, contributions, and bequests upon which there are no restrictions imposed by the donor.

"Unrestricted income from endowment funds", income earned on investment of endowment funds which have no restrictions on income.

Section 14. Notwithstanding any provisions of this chapter to the contrary, all costs and charges for patients who are residents of other countries shall, as provided herein, be exempted from the limitations imposed by this chapter. Any hospital shall be allowed to impose a surcharge on the normal charges that would otherwise be allowed for such residents of other countries. Such surcharges shall not be included in the calculation of gross patient service revenues. The normal charge and the patient discharge statistics shall otherwise be included under the provisions of this chapter.

Section 15. A health maintenance organization organized under chapter one hundred and seventy-six G may (i) negotiate directly with any hospital with respect to such health maintenance organization's rate of payment for hospital services and (ii) enter into an agreement with such hospital reflecting such rate of payment without the approval of the commission established under section thirty-two of chapter six A. The specification in this section of contracting rights of health maintenance organizations shall not be construed as affirming or denying such rights with respect to any other third party payer.

Section 16. (a) There shall be within the executive office of human services an acute hospital conversion board, hereinafter referred to as "the board", to consist of the commissioner of public health, who shall serve as the chairman, the chairman of the rate setting commission, the executive director of the Massachusetts health and educational facilities authority, the deputy commissioner for medical assistance in the department of public welfare and the commissioner of the department of medical security. Said board shall administer the provisions of this section concerning the closing of acute hospitals or their conversion to other health, rehabilitative or public purposes and shall review the results of negotiations between sole community providers and federally designated rural referral centers and Blue Cross/Blue Shield or any other third party payor to determine whether such negotiations fairly took account of the importance of such sole community provider or rural referral center to its service area. Further said board shall provide assistance to acute hospitals in the identification and development of alternative financial resources and site uses, and in the expedition of state regulatory processes. Further said board shall advise the division of employment security, the Massachusetts industrial service program and any other appropriate agencies or institutions regarding the need for re-employment training incentive programs for employees of acute hospitals whose employment is or will be terminated because of the closing or conversion of an acute hospital. Said board shall further continue to provide guidance and advice as necessary to hospitals granted regulatory relief before January first, nineteen hundred and ninety-two.

(b) Upon receiving certification pursuant to this section of a hospital's intention to close or convert to another purpose, the board shall immediately notify the Massachusetts industrial service program established under chapter twenty-three D.

(c) The board shall further have the authority to exempt such closing or converting hospital or any hospital undertaking to purchase or merge with such closing or converting hospital from the provisions of sections twenty-five B to twenty-five G, inclusive, of chapter one hundred and eleven with regard to any substantial change in services, as defined in said sections any regulations pursuant thereto, proposed as a result of such closing or converting hospital's cessation of operation as an acute hospital; provided, however, that said board approves such proposal pursuant to this section; and provided further, that the result of any such exempted proposal shall be a net reduction in the number of medical-surgical, pediatric, obstetric and maternity beds equal to the number of such beds contained in such closing or converting hospital; provided, however, that any such proposal which is not approved or disapproved within ninety days of its submission shall be deemed approved for purposes of this section and shall thereupon be exempt from the provisions of said sections twenty-five B to twenty-five G, inclusive, of chapter one hundred and eleven.

(d) Any acute hospital which qualifies for and receives regulatory relief pursuant to this section shall give its employees at least ninety days prior written notice of the termination of their employment; provided, however, that such notice shall be in a form and manner prescribed by the board and shall include, but not be limited to, the following: notice of their right to continued health benefits pursuant to statute or applicable collective bargaining agreement, notice of their rights pursuant to sections seventy-one A to seventy-one J, inclusive, of chapter one hundred and fifty-one A, and notice of the availability of the comprehensive job placement and reemployment training program established pursuant to section four of chapter twenty-three D.

(e) In carrying out its duties pursuant to this section, the board shall seek the advice of an advisory council to consist of the following members: one representative each designated by the Massachusetts hospital association, the Massachusetts nurses' association, and Blue Cross of Massachusetts, Inc., a representative of a collective bargaining unity for hospital workers designated by the Massachusetts AFL-CIO, and one representative each to be appointed by said board from the following: a large teaching hospital, a community hospital, a large business, a small business, a commercial insurance company, and a health care consumer.

(f) Notwithstanding any provision to the contrary of this chapter or of any general or special law, the board is authorized to continue any rate adjustments, compliance relief, regulatory relief, or any other assistance granted to any hospital prior to January first, nineteen hundred and ninety-two to the extent such relief was authorized prior to said date.

SECTION 13. Subsection (b) of section 1 of chapter 30B of the General Laws, as most recently amended by section 112 of chapter 138 of the acts of 1991, is hereby further amended adding the following two clauses:-

(27) contracts or agreements entered into by a municipal hospital or a municipal department of health;

(28) contracts entered into by a governmental body on behalf of a hospital owned by such governmental body where such contract is funded by expenditures from an operations account, so-called, or a special account, established pursuant to a special act that is maintained for the benefit of and designated with the name of such hospital.

SECTION 14. Chapter 64C of the General Laws is hereby amended by striking out section 28, as appearing in the 1990 Official Edition, and inserting in place thereof the following section:-

Section 28. (a) Fifteen million dollars collected in any fiscal year shall be credited to the Health Care Access Fund established pursuant to section seventeen A of chapter one hundred eighteen F.

(b) Forty percent of the amount in excess of one hundred sixty-nine million, eight hundred thousand dollars received during a fiscal year, after crediting the amount required under paragraph (a), shall be credited to the Local Aid Fund.

(c) Eighty and seventy-seven hundredths percent of the balance remaining after crediting the amounts required under paragraphs (a) and (b), shall be credited to the General Fund.

(d) Nineteen and twenty-three hundredths percent of the balance remaining after crediting the amounts required under paragraphs (a) and (b), shall be credited to the Highway Fund.

SECTION 15. The second paragraph of section 25C of chapter 111, as so appearing, is hereby amended by inserting after the second sentence the following sentence:- A determination by the department of need therefor shall be required for the acquisition of equipment designed or intended to provide magnetic resonance imaging services.

SECTION 16. Section 51 of said chapter 111, as so appearing, is hereby amended by inserting after the word "twenty-five C", in lines 23 and 24, the words:- ; and provided further, that no license shall be issued or renewed to any applicant to establish or maintain an acute hospital as defined pursuant to chapter six B if the department has been notified by the department of medical security that such applicant or such hospital owes an outstanding obligation to the uncompensated care pool pursuant to section fifteen of chapter one hundred and eighteen F.

SECTION 17. The second paragraph of section 1 of chapter 118E of the General Laws, as amended by section 170 of chapter 138 of the acts of 1991, is hereby further amended by inserting after the word "Title XIX", in line 8, the words:- ; provided, however, that said benefits shall be available to otherwise eligible recipients who are residents of long-term care facilities as of July first, nineteen hundred and ninety-two and whose income and resources are insufficient to meet the cost of their medical care as determined by the financial eligibility requirements of said program; and provided, further, that such otherwise eligible recipients who are residents of long-term care facilities shall only be eligible for said benefits if the foregoing provision is permitted pursuant to Title XIX of the Social Security Act and if expenditures therefor are eligible for federal financial participation.

SECTION 18. Chapter 118F of the General Laws is hereby amended by striking out section 2, as appearing in the 1990 Official Edition, and inserting in place thereof the following section:-

Section 2. As used in this chapter the following words shall have the following meanings, unless the context clearly requires otherwise:-

"Acute hospital", a hospital which contains a majority of medical-surgical, pediatric, obstetric, and maternity beds as defined by the department of public health.

"Bad debt", an account receivable based on services furnished to any patient which (i) is regarded as uncollectable, following reasonable collection efforts consistent with the regulations of the department, which regulations shall allow third party payers to negotiate with hospitals to collect the bad debt of its enrollees, (ii) is charged as a credit loss, (iii) is not the obligation of any governmental unit or of the federal government or any agency thereof, and (iv) is not free care.

"Charge", the uniform price for each specific service within a revenue center of an acute hospital established in accordance with section seven of chapter six B.

"Child", a person who is under eighteen years of age.

"Chronic hospital", a hospital which is not an acute hospital.

"Community health centers", health centers operating in conformance with the requirements of Section 330 of United States Public Law 95-626, as most recently amended by Public Law 97-35, and shall include all community health centers which file cost reports as requested by the commission.

"Department", the department of medical security.

"Dependent", the spouse and children of any employee if such persons would qualify for dependent status under the Internal Revenue Code or for whom a support order could be granted under chapters two hundred and eight, two hundred and nine or two hundred and nine C.

"Employee", a person who performs services primarily in the commonwealth for remuneration for an in the commonwealth employer; provided, however, that a person who is self-employed shall not be deemed to be an employee.

"Employer", an employer as defined in section one of chapter one hundred and fifty-one A.

"Enrollee", a person who becomes a member of an insurance program of the department either individually or as a member of a family.

"Free care", unpaid hospital charges for medically necessary services to (1) patients deemed financially unable to pay, in whole or in part, for their care, pursuant to regulations of the department of medical security; (2) uninsured patients who receive emergency care in a hospital emergency room or other hospital care associated with such emergency care services, for which the costs have not been collected after reasonable efforts pursuant to regulations of the department of medical security; or (3) patients in situations of medical hardship where major expenditures for health care have depleted or can reasonably be expected to deplete the financial resources of the individual to the extent that medical services will be unpaid as determined pursuant to the regulations of the department of medical security. For the purposes of this section, "emergency care" shall include, but not be limited to, hospital services provided after sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity including, but not limited to, severe pain in which the absence of immediate medical attention could reasonably be expected to result in placing the patient's health in serious jeopardy, serious impairment to bodily functions or serious dysfunction of a bodily organ or part, examination or treatment for emergency medical condition or active labor in women or any other service rendered to the extent required by 42 USC 1395(dd).

"Health care services", supplies, care and services of medical surgical, optometric, dental, podiatric, chiropractic, psychiatric, therapeutic, diagnostic, preventative, rehabilitative, supportive or geriatric nature including, but not limited to, inpatient and outpatient acute hospital care and services and services provided by a community health center, by a sanatorium, as included in the definition of "hospital" in Title XVIII of the Social Security Act, and treatment and care compatible with such services or by a health maintenance organization.

"Health insurance company", a company as defined in section one of chapter one hundred and seventy-five which engages in the business of health insurance.

"Health insurance plan", the medicare program or an individual or group contract or other plan providing coverage of health care services which is issued by a health insurance company, a hospital service corporation, a medical service corporation or a health maintenance organization.

"Health maintenance organization", a company which provides or arranges for the provision of health care services to enrolled members in exchange primarily for a prepaid per capita or aggregate fixed sum as further defined in section one of chapter one hundred and seventy-six G.

"Hospital", a hospital licensed pursuant to section fifty-one of chapter one hundred and eleven, and the teaching hospital of the University of Massachusetts Medical School and any psychiatric inpatient facility licensed under section twenty-nine of chapter nineteen.

"Hospital service corporation", a corporation established for the purpose of operating a nonprofit hospital service plan as provided in chapter one hundred and seventy-six A.

"Managed health care plan", a health insurance plan which provides or arranges for, supervises and coordinates health care services to enrolled participants, including plans administered by health maintenance organizations and preferred provider organizations.

"Medicaid program", the medical assistance program administered by the department of public welfare pursuant to chapter one hundred and eighteen E and in accordance with Title XIX of the Federal Social Security Act.

"Medical assistance program", the medicaid program, the Veterans Administration health and hospital programs and any other medical assistance program operated by a governmental unit for persons categorically eligible for such program.

"Medical service corporation", a corporation established for the purpose of operating a nonprofit medical service plan as provided in chapter one hundred and seventy-six B.

"Medicare program", the medical insurance program established by Title XVIII of the Social Security Act.

"Provider", any person, corporation, partnership, governmental unit, state institution and other entity qualified under the laws of the commonwealth to perform or provide health care services.

"Publicly aided patient", a person who receives hospital care and services for which a governmental unit is liable in whole or in part under a statutory program of public assistance.

"Purchaser", a natural person responsible for payment for health care services rendered by a hospital.

"Resident", a person living in the commonwealth, as defined by the department by regulation; provided, however, that the person did not move into the commonwealth for the sole purpose of securing health insurance under this chapter; and, provided further, that confinement of a person in a nursing home, hospital or other medical institution shall not by itself be sufficient to qualify such person as a resident.

"Self-employed", a person who, under the common law applicable to the employer-employee relationship, is not considered to be an employee and whose primary source of income is derived from the pursuit of a bona fide business.

"Self-insurance health plan", a plan which provides health benefits to the employees of a business, which is not a health insurance plan, and in which the business is liable for the actual costs of the health care services provided by the plan and administrative costs.

"Small business", a business, including a business consisting only of the self-employed, in which the total of full time equivalent employees when averaged on an annual basis does not exceed fifty.

"Third party payer", an entity including, but not limited to, the medicaid program, the medicare program, a health insurance company, a health maintenance organization, a hospital service corporation, a medical service corporation; provided, however, that "third-party payer" shall not include a consumer responsible for payment to a provider for health care services rendered by such provider.

"Uninsured patient", a patient who is not covered by a health insurance plan, a self-insurance plan or a medical assistance program.

SECTION 19. Said chapter 118F is hereby further amended by striking out section 15, as most recently amended by section 188 of chapter 138 of the acts of 1991, and inserting in place thereof the following section:-

Section 15. (1) The department shall administer the uncompensated care pool consisting of revenues produced by the uncompensated care fee established pursuant to section twelve of chapter six B, matching funds received through federal financial participation for uncompensated care payments to disproportionate share hospitals and legislative appropriations.

(2) The hospital's liability to the pool shall equal the product of the uncompensated care fee percentage established by the commission pursuant to paragraph two of section twelve of chapter six B times charges for purchasers and third party payers, excluding charges for Title XVIII, Title XIX, publicly-aided patients and free care services eligible for payment by the uncompensated care pool.

(3) The pool's liability to the hospital shall equal the product of allowable free care charges multiplied by the applicable ratio developed by the commission pursuant to paragraph four of section twelve of chapter six B.

(4) The department shall administer the pool and require payments to the pool or disburse funds from the pool consistent with each hospital's net liability to or from the pool. The department shall specify, by regulation, appropriate mechanisms that provide for interim determination and payment of a hospital's liability to or from the pool during the year and final settlement of each year's pool. The final pool settlement shall be determined using actual gross patient service revenues, actual free care charges, adjusted for any audit findings, and any final ratios calculated by the commission in accordance with section twelve of chapter six B. The department shall also provide for an appropriate reconciliation of any interim payments and estimated liabilities to or from the pool with a hospital's actual liability to or from the pool for each year.

(5) The department shall not at any time make payments from the pool for any period in excess of amounts that have been paid into or are available in the pool for such period; provided, however, that the department may temporarily prorate payments from the pool for cash flow purposes; provided, however, that should there exist a shortfall of pool revenue, in any fiscal year, to cover allowable free care payments, the department shall allocate such payments so that those hospitals with the greatest proportional requirement for pool income shall receive a greater proportional payment from the pool.

(6) The department shall establish an appropriate mechanism for enforcing a hospital's obligation to the pool in the event a hospital does not make a scheduled payment to the pool. Such enforcement mechanism will include notification to the department of public welfare to offset payments on a hospital's Title XIX claims from the department of public welfare in the amount of payment owed to the pool plus a surcharge of five percent on the amount, and to transfer the withheld funds into said pool. If the department of public welfare offsets claims payments as ordered by the department, it shall be deemed not to be in breach of contract or any other obligation for payment of non-contracted services, and hospitals to which payment is offset under order of the department shall serve all Title XIX recipients in accordance with the contract then in effect with the department of public welfare, or, in the case of a non-contracting or disproportionate share hospital, in accordance with its obligation for providing services to Title XIX recipients pursuant to this act. In no event shall the department direct the department of public welfare to offset claims unless the hospital has maintained an outstanding obligation to the uncompensated care pool for a period longer than forty-five days and has received proper notification of the department's intention in accordance with regulations to be developed by the department.

(7) Payments by acute hospitals to the pool, state revenues appropriated for the purposes of the pool, and federal financial participation funds deposited in the pool shall be placed in an uncompensated care trust fund established in section seventeen. Amounts placed in the fund may be expended by the department for the purposes of said pool; and provided further, the department shall establish mechanisms to make payments from the pool to community health centers for free care expenses. Such payments for such free care expenses shall be at the level of actual cost.

(8) The department shall manage the pool in order to encourage maximum efficiency and appropriateness in the utilization of acute hospital services and may require utilization review in accordance with section four of chapter six B. Said department may refuse to allow payments to hospitals for free care for which reimbursement is available from other sources including, but not limited to, the medicare program. Said department may adopt regulations prohibiting payments from the pool for the costs of health care provided to residents of foreign countries. Said department may adopt regulations requiring disproportionate share hospitals to use a portion of payments received from the pool to reimburse physicians for the costs of free care which such physicians provide in such hospitals. Said department shall promulgate regulations detailing the definition of free care, including regulations setting standards for reasonable efforts to collect costs of emergency care and standards to determine medical hardship. Said department shall also adopt any other regulations necessary to manage said pool including, but not limited to, regulations providing audit standards for said pool, regulations establishing an enforcement mechanism pursuant to subdivision (7), and regulations containing reasonable controls on utilization.

SECTION 20. Said chapter 118F is hereby further amended by inserting after section 12 the following section:-

Section 12A. The department shall establish an advisory board relating to small business health insurance reform issues in connection with chapter one hundred and seventy-six J. Said board shall advise the department relative to small business health insurance access and affordability. Said board shall consist of nine members appointed by the governor, five of whom shall represent small businesses, one of whom shall be a health insurance underwriter, one of whom shall represent a nonprofit hospital service corporation, one of whom shall represent a commercial insurance company and one of whom shall represent a health maintenance organization.

SECTION 21. Said chapter 118F is amended by inserting after section 14 the following section:-

Section 14A. The department shall establish a continuing program of investigation and study of the health insurance needs of the residents of the geographically isolated or rural areas of the commonwealth.

One such study shall examine the impact of the lack of, or inadequacy of, health insurance programs available to these individuals. The study shall document such impact and shall develop recommendations and proposals to remedy the situation. Such proposals shall include, but be not limited to, gaining access to both health maintenance organizations and indemnification insurance plans.

Another such study shall examine the overall impact of programs developed by the department and the department of public welfare on the residents of such areas.

SECTION 23. Said chapter 118F is hereby further amended by inserting after section 17 the following section:-

Section 17A. There shall be established and set up on the books of the commonwealth a separate fund to be known as the Health Care Access Fund. There shall be credited to said fund the following: (a) all fees assessed or generated from programs authorized pursuant to this section; (b) revenues generated pursuant to paragraph (a) of section twenty-eight of chapter sixty-four C; (c) to the extent available, federal financial participation made available under Title XIX of the Social Security Act to match the costs of the uncompensated care pool and to the extent such monies are authorized to be transferred to said fund pursuant to general or special law; (d) and all interest earned on monies within said fund.

Amounts credited to the Health Care Access Fund shall be used for the following purposes subject to appropriation:

(i) to establish a program of preventive pediatric health care services for the benefit of dependent and adoptive children, from birth through the age of six, who do not receive such services pursuant to chapter one hundred and eighteen E section forty-seven C of chapter one hundred and seventy-five, section eight B of chapter one hundred and seventy-six G. Said program which, shall be administered by the department of medical security shall provide preventative and primary care service for children. For the purposes of this paragraph, preventive care services shall mean services rendered to a dependent or adoptive child from the date of birth through the attainment of six year of age and shall include physical examination, history measurements, sensory screening, neuropsychiatric evaluation and development screening, and assessment at the following intervals: six times during the child's first year after birth, three times during the next year, annually until age six. Such services shall also include hereditary and metabolic screening at birth, appropriate immunizations, and tuberculin tests, hematocrit, hemoglobin or other appropriate blood tests, and urinalysis as recommended by the physician and other such services as periodically recommended by the American Academy of Pediatrics.

Such coverage shall also include screening for lead poisoning as required by the regulations promulgated pursuant to section one hundred and ninety-three of chapter one hundred and eleven. Premium contributions shall be charged according to the following schedule: persons with gross family incomes up to one hundred and thirty-three percent of the federal poverty level, inclusive, shall not be responsible for any such costs; and provided further, that persons with gross family incomes exceeding one hundred and thirty-three percent through two hundred percent of the federal poverty level, inclusive, shall be responsible for copayments; and provided further, that persons with gross family incomes exceeding two hundred percent through four hundred percent of the poverty level, inclusive, shall be responsible for the first forty percent of the premium cost; and provided further that persons with gross family incomes exceeding four hundred percent of the federal poverty level shall be responsible for the full premium cost of said program. The cost of such program shall be further funded, in party, by copayments and deductibles contributed by enrollees according to a sliding scale established by the department of medical security; provided that persons with gross family incomes up to one hundred and thirty-three percent of the federal poverty level shall not be responsible for any such costs. The department shall in consultation with the department of public health and the department of public welfare, promulgate regulations necessary to implement the requirements of this subsection.

(ii) to establish a program of managed care within community health centers pursuant to regulations promulgated by the department of medical security.

(iii) to fund the Vaccine Trust Fund established pursuant to section one hundred and forty-one of chapter six hundred and fifty-three of the acts of nineteen hundred and eighty-nine.

(iv) a program of medical respite services provided by the Boston health care for the homeless program.

SECTION 24. Chapter 175, as so appearing, is hereby amended by inserting after section 24A the following two sections:-

Section 24B. The commissioner shall require that a policy, contract, agreement, plan or certificate of insurance for coverage of health care services, including any self-insured sickness, health or welfare plan issued within or without the commonwealth and including, but not limited to, those of a non-profit hospital service corporation organized pursuant to chapter one hundred and seventy-six A, a nonprofit medical service corporation organized pursuant to chapter one hundred and seventy-six B, an insurance company licensed pursuant to this chapter, a health maintenance organization organized pursuant to chapter one hundred and seventy-six G and any preferred provider organization organized pursuant to chapter one hundred and seventy-six I, shall provide, the following: (i) to the policyholder, subscriber or, in the case of a group policy, the group representative, prior notice of modifications in covered services under the policy and an annual notice listing all preferred or selective providers of health care services, if applicable; (ii) prior notice to providers of health care services which or who have been regularly paid for services to policyholders or subscribers of such companies of modifications in payments to such providers or modifications in covered services that will be in effect and the effective date of such modifications. The commissioner shall promulgate regulations to enforce the provisions of this section.

SECTION 25. Paragraph (a) of section 47B of said chapter 175, as appearing in the 1990 Official Edition, is hereby amended by adding the following two sentences:- Notwithstanding the foregoing provisions, the period of confinement may be calculated by substituting, solely at the insurer's option and, where medically appropriate, two days of outpatient treatment at a community mental health center or other mental health clinic or psychiatric day treatment center licensed by the department of public health or two days of outpatient day treatment at a psychiatric hospital licensed by the department of mental health, for one day of inpatient hospital care. For the purposes of this section, an "outpatient hospital day" shall be defined by the division of insurance.

SECTION 26. Paragraph (a) of subdivision (H) of section 110 of said chapter 175, as so appearing, is hereby amended by adding the following two sentences:- Notwithstanding the foregoing provisions, the period of confinement may be calculated by substituting, solely at the insurer's option and, where medically appropriate, two days of outpatient day treatment for one day of inpatient hospital care. For the purposes of this section, an "outpatient hospital day" shall be defined by the division of insurance.

SECTION 27. Section 5 of chapter 176A of the General Laws, as so appearing, is hereby amended by striking out, in lines 56, 59, 63, 66, 68, 70, 71, 73, 74 and 83, the word "hospital" and inserting in place thereof, in each instance, the words:- non-acute hospital.

SECTION 28. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in lines 62, 64, 69, 75, 76 and 84, the word "hospitals" and inserting in place thereof, in each instance, the words:- non-acute hospitals.

SECTION 29. The twelfth paragraph of said section 5 of said chapter 176A, as so appearing, is hereby amended by striking out the first two sentences and inserting in place thereof the following two sentences:- A nonacute hospital shall file with the commission in accordance with regulations adopted after public hearing such data, statistics, schedules or other information as the commission may reasonably require to enable it to approve or disapprove contracts with or rates of payment to nonacute hospitals. For the purpose of approving, disapproving, or permitting the continuance of all rates of payment under such contracts, the commission may require an examination of the books of account and statistical records of each nonacute hospital and such examination shall be made under the direction and supervision of the commission.

SECTION 30. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in line 121, the words "hospital or provider of other health services" and inserting in place thereof the words:- nonacute hospital.

SECTION 31. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in line 131, the words "hospital or provider of other health services" and inserting in place thereof the words:- nonacute hospitals.

SECTION 32. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in lines 141 and 142, the words ", each interested hospital and provider of other health services involved agree" and inserting in place thereof the words:- and each interested nonacute hospital involved agrees.

SECTION 33. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in lines 152 and 153, the words ", each interested hospital and provider of other health services involved agree" and inserting in place thereof the words:- and each interested nonacute hospital involved agrees.

SECTION 34. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in lines 157 and 158, the words "each interested hospital or provider of other health services" and inserting in place thereof the words:- nonacute hospital.

SECTION 35. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out, in lines 166 and 167, the words "hospital and provider of other health services" and inserting in place thereof the words:- nonacute hospital,- and by striking out, in lines 170 and 171, the words ", each hospital and provider of other health services involved agree" and inserting in place thereof the words:- and each interested nonacute hospital involved agrees.

SECTION 36. Said section 5 of said chapter 176A, as so appearing, is hereby further amended by striking out the seventeenth paragraph and inserting in place thereof the following paragraph:-

Any non-profit hospital service corporation, nonacute hospital or provider of other health services aggrieved by an order, finding, decision or other action made or taken under this section by the commission may, within twenty days of the filing thereof by the commission in its office as a public record, appeal such order, filing, decision or other action by filing a petition with the division of administrative law appeals, established pursuant to section four H of chapter seven, if the total amount subject to appeal is less than one hundred thousand dollars or, may file in the supreme judicial court for the county of Suffolk for a review of such order, finding, decision or other action. In the event that there is an appeal from an order of the commission disapproving a rate of payment between a non-profit hospital service corporation and a nonacute hospital or provider of other health services, any level of payment which the commission did approve shall be used pending the determination of the appeal and any difference in the rates established as a result of the appeal and the interim rate shall be adjusted, as the court may determine.

SECTION 37. Paragraph (a) of section 8A of said chapter 176A, as so appearing, is hereby amended by adding provisions the following two sentences:- Notwithstanding the foregoing provisions, the period of confinement may be calculated by substituting, solely at the corporation's option and, where medically appropriate, two days of outpatient treatment at a community mental health center or other mental health clinic or psychiatric day treatment center licensed by the department of public health or two days of outpatient day treatment at a psychiatric hospital licensed by the department of mental health, for one day of inpatient hospital care. For the purposes of this section, an "outpatient hospital day" shall be defined by the division of insurance.

SECTION 38. Paragraph (a) of the fourth paragraph of section 10 of said chapter 176A, as so appearing, is hereby amended by adding the following two sentences:- Notwithstanding the foregoing provision, the period of confinement may be calculated by substituting, solely at the corporation's option and, where medically appropriate, two days of outpatient day treatment for one day of inpatient hospital care. For the purposes of this section, an "outpatient hospital day" shall be defined by the division of insurance.

SECTION 39. Paragraph (a) of section 4A of chapter 176B, as so appearing, is hereby amended by adding the following two sentences:- Notwithstanding the foregoing provisions, the period of confinement may be calculated by substituting, solely at the non-profit medical service corporation's option and, where medically appropriate, two days of outpatient treatment at a community mental health center or other mental health clinic or psychiatric day treatment center licensed by the department of public health or two days of outpatient day treatment at a psychiatric hospital licensed by the department of mental health, for one day of inpatient hospital care. For the purposes of this section, an outpatient hospital day shall be defined by the division of insurance.

SECTION 40. Paragraph (a) of section 4A> of said chapter 176B, as so appearing, is hereby amended by adding the following two sentences:- Notwithstanding the foregoing provisions, the period of confinement may be calculated by substituting, solely at the non-profit medical service corporation's option and, where medically appropriate, two days of outpatient day treatment for one day of inpatient hospital care. For the purposes of this section, an "outpatient hospital day" shall be defined by the division of insurance.

SECTION 41. Chapter 176D of the General Laws is hereby amended by inserting after section 3 the following section:-

Section 3A. The following are defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance by entities organized under chapters one hundred and seventy-six A, one hundred and seventy-six B, one hundred and seventy-six G, and one hundred and seventy-six I, or licensed under chapter one hundred and seventy-five: (i) entering into any agreement to commit or by any concerted action committing any act of, boycott, coercion, intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance; (ii) refusal to enter into a contract with a health care facility on the basis of the facility's religious affiliation; (iii) seeking to set the price to be paid to any health care facility by reference to the lowest price paid that provider under contract with any other nonprofit hospital service corporation, medical service corporation, insurance company, health maintenance organization, or preferred provider arrangement; (iv) refusal to contract or affiliate with a health care facility solely because the facility does not provide a specific service or range of services, provided, however, that the selection of health care facilities shall be based primarily on cost, availability and quality of covered services.

SECTION 42. The General Laws are hereby further amended by inserting after chapter 176I the following chapter:- `tuc CHAPTER 176J. SMALL GROUP HEALTH INSURANCE.

Section 1. As used in this chapter the following words shall have the following meanings, unless the context clearly requires otherwise:-

"Actuarial opinion", a signed written statement by a member of the American Academy of Actuaries based upon the person's examination, including a review of the appropriate records and of the actuarial assumptions and methods utilized by the carrier in establishing premium rates for applicable health benefit plans.

"Adjusted average market premium price", the arithmetic mean of all premium rates for a given prototype plan sold to eligible insureds with similar case characteristics by all carriers selling prototype plans in the commonwealth.

"Association group policy", a group policy that (i) is issued to an association or to a trust or to the trustee of a fund established, created or maintained for the benefit of members of one or more associations, and (ii) insures or provides coverage to any of the following members of such association: employees thereof or employees of members or one or more of the preceding or all of any class or classes thereof. If employees are covered, such coverage shall be for the benefit of persons other than the employees' employer. A minimum of one hundred persons shall be eligible for coverage under the group policy as of its original issue date. The association shall have been organized and maintained in good faith for purposes other than that of obtaining insurance, as determined by the commissioner, shall have a constitution and by-laws or other governing documents analogous thereto and shall have been in active existence for at least one year.

"Benefit level", the health benefits provided by, and the benefit payment structure of, a health benefit plan.

"Carrier", an insurer licensed or otherwise authorized to transact accident and health insurance under chapter one hundred and seventy-five; a non-profit hospital service corporation organized under chapter one hundred and seventy-six A; a nonprofit medical service corporation organized under chapter one hundred and seventy-six B; a health maintenance organization organized under chapter one hundred and seventy-six G; and an insured group health benefit plan that includes a preferred provider arrangement organized under chapter one hundred and seventy-six I; which issues a health benefit plan to one or more eligible insureds on or after March first, nineteen hundred and ninety-two.

"Case characteristics", age, sex, rate basis type, industry, number of eligible persons, and participation rate of a group.

"Class of business", all or a distinct grouping of eligible insureds as shown on the records of the carrier which is provided with a health benefit plan through a health care delivery system operating under a license distinct from that of another grouping.

"Commissioner", the commissioner of the division of insurance.

"Eligible employee", an employee who: (1) works on a full-time basis with a normal work week of thirty or more hours, and includes an owner, a sole proprietor or a partner of a partnership; provided however, that such owner, sole proprietor or partner is included as an employee under a health care plan of an eligible small business but does not include an employee who works on a temporary or substitute basis, and (2) is hired to work for a period of not less than five months.

"Eligible dependent", the spouse or child of an eligible person, subject to the applicable terms of the health benefit plan covering such employee.

"Eligible small business" or "group", any sole proprietorship, firm, corporation, partnership or association actively engaged in business who, on at least fifty percent of its working days during the preceding year employed from among one to not more than twenty-five eligible employees, the majority of whom worked in the commonwealth; provided, however, that a health carrier may offer health insurance to a business of more than twenty-five employees in accordance with the provisions of this chapter. In determining the number of eligible employees, companies which are affiliated companies or which are eligible to file a combined tax return for purposes of state taxation shall be considered one business. Except as otherwise specifically provided, provisions of this chapter which apply to an eligible small business shall continue to apply through the end of the rating period in which an eligible insured no longer meets the requirements of this definition.

"Emergency services", covered services provided after the sudden onset of a medical condition manifesting itself by acute symptoms, including severe pain, which are severe enough that the lack of immediate medical attention could reasonably be expected to result in: (1) placing the patient's health in serious jeopardy; (2) serious impairment of bodily functions; or, (3) serious dysfunction of any bodily organ or part.

"Financial impairment", a condition in which, as determined by the commissioner, the applicant is, or if subjected to the provisions of this chapter could reasonably be expected to be, insolvent, or otherwise in an unsound financial condition such as to render its further transactions of business hazardous to the public or its policyholders or members, or compelled to compromise, or attempt to compromise, with its creditors or claimants on the grounds that it is financially unable to pay its claims.

"Group average premium rates", a set of numbers, one for each rate basis type, where each number is the total of the premiums charged to an eligible small business for all eligible employee and eligible dependents of that rate basis type, divided by the number of insured eligible employees of that rate basis type.

"Group base premium rates", the group average premium rates that would be charged by a carrier at the beginning of the rating period if the premiums were based solely upon the age, gender, industry, group size, participation rate, and rate basis type of the members of the group. The group base premium rates for every group shall be adjusted to a January first basis by dividing each group base premium rate by a deflator. The deflator equals the sum of trend for that carrier and the number one (1), raised to the power of the fraction of the calendar year which has elapsed at the time the new rating period begins.

"Health benefit plan", any individual, general, blanket or group policy of health, accident and sickness insurance issued by an insurer licensed under chapter one hundred and seventy-five; a group hospital service plan issued by a non-profit hospital service corporation under chapter one hundred and seventy-six A; a group medical service plan issued by a non-profit hospital service corporation under chapter one hundred and seventy-six B; a group health maintenance contract issued by a health maintenance organization under chapter one hundred and seventy-six G; an insured group health benefit plan that includes a preferred provider arrangement under chapter one hundred and seventy-six I; and any multiple employer welfare arrangement (MEWA) required to be licensed under chapter one hundred and seventy-five; offered to an eligible small business. The term "health benefit plan" shall not include accident only, credit, dental or disability income insurance, coverage issued as a supplement to liability insurance, insurance arising out of a workers' compensation or similar law, automobile medical payment insurance, insurance under which beneficiaries are payable with or without regard to fault and which is statutorily required to be contained in a liability insurance policy or equivalent self-insurance, long-term care only insurance, or any group blanket or general policy which provides supplemental coverage to medicare or other governmental programs.

"Intermediary", a chamber of commerce, trade association, or other organization, formed for purposes other than obtaining insurance, as determined by the commissioner, which offers as a service to its members the option of purchasing a health benefit plan.

"Late enrollee", an eligible employee or dependent who requests enrollment in an eligible small business' health insurance plan or insurance arrangement after the group's initial enrollment period, their initial eligibility date provided under the terms of the plan or arrangement, or the group's annual open enrollment period, provided however, that an eligible employee or dependent shall not be considered a late enrollee if the request for enrollment to the insurer is made within thirty days after termination of coverage provided under another health insurance plan or arrangement where such coverage has ceased due to termination of the spouse's employment or death of the spouse.

"Mandated benefit", a health service or category of health service provider which a carrier is required by its licensing or other statute to include in its health benefit plan.

"MEWA", or "multiple employer welfare arrangement", also called a "multiple employer trust", either: (1) a fully-insured multiple employer welfare arrangement as defined in sections 3 and 514 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 USC 1002 and 1144, as amended; or, (2) an entity holding itself out to be a multiple employer welfare arrangement or so-called "multiple employer trust" which is not fully insured and, therefore, shall be required to be licensed under chapter one hundred and seventy-five. An arrangement that constitutes a MEWA is considered a separate group health plan with respect to each employer maintaining the arrangement.

"Participation rate", the percentage of eligible employees electing to participate in a health benefit plan out of all eligible employees, or the percentage of the sum of eligible employees and eligible dependents electing to participate in a health benefit plan out of the sum of all eligible employees and eligible dependents at the election of the carrier. In either case, the numbers used to compute these percentages shall not include any eligible employee or eligible dependent who does not participate in the eligible small business' health benefit plan, but who is enrolled in a health benefit plan through a source other than the eligible small business.

"Participation requirement", a policy provision, or a carrier's underwriting guideline if there is no such provision, which requires that a group attain a certain participation rate in order for a carrier to accept the group for enrollment in the plan. For groups of five or fewer eligible persons, a carrier may require a participation rate not to exceed one hundred percent. For groups of six or more eligible persons, a carrier may require a participation rate not to exceed seventy-five percent.

"Preexisting conditions provision", a health benefit plan provision which excludes coverage for charges or expenses incurred during a specified period following the insured's effective date of coverage (i) as to a condition which, during a specified period immediately preceding the effective date of coverage, had manifested itself in such a manner as would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment or for which medical advice, diagnosis, care or treatment was recommended or received or (ii) as to a pregnancy existing on the effective date of the coverage.

"Prototype plan", a health benefit plan which meets the criteria established by the commissioner. At least one prototype plan shall have benefit and cost sharing levels that are consistent with the basic method of operation and the benefit plans of health maintenance organizations, including any restrictions imposed by federal law.

"Qualifying health plan", any (i) blanket or general policy of medical, surgical or hospital insurance described in subdivisions (A), (C) or (D) of section one hundred and ten of chapter one hundred and seventy-five; (ii) policy of accident or sickness insurance as described in section one hundred and eight of chapter one hundred and seventy-five which provides hospital or surgical expense coverage; (iii) nongroup or group hospital or medical service plan issued by a non-profit hospital or medical service corporation under chapters one hundred and seventy-six A and one hundred and seventy-six B; (iv) nongroup or group health maintenance contract issued by a health maintenance organization under chapter one hundred and seventy-six G; (v) insured group health benefit plan that includes a preferred provider arrangement under chapter one hundred and seventy-six I; (vi) self-insured or self-funded employer group health plan; (vii) health coverage provided to persons serving in the armed forces of the United States; or (viii) medical assistance provided under chapter one hundred and eighteen E. The commissioner may, by regulation, define other health coverage as a qualifying health plan for the purposes of this chapter.

"Rate basis type", each category of individual or family composition for which separate rates are charged for a health benefit plan as determined by the carrier subject to restrictions set forth in regulations promulgated by the commissioner.

"Rating period", the period for which premium rates established by a carrier are in effect, as determined by the carrier.

"Trend", the annual change, from the first day of a group's prior rating period to the first day of that group's new rating period, in the average of all groups' base premium rates attributable to factors other than changes in benefit levels, adjusted for rating periods greater or lesser than one year.

"Waiting period", a period immediately subsequent to the effective date of an insured's coverage under a health benefit plan during which the plan does not pay for some or all hospital or medical expenses.

Section 2. (a) Except as otherwise provided, this chapter applies to all health benefit plans issued, made effective, delivered or renewed to any eligible small business after April first, nineteen hundred and ninety-two, whether issued directly by a carrier, or through an intermediary. Nothing in this chapter shall be construed to require a carrier which does not issue health benefit plans subject to the provisions of this chapter to issue health benefit plans subject to the provisions of this chapter.

(b) Coverage to an eligible small business through an association group policy issued for delivery outside of the commonwealth and providing coverage for residents of at least five of the states of the United States of America including for these purposes, the District of Columbia, shall be exempted from the requirements of this chapter by the commissioner, except that such coverage shall be considered a "health benefit plan" and a "health benefit plan covering eligible small businesses" for purposes of section eight of this chapter.

No association group policy shall qualify for the exemption provided in this paragraph if

(i) the majority of insured persons reside in the commonwealth; or

(ii) the premium contribution payable under any such policy by any eligible small business is determined by reference to the actual or anticipated claim experience of such eligible small business as opposed to the claim experience of the association as a whole.

(c) Coverage provided to an eligible small business through an association group policy not granted an exemption pursuant to paragraph (b) shall be subject to all of the requirements of this chapter, except that, notwithstanding subsection (a) of section four, if a carrier would, as of the effective date of this chapter, be subject to the requirements of this chapter solely as a result of providing such coverage, then such carrier shall not be required to issue a health benefit plan to any eligible small business that is not a member of any such association group insured by such carrier unless the association group conditions membership in the association or eligibility of members in the association group's health benefit plan coverage on health status, claim experience or duration of coverage since issue.

(d) Coverage provided by an insurer for non-group health insurance or by any other carrier for non-group health care coverage shall not be subject to the requirements of this chapter.

(e) To qualify for the exemptions provided in paragraphs (b) and (c), the carrier providing coverage must report annually, within ninety days of the end of each calendar year, a certified statement containing the following information to the commissioner, and such other information as the commissioner may specify by regulation: (1) the number of persons insured within the association group policy in total, and the number who reside in the commonwealth, (2) a complete listing of the states, including the District of Columbia, in which these persons reside, (3) a statement describing whether the association conditions health benefit plan coverage on health status, claims experience, or duration of coverage since issue, and (4) a statement describing whether premium rates for health benefit plan insureds vary based on claims experience, health status, or duration of coverage since issue.

Section 3. (a) Premiums charged to every eligible small business for a health benefit plan issued or renewed on or after April first, nineteen hundred and ninety-two shall satisfy the following requirements:

(1) For every health benefit plan issued or renewed on or after April first, nineteen hundred and ninety-two, the group base premium rates charged by a carrier to each group during a rating period shall not exceed two times the group base premium rate which could be charged by that carrier to the group with the lowest group base premium rate for that rate basis type within that class of business.

(2) A carrier may establish a benefit level rate adjustment for all groups which shall be expressed as a number. The number shall represent the relative actuarial value of the benefit level of the health benefit plan issued to that group as compared to the actuarial value of other health benefit plans within that class of business. If a carrier chooses to establish benefit level rate adjustments, every group shall be subject to the applicable benefit level rate adjustment.

(3) The commissioner shall annually establish not less than five distinct regions of the state for the purposes of area rate adjustments. A carrier may establish an area rate adjustment for each distinct region, the value of which shall range from eight-tenths to one and one-fifth. If a carrier chooses to establish area rate adjustments, every group within each area shall be subject to the applicable area rate adjustment.

(4) A carrier may establish a group size rate adjustment, the value of which shall range from ninety-five one-hundredths to one and five one-hundredths. The group size rating must be based only upon actual administrative costs or other business costs borne by the carrier for serving groups of varying sizes. If a carrier chooses to establish group size rate adjustments, every group shall be subject to the applicable group size rate adjustment.

(5) A carrier may establish participation-rate rate adjustments for any health benefit plan or plans for any ranges of participation rates below the minimum participation requirements established in accordance with the definition of participation requirement in section two, the value of which shall be expressed as a number. The participation-rate rate adjustments must be based upon actuarially sound analysis of the differences in the experience of groups with different participation rates. If a carrier chooses to establish participation-rate rate adjustments, every group with a participation rate within the ranges defined by the carrier shall be subject to the applicable participation-rate rate adjustment.

(6) A carrier may establish a wellness program rate discount for any eligible small businesses which provide employees wellness programs which meet minimum standards established by the commissioner. The value of the wellness program rate discount shall range from ninety-five one-hundredths to ninety-nine one-hundredths. If a carrier establishes a wellness program rate discount, every eligible insured with a wellness program that meets such standards shall be subject to the applicable wellness program rate discount.

(7) A carrier who, as of December thirty-first, nineteen hundred and ninety-one, varies rates by health status, claims experience, duration, or any factors other than case characteristics or area may establish a phase-out rate adjustment for each group. The phase-out rate adjustments shall range from sixty-seven one-hundredths to one and thirty-three one-hundredths between April first, nineteen hundred and ninety-two and December thirty-first, nineteen hundred and ninety-two, inclusive. The phase-out rate adjustment shall range from three-quarters to one and one-quarter between January first, nineteen hundred and ninety-three and December thirty-first, nineteen hundred and ninety-three, inclusive. The phase-out rate adjustments shall range from eighty-five one-hundredths to one and fifteen one-hundredths between January first, nineteen hundred and ninety-four and December thirty-first, nineteen hundred and ninety-four, inclusive. No phase-out rate adjustments shall be permitted after December thirty-first, nineteen hundred and ninety-four. If a carrier chooses to establish phase-out rate adjustments, every group which was part of the carrier's in-force business on April first, nineteen hundred and ninety-two shall be subject to a phase-out rate adjustment, but all groups which were not part of the carrier's in-force business on April first, nineteen hundred and ninety-two shall not be subject to a phase-out rate adjustment.

A carrier who, as of December thirty-first, nineteen hundred and ninety-one varies rates by health status, claims experience, duration, group size, or any factors other than case characteristics or area, may base its phase-out rate adjustments only upon those factors other than case characteristics or area which it used to vary its rates on December thirty-first, nineteen hundred and ninety-one and may vary its rates due to these factors only by the amount of the phase-out rate adjustments established in this section, or by the amount which it varied its rates due to those factors on December thirty-first, nineteen hundred and ninety-one, whichever is less. A carrier who, as of December thirty-first, nineteen hundred and ninety-one, does not vary rates by any factors other than case characteristics may not establish a phase-out rate adjustment for any group. Effective January first, nineteen hundred and ninety-five, no carrier may charge a premium rate to an eligible small business which is based upon a group's health status, duration of coverage, or actual or expected claims experience.

(8) A carrier who, as of December thirty-first, nineteen hundred and ninety-one, varies rates by the age of the insured may establish an age rate adjustment for each eligible small business. The age rate adjustments shall range from sixty-seven one-hundredths to one and thirty-three one-hundredths between April first, nineteen hundred and ninety-two and December thirty-first, nineteen hundred and ninety-three, inclusive.

The premium rate charged by a carrier to each group on the date the group's policy is issued or renewed shall be established such that the average premium rates charged for each rate basis type at the beginning of the rating period, adjusted to a January first basis, equals that rate basis type's group base premium rate, multiplied by the benefit level rate adjustment, multiplied by the area rate adjustment, multiplied by the group size rate adjustment, multiplied by the participation-rate rate adjustment, multiplied by the wellness program rate discount, multiplied by the phase-out rate adjustment, multiplied by the age rate adjustment, as may be applicable pursuant to this section.

Notwithstanding the provisions of any general or special law to the contrary, including the provisions of this section, any carrier that issues, delivers or renews a health benefit plan on or before December thirty-first, nineteen hundred and ninety-four, subject to this chapter without a phase-out rate adjustment may charge a group base premium rate which does not exceed the rate band allowable for any other carrier under paragraph (1) of subsection (a).

(b) For all rating periods which begin between April first, nineteen hundred and ninety-two and December thirty-first, nineteen hundred and ninety-four, inclusive, the premium rate for each group which renews its coverage with a carrier shall not exceed the premium rate charged by that carrier for that group during the prior rating period by more than: (1) trend within that class of business for that carrier; plus, (2) the sum of any premium changes due to changes in the age, sex, group size, area, participation rate, or rate basis types represented in the group and any change in the applicable wellness program discount; plus (3) ten percent; plus, (4) the change in the actuarial value of the benefits due to changes in the benefit level for that eligible insured.

Section 4. (a) (1) Every carrier shall make available to every eligible small business every health benefit plan which it provides to any eligible small business. Upon the request of an eligible small business, a carrier must provide that business with a price for every health benefit plan which it provides to any eligible small business. Except under the conditions set forth in paragraph (3) of subsection (a) and paragraph (2) of subsection (b), every carrier shall accept for enrollment any eligible small business which seeks to enroll in a health benefit plan. Every carrier shall permit every eligible small business group to enroll all eligible persons and all eligible dependents; provided that the commissioner shall promulgate regulations which limit the circumstances under which coverage must be made available to an eligible employee who seeks to enroll in a health benefit plan significantly later than he was initially eligible to enroll.

Nothing in this chapter shall be construed to prohibit a carrier from offering coverage in a group to a person, and his dependents, who does not satisfy the hours per week or period employed portions of the definition of eligible employee.

Notwithstanding any other provision in this section, a carrier may deny a group enrollment in a health benefit plan if the carrier certifies to the commissioner that the carrier intends to discontinue selling that health benefit plan to new eligible small businesses. The commissioner is authorized to promulgate regulations which ensure that a carrier cannot use the provisions of this paragraph to circumvent the intent of this chapter. Notwithstanding any other provision in this section, between April first, nineteen hundred and ninety-two and December thirty-first, nineteen hundred and ninety-four, inclusive, a carrier may choose to limit the time during which it will accept new groups for coverage to a period of not less than ninety consecutive days during each consecutive twelve month period. Notwithstanding any other provision in this section, for between April first, nineteen hundred and ninety-two and December thirty-first, nineteen hundred and ninety-three, inclusive, a carrier may choose not to accept a new group if the group was covered by a health benefit plan on the day this chapter is enacted.

Notwithstanding any other provision in this section, a carrier may deny a group of five or fewer eligible persons enrollment in a health benefit plan unless the group enrolls through an intermediary. If a group of five or fewer eligible employees elects to enroll through an intermediary, a carrier may not deny that group enrollment. The carrier shall implement such requirements consistently, treating all similarly situated groups in a similar manner.

(3) A carrier shall not be required to issue a health benefit plan to an eligible small business if the carrier can demonstrate to the satisfaction of the commissioner that within the prior twelve months, (a) the small business has repeatedly failed to pay on a timely basis the required health premiums; or, (b) the small business has committed fraud, misrepresented whether or not a person is an eligible employee, or misrepresented other information necessary to determine the size of a group, the participation rate of a group, or the premium rate for a group; or, (c) the small business has failed to comply in a material manner with a health benefit plan provision, including carrier requirements regarding employer contributions to group premiums; or, (d) the small business has been covered by three or more health benefit plans within the same class of business during the four years prior to the date of application for coverage. A carrier shall not be required to issue a health benefit plan to an eligible small business if the small business fails to comply with the carrier's requests for information which the carrier deems necessary to verify the application for coverage under the health benefit plan.

(4) A carrier shall not be required to issue a health benefit plan to an eligible small business if the carrier can demonstrate to the satisfaction of the commissioner that: (a) the small business fails at the time of issuance or renewal to meet a participation requirement established in accordance with the definition of participation rate in section one; or, (b) acceptance of an application or applications would create for the carrier a condition of financial impairment, and the carrier makes such a demonstration to the same commissioner.

(5) Notwithstanding any other provision of this section, a health maintenance organization shall only be required to offer coverage or accept applications for a prototype plan.

A health maintenance organization shall not be required to accept applications from or offer coverage: (a) to a group, where the group is not physically located in the health maintenance organization's approved service area; or (b) to an eligible employee who applies as part of a group, where the employee does not meet the health maintenance organization's requirements regarding residence or employment with the health maintenance organization's approved service area; or, (c) within an area, where the health maintenance organization reasonably anticipates, and demonstrates to the satisfaction of the commissioner, that it will not, within that area, have the capacity in its network of providers to deliver services adequately to the members of such groups because of its obligations to existing contract holders and enrollees; provided that, a health maintenance organization that makes such a demonstration to the satisfaction of the commissioner may not offer coverage in the applicable area to any new cases of business groups of any size until the later of ninety days after each such refusal or the date on which the carrier notifies the commissioner that it has regained capacity to deliver services to eligible small business groups.

(b) (1) Every health benefit plan shall be renewable with respect to all eligible persons and eligible dependents at the option of the eligible small business.

(2) A carrier shall not be required to renew the health benefit plan of an eligible small business if the small business: (a) has not paid the required premiums; or, (b) has committed fraud, misrepresented whether or not a person is an eligible employee, or misrepresented information necessary to determine the size of a group, the participation of a group, or the premium rate for a group; or, (c) failed to comply in a material manner with health benefit plan provisions including carrier requirements regarding employer contributions to group premiums; or, (d) fails, at the time of renewal, to meet the participation requirements of the plan; or, (e) fails, at the time of renewal, to satisfy the definition of an eligible small business; or, (f) is not actively engaged in business.

(3) A carrier may refuse to renew enrollment for an eligible employee or eligible dependent if: (a) the individual has committed fraud, misrepresented whether or not he is an eligible employee, or misrepresented information necessary to determine his eligibility for a health benefit plan or for specific health benefits; or, (b) the individual fails to comply in a material manner with health benefit plan provisions.

(c) The commissioner shall promulgate regulations to enforce the provisions of this section.

Section 5. (a) No policy shall exclude any eligible employee or eligible dependent on the basis of an actual or expected health condition of such person.

(b) Preexisting conditions provisions shall not exclude coverage for a period beyond six months following the individual's effective date of coverage and may only relate to (i) conditions which had, during the six months immediately preceding the effective date of coverage, manifested themselves in such a manner as would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment or for which medical advice, diagnosis, care or treatment was recommended or received or (ii) a pregnancy existing on the effective date of coverage.

In determining whether a preexisting condition provision applies to an eligible employee or dependent, all health benefit plans shall credit the time such person was covered under a previous qualifying health plan provided by a carrier if the previous coverage was continuous to a date not more than thirty days prior to the effective date of the new coverage, exclusive of any applicable service waiting period under such new coverage, and if the previous qualifying coverage was reasonably actuarially equivalent to the new coverage, as determined by the commissioner.

(c) No policy may provide for a waiting period of more than six months beyond the insured's effective date of coverage under the health benefit plan; provided, however, that a carrier may not impose any waiting period upon a new employee who had coverage under a previous qualifying health plan immediately prior to, or until, employment by the eligible small business. If a policy includes a waiting period, emergency services must be covered during the waiting period. In determining whether a waiting period applies to an eligible employee or dependent, all health benefit plans shall credit the time such person was covered under a previous qualifying health plan if the insured experiences only a temporary interruption in coverage, and if the previous qualifying coverage was reasonably actuarially equivalent to the new coverage, both as determined by the commissioner. The waiting period may only apply to services which the new plan covers, but which were not covered under the old plan.

When a group changes from one health benefit plan to another, whether such plan is with the same carrier or a different carrier, the carrier may impose a new waiting period of not more than six months on all members of the group.

The commissioner shall promulgate regulations to enforce the provisions of this section.

Section 6. Notwithstanding any law to the contrary, the commissioner shall be authorized to approve health insurance policies submitted to the division of insurance for the purpose of being provided to eligible small businesses. Said health insurance policies shall be subject to the provisions of this chapter and may exclude coverages of mandated benefits. The commissioner shall promulgate regulations regarding eligibility criteria. Said eligibility criteria shall require that health insurance policies which exclude mandated benefits shall only be offered to small businesses which did not provide health insurance to its employees as of April first, nineteen hundred and ninety-two. Said eligibility criteria may require an employer contribution of at least fifty percent of the health insurance premium for employees. Said eligibility criteria shall also provide that small businesses shall not have any health insurance policies which exclude mandated benefits for more than a five year period.

Section 7. Every carrier shall make reasonable disclosure to prospective small business insureds, as part of its solicitation and sales material of:

(a) between April first, nineteen hundred and ninety-two and December thirty-first, nineteen hundred and ninety-four, inclusive, the extent, if any, to which premium rates are established or adjusted in part based upon the actual or expected variation in claim costs, the actual or expected variation in health conditions of employees or dependents of small businesses, or the time elapsed since initial enrollment in a health benefit plan; and

(b) the surcharge, if any, which shall be applied to a group's premium if one or more members are covered in the plan set forth in section eight of this chapter; and,

(c) the participation requirements or participation rate adjustments of the carrier with regard to each health benefit plan.

Every carrier, as a condition of doing business under the jurisdiction of this chapter, shall file with the commissioner an actuarial opinion that the carrier's rating methodologies and rates comply with the requirements of this chapter and any regulations promulgated under the authority of this chapter. Every carrier shall maintain at its principal place of business a complete and detailed description of its rating practices including information and documentation which demonstrates that its rating methods and practices are based upon commonly accepted actuarial assumptions, are in accordance with sound actuarial principles, and comply with the provisions of this chapter. Such information shall be made available to the commissioner upon request, but shall remain confidential.

If the commissioner determines that a carrier is not complying with the provisions of this chapter, the commissioner may disapprove the rating methodologies and the rates which the carrier uses.

Section 8. There is established a nonprofit entity to be known as the "Massachusetts Small Employer Health Reinsurance Plan". All commercial carriers issuing health benefit plans to an eligible small business on or after April first, nineteen hundred and ninety-two shall be members of the reinsurance program. Non-profit hospital and medical service corporations and health maintenance organizations shall not participate in the reinsurance program established by this section.

Such plan shall be prepared and administered by a governing committee appointed by the governor for terms of three years, consisting of seven members representing small business health insurers participating in the plan. At least one member of the governing committee shall be a small business domestic health insurer. The governing committee shall be responsible for the hiring of the employees of the plan.

On or before March thirty-first, nineteen hundred and ninety-two, the governing committee shall submit to the commissioner a plan of operation. The commissioner shall, after notice and hearing, approve or disapprove the plan of operation. Subsequent amendments to such plan shall be deemed approved by the commissioner if not expressly disapproved in writing by the commissioner within thirty days from the date of the filing. The plan shall not reimburse a carrier with respect to the claims of a reinsured employer or dependent in any calendar year until the carrier has paid five thousand dollars in benefits in a calendar year for benefits otherwise covered by the plan. The governing board may increase said dollar amount upon the approval of the commissioner.

Meetings of the governing committee of the plan shall be conducted in accordance with the provisions of section eleven A of chapter thirty A.

Premium rates charged for coverage reinsured by the plan shall be established as follows or as the commissioner may direct, in consultation with the governing committee:

(1) one and one-half times the adjusted average market premium price established by the plan for that classification or group with similar characteristics and coverage, with respect to the eligible employees, and their dependents, of a small employer, all of whose coverage is reinsured with the plan, minus a ceding expense factor determined by the plan.

(2) five times the adjusted average market premium price established by the program for that classification or group with similar characteristics and coverage, with respect to an eligible employee or his dependents, minus a ceding expense determined by the reinsurance program.

To control the size of the population of the plan, the plan shall annually provide for territorial and classification credits for those companies voluntarily writing small business health insurance within those territories and classifications that would otherwise be disproportionately represented in the plan. The size of the credits shall be such as to enhance the prospects that no classification or territory is disproportionately represented in the plan.

Any member may reinsure coverage of an eligible employee of an eligible insured, or any dependent of such an employee with the reinsurance program, provided:

(1) with respect to a prototype plan, the reinsurance program shall reinsure the level of coverage provided;

(2) with respect to other plans issued to eligible small businesses, the reinsurance program shall reinsure the level of coverage provided, up to, but not exceeding, the level of coverage provided in a prototype plan;

(3) with respect to eligible employees and their dependents, who are employed by a small business as of the date such employer's coverage by the carrier, or other benefit arrangement commences coverage may be reinsured within sixty days of the commencement of such employer's coverage with the carrier, or other benefit arrangement except in the case of late enrollees.

(4) with respect to eligible employees, and their dependents who are hired subsequent to the commencement of such employer's coverage by a carrier, or other benefit arrangement, coverage may be reinsured within sixty days of the commencement of their coverage under the plan except in the case of late enrollees.

(5) with respect to eligible employees, and their dependents, when a carrier, or other benefit arrangement reinsures the entire employer group, coverage may be reinsured:

(a) within sixty days of the commencement of the groups coverage under the plan; or

(b) in the case where a new entrant to an employer group is reinsured under the provisions of clause (5), on the first plan anniversary after the new entrant became a member of the employer's plan;

(6) no carrier, or other benefit arrangement may reinsure through the reinsurance program, the health benefit plan coverage of all of the eligible employees, and their dependents, of any small employer unless:

(a) such coverage provides at least the benefits contained in the prototype plan, and

(b) such coverage uses cost containment and managed care techniques as established by the reinsurance program.

(c) such plan contains a participation requirement at issuance of at least seventy-five percent of eligible employees, for plans with six or more eligible employees, and at renewal, the participation requirements that the carrier, or other benefit arrangement required at issuance.

(7) if an eligible small business group is covered under a plan other than a prototype plan and the carrier chooses to reinsure the group subsequent to the initial coverage period, or if a new individual joins the group and the carrier wants to reinsure that individual, the carrier cannot force the small business to change to a prototype plan. The carrier must allow the small business to maintain the same benefit plan and reinsure only the portion of the plan consistent with a prototype plan.

Following the close of each fiscal year, the governing committee shall determine the premiums charged for reinsurance coverage, the reinsurance plan expenses for administration, and the incurred losses, if any, for the year, taking into account investment income and other appropriate gains and losses. Any net loss for the year shall be recouped by assessment of the members. Said assessments shall be apportioned in proportion to said members' respective shares of the total premiums earned in the commonwealth from health benefit plans covering eligible small businesses. Such assessments shall not exceed five percent of such premiums from such health benefit plans.

If the assessment level is inadequate, the governing committee may adjust reinsurance thresholds, retention levels or consider other forms of reinsurance. The governing committee shall report annually to the commissioner and the joint committee on insurance on its experience, the effect of reinsurance and small group rates on individual ceding and recommendations, if any, on additional funding sources, if needed. If other funding sources are not made available, the committee may enter into negotiations with plan members to resolve any deficit through reductions in future payment levels for reinsurance plans. Any such recommendations shall take into account the findings of an actuarial study to be undertaken within the first three years of the plan's operation to evaluate and measure the relative risks being assumed by differing types of health benefit plan carriers. The study shall be conducted by three actuaries appointed by the commissioner, one of whom shall represent risk assuming carriers, one of whom shall represent reinsuring carriers and one of whom shall represent the commissioner.

SECTION 43. Section eighty-one of chapter twenty-three of the acts of nineteen hundred and eighty-eight is hereby repealed.

SECTION 44. Sections fifty-five and ninety-eight of chapter one hundred and thirty-eight of the acts of nineteen hundred and ninety-one are hereby repealed.

SECTION 45. Item 4600-1050 in section 2 of chapter 138 of the acts of 1991, is hereby amended by striking out, in lines 4 to 8, inclusive, the words "that not less than four million dollars of revenues from this pool shall be expended for a managed health care program at community health centers; provided further,",- and by striking out, in lines 15 to 18, inclusive, the words, "; provided further, that not less than ten million seven hundred thousand dollars of revenues from the pool shall be transferred to the Vaccine Trust Fund".

SECTION 46. Said section 2 of said chapter 138 is hereby further amended by inserting after item 4600-1050 the following four items:- `tm;keep=no `tcol=6,B4;c1=1,9,tu,T;c2=1,78,tuc;c3=1,78,tuc;c4=12,53,tfh1;c5=16,49,tu;c6=66,13,tur

`tc1 4600-1200 `tc4 For a program of preventive pediatric health care services established pursuant to section six A and six B of chapter one hundred and eighteen E of the General Laws `tc6 $5,000,000 `tc5 Health Care Access Fund 100.0% `tc1 4600-1210 `tc4 For a program of managed care established pursuant to section fifteen of chapter one hundred and eighteen F of the General Laws, within community health centers pursuant to regulations promulgated by the department of medical security `tc6 $4,000,000 `tc5 Health Care Access Fund 100.0% `tc1 4600-1220 `tc4 For monies required to fund the Vaccine Trust Fund established pursuant to section one hundred and forty-one of chapter six hundred and fifty-three of the acts of nineteen hundred and eighty-nine `tc6 $10,700,000 `tc5 Health Care Access Fund 100.0% `tc1 4600-1230 `tc4 For a program of medical respite services provided by the Boston health care for the homeless program established pursuant to section seventeen A of chapter one hundred and eighteen F of the General Laws `tc6 $300,000 `tc5 Health Care Access Fund 100.0% `tcol;end

SECTION 47. Section eighty-seven of chapter one hundred and fifty of the acts of nineteen hundred and ninety shall take effect no earlier than July first, nineteen hundred and ninety-two.

SECTION 48. Section 2 of chapter 255 of the acts of 1991 is hereby amended by striking out item 4408-1000 and inserting in place thereof the following item:- `tm;keep=no `tcol=6,B4;c1=1,9,tu,T;c2=1,78,tuc;c3=1,78,tuc;c4=12,53,tfh1;c5=16,49,tu;c6=66,13,tur

`tc1 4408-1000 `tc4 For a program of cash assistance to certain residents of the commonwealth entitled emergency aid to the elderly, disabled and children found by the department of public welfare to be eligible for such aid, pursuant to regulations promulgated by said department and subject to the limits of appropriation therefor; provided, however, that said program may include a program of medical benefits as defined by regulations of the department of public welfare; provided, however, that said program shall include services provided in public detoxification and outpatient substance abuse treatment centers; provided, further, that the department may provide benefits to persons over the age of sixty-five who have applied for benefits under chapter one hundred and eighteen A of the General Laws, to persons suffering from those physical or mental incapacities designated by the department, and which have been verified by a medical practitioner designated by the department, and to certain persons caring for a disabled person; provided, further, that the costs of verifying disability may be paid from this item; provided, further, that in designating those physical or mental incapacities which are disabling, the department may include those impairments listed in 20 C.F.R. 404, Subpart P, Appendix I; provided, further, that the department may apply age, educational and vocational standards to those individuals who have a medical disability which does not meet the medical standards established by regulations of the department; provided, further, that the payment standard shall not exceed the payment standard in effect for the General Relief program in fiscal year nineteen hundred and ninety-one; provided, further, that a thirty-five dollar rent benefit, to the extent determined to be possible within the appropriation by the department, shall be paid to all households incurring a rent or mortgage expense and not residing in public housing or subsidized housing; provided, further, that families with dependent children, whose sole reason for ineligibility under chapter one hundred and eighteen is either an inability to satisfy the work history requirement of said program or an inability to satisfy the relationship requirement, may be eligible under this program; provided, further, that the department may provide participants in the Vocational Rehabilitation program of the Massachusetts rehabilitation commission, as defined in 106 CMR 312, benefits under this program if otherwise eligible; provided, further, that benefits may be provided to an otherwise eligible student under age twenty-one who is regularly attending full-time a grade, high school, technical or vocational school not beyond the secondary level; provided, further, that the department is authorized to promulgate emergency regulations pursuant to section three of chapter thirty A of the General Laws to implement this program promptly and within the appropriation; provided, further, that the department may begin the eligibility determination process prior to the effective date of regulations hereunder; provided, further, that no ex-offender, person over age forty-five without a prior work history, or person in a residential treatment facility shall be eligible for benefits under this program unless said person otherwise meets the eligibility criteria described herein and defined by regulations of the department; provided, further, that benefits under this program shall be provided only to residents who are citizens of the United States or aliens lawfully admitted for permanent residence or otherwise permanently residing in the United States under color of law and shall not be provided to illegal or undocumented aliens, provided further, that in promulgating, amending or rescinding its regulations with respect to eligibility or benefits, including the payment standard, medical benefits, and any other benefits, under this program, the department shall take into account the amounts available to it for expenditure under this chapter so as not to exceed the appropriation, and may, in its discretion, depart from prior practices in accordance with the provisions of this item; provided, further, that notwithstanding the provisions of any special or general law to the contrary, or this line item, thirty days before implementing eligibility or benefit changes or both to the program, the commissioner shall file with the house and senate committees on ways and means and with the clerk of the house of representatives and the clerk of the senate a report setting forth such proposed changes; provided, further, that the report shall contain detailed information concerning the current and proposed operation of the program, including categories of eligibility, number of eligible persons in each category, demographic information regarding said persons, services rendered to said persons, direct service costs, administrative costs, and an explanation of the need for the proposed changes in eligibility requirements or benefit levels or both which shall be implemented and a determination by the secretary of human services that available appropriations for said program will be insufficient to meet projected expenses; provided, further, that the department is authorized to promulgate emergency regulations pursuant to chapter thirty A of the General Laws to implement these eligibility or benefit changes or both, provided, further that in establishing the initial program only, the department shall include all eligibility categories permitted herein at the payment standard in effect for the former general relief program in fiscal year nineteen hundred and ninety-one; provided, further that nothing herein shall be construed as creating any right accruing to recipients of the former general relief program; provided, further, that any person incarcerated in a correctional institution shall not be eligible for benefits under said program; provided, further, that the secretary of health and human services shall report on December first, nineteen hundred and ninety-one, and every three months thereafter to the house and senate committees on ways and means for the preceding three months on the numbers of persons applying for benefits under this program, by category, age, and disability, if any, and the number of persons receiving and denied benefits under this program by category, age, and disability, if any; provided, further, that notwithstanding any general or special law to the contrary, that the funds made available herein shall be the only funds available for said program, and the department shall not spend funds for said program in excess of the amount made available herein, and subject to the condition that no funds appropriated herein shall be expended for the payment of abortions not necessary to prevent the death of the mother `tc6 $102,517,000 `tcol;end

SECTION 49. Section three of chapter three hundred and thirty-seven of the acts of nineteen hundred and eighty-nine is hereby repealed.

SECTION 51. Notwithstanding any general or special law to the contrary, for fiscal years nineteen hundred and ninety-two and nineteen hundred and ninety-three, acute hospitals, except for specialty hospitals, as defined in chapter six B, shall be subject to price caps and to maximum gross inpatient service revenue limitations which shall be determined as follows:

(i) Using merged billing and discharge tapes submitted by each hospital including specialty hospitals pursuant to commission regulations, the commission shall group all discharges for inpatient services provided from October first, nineteen hundred and ninety through September thirtieth, nineteen hundred and ninety-one into DRGs, as defined in section one of chapter six B of the General Laws, utilizing the New York Version 8.0 Grouper. After grouping said discharges, the commission shall calculate, by hospital, an average charge for each DRG by dividing total charges by total discharges in each DRG;

(ii) The commission shall then rank all hospitals' including specialty hospitals average charge for each DRG and determine the ninetieth percentile highest charge level in each DRG;

(iii) The commission shall then multiply each charge level determined in subparagraph (ii) by one plus an inflation index for the fiscal year beginning on October first, nineteen hundred and ninety-one. Said inflation index shall account for the projected annual increase in the market basket of goods and services purchased by hospitals for said fiscal year. The resultant amounts shall constitute the fiscal year nineteen hundred and ninety-two price caps in each applicable DRG;

(iv) The commission shall multiply the fiscal year nineteen hundred and ninety-two price cap for each DRG by one plus an inflation index for the fiscal year beginning on October first, nineteen hundred and ninety-two. Said inflation index shall account for the projected annual increase in the market basket of goods and services purchased by hospitals for said fiscal year. The resultant amounts shall constitute the fiscal year nineteen hundred and ninety-three price caps in each applicable DRG;

(v) Within one hundred and twenty days after the end of each quarter, each hospital shall file with the commission a schedule listing all admissions of non-insured, non-contracting purchasers where charges for the admission exceeded the applicable price cap. Said schedule shall also list the payment received by the hospital. If the commission determines that any non-contracting, non-insured purchaser paid an amount in excess of said price cap, the commission shall direct the hospital to refund said overpayment;

(vi) Within one hundred and twenty days after the end of each quarter, each hospital except for a specialty hospital shall also file with the commission a schedule comparing actual gross inpatient service revenues to the maximum gross inpatient service revenue limitation calculated pursuant to subparagraph (vii);

(vii) A hospital's maximum gross inpatient service revenue limitation shall be determined by multiplying the total number of discharges in each DRG by the fiscal year nineteen hundred and ninety-two or fiscal year nineteen hundred and ninety-three charge cap as appropriate for that DRG, summing the resulting amounts for all DRGs;

(viii) In cases where a hospital's actual gross inpatient service revenues exceed its maximum gross inpatient service revenue limitation the commission shall ensure that future charges are reduced to effect compliance with said maximum gross inpatient service revenues.

If, at the end of fiscal year nineteen hundred and ninety-three, the commission determines a hospital's actual gross inpatient service revenues for fiscal years nineteen hundred and ninety-two and nineteen hundred and ninety-three exceeded its maximum gross inpatient service revenue limitation for those years, the commission shall require the hospital to pay a portion of said excess revenue into the uncompensated care pool, as established pursuant to chapter one hundred and eighteen F of the General Laws, within a reasonable time frame. The commission shall determine said amount by multiplying that portion of the excess charges attributable to purchasers and thirty party payers, excluding Title XVIII, Title XIX, publicly aided patients, inpatient free care and charges that were listed on the quarterly schedules submitted in accordance with subparagraph five of this section, by one minus the average inpatient discount provided to purchasers and third party payers, excluding Title XVIII, Title XIX, publicly aided patients, inpatient free care, and non-contracting, non-insured purchasers.

The commission shall develop by regulation the methodologies and schedules necessary to implement this section.

For purposes of this section, the terms and definitions used herein shall have the same meanings ascribed to them in section one of chapter six B of the General Laws.

SECTION 52. (1) The department of public health shall establish a pilot loan assistance program for teaching hospitals. Hospitals participating in the pilot program shall administer said program. Further, said hospitals agree to provide loan repayment assistance to medical residents at their institutions who: (a) have a minimum of fifty thousand dollars in education debts upon graduation from medical school; (b) are training in primary care; (c) agree to continue practicing in Massachusetts for at least three years upon completion of residency in a location approved by the Area Health Education Center the University of Massachusetts at Worcester; (d) agree to treat those patients covered for health and medical services under Title XIX (Medicaid) of the federal Social Security Act. (2) The loan repayment assistance would: (a) be paid in the amount of ten thousand dollars directly by each participating hospital to the banks holding the loans for the three participating residents from that hospital; (b) begin after the second year of residency when the federal deferment period ends; (c) be offered by each participating hospital beginning in July nineteen hundred and ninety-two for a period of three years. (3) Said department would: (a) provide listings of available positions meeting the commonwealth's criteria; (b) maintain a record of residents in the loan forgiveness program to ensure their compliance with its terms. (4) Said department, in consultation with participating teaching hospitals shall evaluate the loan repayment assistance program in its third year and make any recommendations therefor.

SECTION 53. The department of public health, in consultation with local boards of health, shall investigate the health service needs of the commonwealth to ensure that critical health services are available in communities of the commonwealth. In determining critical services to be preserved, the department shall analyze the health status of the community, existing alternative medical care available, and population-based monitoring of hospital use patterns. Such analysis shall further include consideration of the existence of viable health care providers located within an acute hospital facility and determination of the feasibility of conversion of underutilized or non-essential acute operations, consolidation of shared services and expansion of services while ensuring the availability of critical services to the community. The department shall report periodically to the governor and the senate and house of representatives on the status of access to critical health services in communities of the commonwealth and identify, analyze, and recommend solutions to any significant access problems.

SECTION 54. (a) For fiscal year nineteen hundred and ninety-two only, the uncompensated care pools liability to a hospital shall be calculated net of any payments received during said fiscal year prior to calculations made in accordance with this act.

(b) For fiscal year nineteen hundred and ninety-two only, a hospital's liability to the pool for the period prior to implementation of the uncompensated care fee pursuant to section eleven of chapter six B of the General Laws shall equal the product of the uniform statewide allowance previously in effect, multiplied by private sector patient care costs established pursuant to the most recent hospital agreement. This liability shall be calculated net of all payments made by the hospital to the extent it participated in the uncompensated care pool on a voluntary basis prior to the calculations made in accordance with this act. For fiscal year nineteen hundred and ninety-two, if the fee as authorized pursuant to said section eleven of said chapter six B of the General Laws is initially calculated after the beginning of the hospitals' fiscal year, payments by purchasers and third party payers exclusive of Titles XVIII and XIX and publicly aided patients shall be made through a combination of the allowance previously included in charges for the period prior to said calculation, and said fee.

SECTION 55. For hospital fiscal year nineteen hundred and ninety-two, the uncompensated care liability of purchasers and third party payers to the uncompensated care pool established pursuant to section seventeen of chapter one hundred eighteen F of the General Laws and derived from the uncompensated care fee assessed by acute hospitals on all accounts charged to purchasers and third party payers exclusive of Titles XVIII and XIX and publicly aided patients shall not exceed three hundred million dollars. For state fiscal year nineteen hundred and ninety-two, notwithstanding any general or special law to the contrary, thirty-five million dollars generated by federal financial participation made available under Title XIX of the Social Security Act to match the costs of said pool for disproportionate share hospitals shall be deposited into said pool, and five million dollars of said federal financial participation shall be deposited into the Health Care Access Fund established pursuant to section seventeen A of chapter one hundred eighteen F of the General Laws.

SECTION 56. Notwithstanding any general or special law to the contrary, for fiscal years prior to nineteen hundred and ninety-two, the rate setting commission shall expeditiously complete all pertinent pending maximum allowable cost and approved revenue reviews and audits, using such thresholds, allowances and other measures it deems necessary, fair and reasonable for the settlement of such pending matters. Upon completion of required reviews and audits, the commission shall determine a hospital's revenue compliance with the provisions of sections seventy-eight to one hundred of chapter six A of the General Laws, inserted by chapter twenty-three of the acts of nineteen hundred and eighty-eight. The commission shall notify a hospital of any over generation of approved revenues and require the hospital to pay a portion of such excess revenue into the uncompensated care trust fund established pursuant to section seventeen of chapter one hundred and eighteen F. The commission shall specify, in regulation, the methodology for determining the appropriate portion of approved revenues to be paid into the trust fund and shall provide for such required payment to be amortized over a period not to exceed five years.

SECTION 57. Except for emergency regulations adopted pursuant to section two of chapter thirty A, any new regulation or any amendment or repeal of any regulation adopted by the department of medical security for the purpose of defining free care eligibility and free care for charges to which the free care pool is liable to any hospital, shall, after the compliance with all applicable provisions of said chapter thirty A, except section five, be submitted to the general court. The commissioner of the department of medical security shall file the proposed regulations, amendment or repeal with the clerk of the house of representatives, together with a statement that the pertinent provisions of chapter thirty A, except section five, have been complied with. The clerk of the house of representatives, with the approval of the president of the senate and the speaker of the house of representatives, shall refer such regulations to the joint committee on health care. Within thirty days after such referral, said committee may hold a public hearing on the regulations and may issue a report to said commissioner within thirty days of said meeting. Said report shall contain any proposed changes to the regulations voted upon by the committee. Said commissioner shall review said report and shall adopt final regulations as deemed appropriate in view of said report and shall file with the chairman of the health care committee its final regulations. Not earlier than one hundred and twenty days after the proposed regulations have been filed with said clerk of the house of representatives, said commissioner shall file the final regulations with the state secretary as provided in section five of said chapter thirty A and said regulations shall thereupon take effect.

SECTION 58. Notwithstanding the provisions of any general or special law to the contrary, acute hospitals shall be allowed to sell claims for payment to collection agencies for a fee; provided, however, that such claims for payment shall not include any claim for payment of any charge which is considered to be free care as defined in chapter one hundred and eighteen F of the General Laws. The department of medical security may by regulation establish a mechanism for the bulk sale of claims for payment by two or more participating acute hospitals to collection agencies; provided, further, that nothing shall prevent acute hospitals from combining their debt for sale to collection agencies outside of this regulatory mechanism.

SECTION 59. There is hereby established an advisory commission to collect and disseminate evidence for the value and success of recognized quality improvement principles and methods in the health care industry. The advisory commission consisting of seventeen members shall be appointed by the governor and shall consist of the commissioner of public health, who shall serve as chairman, the deputy commissioner of public welfare for medical assistance, the chairman of the rate setting commission, the commissioner of medical security, health policy experts, members of the business community with recognized industrial quality management experience, and a representative from each of the following trade associations: the Massachusetts Hospital Association, the Massachusetts Nurses Association, the Massachusetts Medical Society, the Massachusetts Federation of Nursing Homes, the Massachusetts Association of Homes for the Aged, the Massachusetts League of Community Health Centers, the Visiting Nurses Association of Massachusetts, and the Massachusetts Association of Health Maintenance Organizations. In reviewing evidence for the value of quality improvement methods in the health care industry, advisory commission members shall consider the success of existing quality improvement methods, including but not limited to Total Quality Management and Computerized Quality Screening, employed in various industries; the utility or applicability of severity adjustment methods and outcome measurement determinants; the impact of state and Joint Commission on Accreditation of Health Care Organizations regulations on the goal of quality improvement in the health care industry.

The advisory commission may apply for and receive grants to carry out its purpose.

The advisory commission shall report its findings and make its recommendations, if any, to the governor and the joint committee on health care, no later than October first, nineteen hundred and ninety-two.

SECTION 60. Notwithstanding any general or special law to the contrary, the special commission on the practice of nursing shall be granted until June thirtieth, nineteen hundred and ninety-two to complete its work and file its report with the general court.

SECTION 61. The commissioner of insurance shall conduct a study of the effectiveness of chapter one hundred and seventy-six J of the General Laws. Said study shall consider the effect of the chapter on improving access, affordability, and stability in the small business insurance market and may recommend amendments to the chapter as the commissioner may determine. A report of said study's findings shall be filed with the committee on insurance no later than December thirty-first, nineteen hundred and ninety-two.

SECTION 62. Notwithstanding the provision of section twenty-five C of chapter one hundred and eleven of the General Laws, any person who prior to October first, nineteen hundred and ninety-one filed notice of intent to acquire or has acquired medical equipment designed or equipped to provide magnetic resonance imaging services under the solo or group practice exclusion from the definition of "clinic" in section fifty-two of chapter one hundred and eleven of the General Laws may own such equipment without obtaining a determination of need from the department of public health. Notwithstanding the foregoing, no such person may implement an addition, expansion, conversion, transfer of site or transfer of ownership, as such terms are defined pursuant to sections twenty-five B to twenty-five G, inclusive, of said chapter one hundred and eleven of medical equipment with a fair market value in excess of one hundred and fifty thousand dollars designed or equipped to provide magnetic resonance imaging services unless such person is first issued a determination of need therefor by the department of public health.

SECTION 63. The commissioner of public health is hereby directed to conduct a statewide review of procedures used by hospitals in informing the next-of-kin upon the death of an individual in an emergency room. The commissioner shall forward the results of said review to the chairs of the joint committee on health care within one hundred and twenty days of the effective date of this act.

SECTION 64. Any rule or regulation promulgated pursuant to this act shall contain reporting requirements governing mandatory disclosure of comprehensive financial data, in such form as the rate setting commission shall determine, concerning every organization with which an acute hospital is affiliated, including but not limited to related or affiliated corporations, partnerships, holding companies and subsidiaries. Such data shall include all compensation and benefits for the five top officers.

SECTION 65. Sections one, two, four, five, six, seven, eight, nine, ten, eleven, twelve, sixteen, eighteen, fifty-one, fifty-four and fifty-six of this act shall take effect on October first, nineteen hundred and ninety-one.

SECTION 66. Section three of this act shall take effect on January first, nineteen hundred and ninety-two.

SECTION 67. Except as otherwise provided the remaining provisions of this act shall take effect upon passage.