SECTION 1.  Chapter 118E of the general laws in amended by adding the following section:

Section 78.MassHealth shall not contract with any managed care organization, as defined in section 64, that reimburses any participating providers at rates that are 15% above the managed care organization’s median network relative price, as published in the annual report on relative prices, so called by the center for health information and analysis established under chapter 12C.

SECTION 2.  Chapter 176O of the general laws is hereby amended by adding the following section:-

Section 28. A contract or agreement for payment, including fee for service, alterative payment arrangements, incentive payment, bonus payment or supplemental payments, between an acute care hospital licensed under chapter 111 and a carrier as defined by section 1 of chapter 176O for medical, diagnostic or therapeutic services shall conform to the following requirements: 

(a)A carrier's provider network relative prices for network hospitals as calculated by the center for health information and analysis shall not exceed 1.25, as defined by the health policy commission, unless an exception applies under subsection (e) of this section.

(b)If the commissioner finds a carrier in violation of this section, he shall direct the carrier to immediately adjust the provider's rate of payment such as to come into compliance with this section.

(c)A hospital that participates in a carrier's provider network or any health benefit plan shall not refuse to participate in the carrier's provider network due to the carrier's compliance with this section.

(d)For every 10% of the hospital’s state-funded public payer mix based on gross patient service revenue including, Medicaid, Connector and health care safety net, so-called, hospitals may exceed such threshold by 0.025, but shall not exceed their original relative price.

(e)The division shall promulgate rules and regulations as necessary to monitor and ensure compliance with this section and shall coordinate any such rules and regulations with the health policy commission.

(f)The division shall annually issue recommendations regarding the threshold and its application, or modification to the Legislature.

SECTION 3.  Contracts between hospitals and carriers entered into or renewed prior to the effective date of this act shall come into compliance with the terms of this act no later than October 1, 2015.