Health maintenance organizations, managed care organizations, and their contracting entities may not put direct incentive or specific payment provisions in provider contracts if the payments are meant to induce denial, reduction, limitation, or delay of medically necessary services.
§2207. Requirements of provider contracts A. A health maintenance organization, managed care organization, or their contracting entities shall not include provisions in their contracts with health care providers which include incentive or specific payment made directly, in any form, to a health care provider or health care provider group as an inducement to deny, reduce, limit, or delay specific, medically necessary, and appropriate services provided with respect to a specific insured or groups of insured with similar medical conditions. B. Nothing in this Section shall be construed to prohibit contracts that contain incentive plans that involve general payments, such as capitation payments, or shared-risk arrangements that are not tied to specific medical decisions involving specific insured or groups of insured with similar medical conditions. The payments rendered or to be rendered to physicians, physician groups, or other licensed health care practitioners under these arrangements shall be deemed confidential information. C. As used in this Section, the following definitions shall apply: (1) "Managed care organization" means a licensed insurance company, hospital, or medical benefit plan or program, health maintenance organization, integrated health care delivery system, an employer or employee organization, or a managed care contractor which operates a managed care plan. A managed care entity may include but it is not limited to a preferred provider organization, health maintenance organization, exclusive provider organization, independent practice association, clinic without walls, management services organization, managed care services organization, physician hospital organization, and hospital physician organization. (2) "Managed care plan" means a plan operated by a managed care organization which provides for the financing and delivery of health care and treatment services to individuals enrolled in such plan through its own employed health care providers or contracting with selected specific providers that conform to explicit selection, standards, or both. A managed care plan shall also mean a plan that has a formal organizational structure for continual quality assurance, a certified utilization review program, dispute resolution, and financial incentives for individual enrollees to use the plan's participating providers and procedures. Acts 1997, No. 897, §2.