I

103D CONGRESS

1ST SESSION H. R. 73

To require the Secretary of Health and Human Services and the Attorney

General to jointly carry out a demonstration program to reduce health

care costs through the sharing by medical facilities of certain services

and equipment, notwithstanding any antitrust law to the contrary, and

to direct the Attorney General to carry out a certificate of review process

exempting eligible medical facilities from the application of certain antitrust laws.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. HOAGLAND introduced the following bill; which was referred jointly to the

Committees on Energy and Commerce and the Judiciary

MAY 11, 1993

Additional sponsor: Mr. DOOLEY

A BILL

To require the Secretary of Health and Human Services

and the Attorney General to jointly carry out a demonstration program to reduce health care costs through

the sharing by medical facilities of certain services and

equipment, notwithstanding any antitrust law to the contrary, and to direct the Attorney General to carry out

a certificate of review process exempting eligible medical

facilities from the application of certain antitrust laws.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Health Services Cost

3 Control Act’’.

4 SEC. 2. PURPOSE.

5 It is the purpose of this Act to reduce health care

6 costs by encouraging cooperation between hospitals and

7 other medical facilities in order to contain costs and

8 achieve a more efficient and effective health care delivery

9 system through the elimination of unnecessary duplication

10 of expensive medical or high technology services or equip11 ment while preserving services in geographical proximity

12 to the communities traditionally served by the facilities.

13 SEC. 3. TECHNOLOGY AND SERVICES SHARING DEM14 ONSTRATION PROGRAM.

15 Part D of title VI of the Public Health Service Act

16 (42 U.S.C. 291k et seq.) is amended by adding at the end

17 thereof the following new section:

18 ‘‘SEC. 647. TECHNOLOGY AND SERVICES SHARING DEM19 ONSTRATION PROGRAM.

20 ‘‘(a) ESTABLISHMENT.—

21 ‘‘(1) IN GENERAL.—The Secretary and the At22 torney General (in this section jointly referred to as

23 the ‘Administrators’) shall jointly carry out a dem24 onstration program under which twenty three-year

25 grants are awarded for fiscal year 1994 to eligible

26 applicants to facilitate collaboration among two or
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1 more licensed hospitals or other medical facilities

2 with respect to the provision of expensive, capital-in3 tensive medical technology or other highly resource4 intensive services. Such program shall be designed to

5 demonstrate the extent to which such agreements re6 sult in a reduction in costs to the facilities and indi7 viduals involved, in an increase in access to care for

8 individuals, and in improvements in the quality of

9 care.

10 ‘‘(2) SERVICE AREA.—The Administrators shall

11 determine the region to be served by a demonstra12 tion program under paragraph (1). In carrying out

13 this section, the Administrators shall ensure that the

14 operation of such a program preserves the availabil15 ity of health services in geographical proximity to

16 the communities traditionally served by the facilities

17 participating in the program.

18 ‘‘(b) ELIGIBLE APPLICANTS.—

19 ‘‘(1) IN GENERAL.—To be eligible to receive a

20 grant under subsection (a), a medical facility or fa21 cilities shall prepare and submit to the Administra22 tors an application at such time, in such manner,

23 and containing such information as the Administra24 tors may require, including—
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1 ‘‘(A) a statement that such entity desires

2 to negotiate and enter into a voluntary agree3 ment under which such entity is operating in

4 one State or region for the sharing of medical

5 technology or services;

6 ‘‘(B) a description of the nature and scope

7 of the activities contemplated under the cooper8 ative agreement;

9 ‘‘(C) a description of the financial arrange10 ment between the entities that are parties to

11 the agreement;

12 ‘‘(D) a description of the geographical area

13 generally served by the entities;

14 ‘‘(E) a description of anticipated benefits

15 and advantages to the providers and to individ16 uals; and

17 ‘‘(F) any other information determined ap18 propriate by the Administrators.

19 ‘‘(2) DEVELOPMENT OF EVALUATION GUIDE20 LINES.—Not later than 90 days after the date of en21 actment of this section, the Administrators shall de22 velop regulations, including criteria and evaluation

23 guidelines with respect to applications submitted

24 under paragraph (1).
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1 ‘‘(3) EVALUATIONS OF APPLICATIONS.—The

2 Administrators shall evaluate applications submitted

3 under paragraph (1). In determining which applica4 tions to approve for purposes of awarding grants

5 under subsection (a), the Administrators shall con6 sider whether the agreement described in each such

7 application meets the criteria and guidelines devel8 oped under paragraph (2) and is likely to result in—

9 ‘‘(A) the enhancement of the quality of

10 care;

11 ‘‘(B) the preservation of services in geo12 graphical proximity to the communities tradi13 tionally served by the applicant;

14 ‘‘(C) improvements in the cost-effectiveness

15 of high-technology services by the entities in16 volved;

17 ‘‘(D) improvements in the efficient utiliza18 tion of the entities’ resources and capital equip19 ment;

20 ‘‘(E) the provision of services that would

21 not otherwise be available;

22 ‘‘(F) the elimination of unnecessary dupli23 cation of hospital resources;

24 ‘‘(G) a reduction in costs to individuals; or
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1 ‘‘(H) no undue harm to the care provided

2 individuals seeking services.

3 ‘‘(c) ALLOCATION OF GRANT FUNDS.—

4 ‘‘(1) IN GENERAL.—Amounts provided under a

5 grant awarded under subsection (a) shall be used to

6 facilitate collaboration among entities. Such permis7 sible uses may include reimbursements for the ex8 penses associated with specialized personnel, admin9 istrative services, support services, transportation,

10 and instructional programs. Funds may not be used

11 to purchase expensive, capital-intensive medical tech12 nology or other highly resource-intensive services not

13 previously owned or provided by the facility.

14 ‘‘(2) GRANT AWARD AMOUNT.—Entities apply15 ing for grants under subsection (a) shall specify the

16 desired grant award amount. The Administrators

17 shall determine the appropriate amount in granting

18 such awards.

19 ‘‘(3) GEOGRAPHIC AND SIZE DIVERSITY.—In

20 awarding grants under this section, the Administra21 tors shall assure that, to the extent reasonably prac22 ticable, there is a sufficiently representative geo23 graphic and size distribution of grantees.

24 ‘‘(d) MEDICAL TECHNOLOGY AND SERVICES.—
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1 ‘‘(1) IN GENERAL.—Agreements carried out

2 under this section shall provide for the sharing of

3 medical technology or eligible services among the en4 tities which are parties to such agreements.

5 ‘‘(2) MEDICAL TECHNOLOGY.—For purposes of

6 this section, the term ‘medical technology’ includes

7 the drugs, devices, equipment and medical and sur8 gical procedures utilized in medical care, and the or9 ganizational and support systems within which such

10 care is provided, that—

11 ‘‘(A) have high capital costs or extremely

12 high annual operating costs; and

13 ‘‘(B) are technologies with respect to which

14 there is a reasonable expectation that shared

15 ownership will avoid a significant degree of the

16 potential excess capacity of such service in the

17 community or region to be served under such

18 agreement.

19 ‘‘(3) ELIGIBLE SERVICES.—With respect to

20 services that may be shared under an agreement en21 tered into under this section, such services shall—

22 ‘‘(A) either have high capital costs or ex23 tremely high annual operating costs; and

24 ‘‘(B) be services with respect to which

25 there is a reasonable expectation that shared
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1 ownership will avoid a significant degree of the

2 potential excess capacity of such services in the

3 community or region to be served under such

4 agreement.

5 Such services may include mobile services.

6 ‘‘(e) TERM.—The demonstration program established

7 under this section shall continue for 3 calendar years.

8 ‘‘(f) REPORTS.—

9 ‘‘(1) IN GENERAL.—Grantees shall submit an10 nual reports to the Administrators containing infor11 mation on the demonstration projects funded under

12 this section, as required by the Administrators.

13 ‘‘(2) TO CONGRESS.—On the date that occurs

14 42 months after the establishment of the demonstra15 tion program under this section, the Administrators

16 shall prepare and submit to the appropriate commit17 tees of Congress, a report concerning results of the

18 demonstration and the potential for cooperative

19 agreements of the type entered into under this sec20 tion to—

21 ‘‘(A) contain health care costs;

22 ‘‘(B) increase the access of individuals to

23 medical services; and

24 ‘‘(C) improve the quality of health care.
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1 Such report shall also contain the recommendations

2 of the Administrators with respect to future pro3 grams to facilitate cooperative agreements and rec4 ommendations for legislation.

5 ‘‘(g) RELATION TO ANTITRUST LAWS.—

6 ‘‘(1) IN GENERAL.—Notwithstanding any provi7 sion of the antitrust laws, it shall not be considered

8 a violation of the antitrust laws for an entity that

9 receives a grant under subsection (a) to enter into

10 and carry out activities under a cooperative agree11 ment in accordance with this section.

12 ‘‘(2) DEFINITION.—For purposes of this sub13 section, the term ‘antitrust laws’ means—

14 ‘‘(A) the Act entitled ‘‘An Act to protect

15 trade and commerce against unlawful restraints

16 and monopolies’’, approved July 2, 1890, com17 monly known as the ‘‘Sherman Act’’ (26 Stat.

18 209; chapter 647; 15 U.S.C. 1 et seq.);

19 ‘‘(B) the Federal Trade Commission Act,

20 approved September 26, 1914 (38 Stat. 717;

21 chapter 311; 15 U.S.C. 41 et seq.);

22 ‘‘(C) the Act entitled ‘‘An Act to supple23 ment existing laws against unlawful restraints

24 and monopolies, and for other purposes’’, ap25 proved October 15, 1914, commonly known as
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1 the ‘‘Clayton Act’’ (38 Stat. 730; chapter 323;

2 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

3 3285, 3691; 29 U.S.C. 52, 53); and

4 ‘‘(D) any State antitrust laws that would

5 prohibit the activities described in paragraph

6 (1).

7 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated to carry out this section,

9 $2,500,000 for each of the fiscal years 1994 through

10 1996. Any appropriation pursuant to the preceding sen11 tence shall be subject to section 601 of the Congressional

12 Budget Act of 1974 (relating to discretionary spending

13 limits).’’.

14 SEC. 4. CERTIFICATE OF REVIEW PROCESS.

15 (a) ISSUANCE OF CERTIFICATE OF REVIEW.—

16 (1) IN GENERAL.—The Attorney General may

17 issue a certificate of review with a three-year term

18 to licensed hospitals and other medical facilities that

19 enter into cooperative agreements with respect to the

20 provision of expensive, capital-intensive medical tech21 nology or other highly resource-intensive services if

22 such agreements—

23 (A) are designed to result in a reduction in

24 unnecessary duplication of services, in a reduc25 tion in costs to individuals, in an increase in ac-
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1 cess to care for individuals, or in improvements

2 in the quality of care;

3 (B) will not unreasonably enhance, sta4 bilize, or depress prices within the United

5 States for the equipment or services of the class

6 under the agreement; and

7 (C) will not constitute unfair methods of

8 competition against competitors engaged in pro9 viding the services of the class under the agree10 ment.

11 (2) DEADLINE FOR RESPONSE TO APPLICA12 TION.—The Attorney General shall respond to a re13 quest for a certificate of review under paragraph (1)

14 not later than 90 days after receiving the request.

15 (b) PROTECTION CONFERRED BY CERTIFICATE OF

16 REVIEW.—

17 (1) PROTECTION FROM CIVIL OR CRIMINAL

18 ANTITRUST ACTIONS.—Except as provided in para19 graph (2), no criminal or civil action may be brought

20 under the antitrust laws against a hospital or other

21 medical facility to which a certificate of review under

22 subsection (a) is issued which is based on conduct

23 which is specified in, and compliance with the terms

24 of, such certificate of review which certificate was in

25 effect when the conduct occurred.
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1 (2) CIVIL ACTIONS.—

2 (A) Any person who has been injured as a

3 result of conduct engaged in under a certificate

4 of review under subsection (a) may bring a civil

5 action for injunctive relief, actual damages, the

6 loss of interest on actual damages, and the cost

7 of suit (including a reasonable attorney’s fee)

8 for the failure to comply with the standards of

9 such subsection. Any action commenced under

10 this subsection shall proceed as if it were an ac11 tion commenced under section 4 or section 16

12 of the Clayton Act, except that the standards of

13 subsection (a) and the remedies provided in this

14 paragraph shall be the exclusive standards and

15 remedies applicable to such action.

16 (B) Any action brought under subpara17 graph (A) shall be filed within two years of the

18 date the plaintiff has notice of the failure to

19 comply with the standards of subsection (a) but

20 in any event within 4 years after the cause of

21 action accrues.

22 (C) In any action brought under subpara23 graph (A), there shall be a presumption that

24 conduct which is specified in and complies with
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1 a certificate of review does comply with the

2 standards of subsection (a).

3 (D) In any action brought under subpara4 graph (A), if the court finds that the conduct

5 does comply with the standards of subsection

6 (a), the court shall award to the hospital or

7 other medical facility against which the claim is

8 brought the cost of suit attributable to defend9 ing against the claim (including a reasonable

10 attorney’s fee).

11 (E) The Attorney General may file a suit

12 pursuant to section 15 of the Clayton Act (15

13 U.S.C. 25) to enjoin conduct threatening clear

14 and irreparable harm to the national interest.

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