Section 5. Any corporation subject to this chapter may contract with corporations formed under chapter one hundred and seventy-six B for the joint administration of their business and for joint and co-operative writing and issuing of certificates and may enter into reciprocal arrangements with other nonprofit hospital service corporations organized in other jurisdictions for the mutual benefit of their subscribers and may contract with any agency of the United States of America, of the commonwealth or any city or town within the commonwealth for the purpose of providing hospital service or reimbursement for other health services. Any such corporation shall contract with a corporation formed under chapter one hundred and seventy-six B for the joint administration of their business when acting as a carrier under chapter one hundred and seventy-six G.

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Any hospital service corporation may join with any other hospital service corporation organized either under the laws of the commonwealth or of any other state for the purpose of establishing or maintaining an agency or corporation designed to facilitate the provision of hospital services and other health services for residents of the commonwealth employed by firms having employees located in more than one state and may enter into contracts with such an agency or corporation or with a corporation owned by such an agency or corporation for the joint administration of their business and for the joint and cooperative writing and issuing of certificates, provided that any corporation or agency which is not a non-profit hospital service corporation with which there is joint and cooperative writing and issuing of certificates shall be qualified to do business in the commonwealth.

Any corporation subject to this chapter may enter into contracts for the rendering of hospital service only with hospitals referred to in section one.

In providing reimbursement for health services other than hospital services, any hospital service corporation may enter into contracts for the furnishing of such health services with providers thereof. All rates of payment to providers of other health services made by such corporation, under such contracts, shall be approved in advance by the executive office of health and human services, in this section called the executive office, or a governmental unit designated by the executive office. Any such approval may be withdrawn by the commission at any time as hereinafter provided. No rates of payment under any such contract with a provider of other health services shall be approved nor their continuance be permitted by the commission, unless such rates are not excessive, not inadequate and not unfairly discriminatory in relation to other such providers who have entered into such contracts with such corporation. A contract between a hospital service corporation and a provider of home health services or licensed hospice agency shall not require the participating home health provider or participating licensed hospice agency to be accredited by the Joint Commission on Accreditation of Healthcare Organizations or other national accrediting body if the agency is certified for participation in the Medicare program, Title XVIII of the federal Social Security Act, 42 U.S.C. Sections 1395 et seq.

Every contract made by such corporation with a participating hospital or provider of other health services shall contain a provision whereby such hospital or provider of other health services guarantees to subscribers or their dependents or employees, or dependents of employees of employers who contribute the subscription fees in whole or in part the benefits of the subscriber’s certificate in effect at the time such services are provided notwithstanding the ability of such corporation to pay therefor. Officers of the commonwealth and of counties, cities and towns within the commonwealth are authorized to execute contracts containing such provision.

In negotiating a contract with a nonprofit hospital service corporation, a non-acute hospital shall have the right to designate the Massachusetts hospital association, incorporated, or any other state-wide, hospital member organization as its agent for negotiating such contract. Each individual non-acute hospital, however, shall retain the right to accept or reject all or part of such negotiated contract.

When any such corporation is informed that such a negotiating agent represents one or more non-acute hospitals, such corporation shall have the right to propose to the agent, and thereafter negotiate, a non-acute hospital contract that would be applicable to some or all of the non-acute hospitals represented by the agent.

Such a negotiating agent that represents more than one non-acute hospital shall have the right to propose to said corporations, and thereafter negotiate, a non-acute hospital contract which would be applicable to some or all of the non-acute hospitals represented by it.

The commission shall not disapprove any contract between a non-acute hospital and said corporations on the grounds that a term or terms of the contract are similar or identical to the terms of a proposed or approved contract between any other non-acute hospital and such corporations, or that the non-acute hospital was represented by a negotiating agent which represented one or more other non-acute hospitals.

All rates of payment to non-acute hospitals made by such corporation, under such contracts, shall be approved in advance by the commission. Any such approval may be withdrawn by the commission at any time as hereinafter provided. No rates of payment shall be approved, nor their continuance be permitted by the commission, unless such rates reflect reasonable costs or are based on charges made to the general public, whichever is lower. The commission in determining reasonable cost shall give consideration to services provided by the non-acute hospital and the costs of comparable non-acute hospitals, and may give consideration to depreciation, amortization, interest, occupancy, individual services which are rendered for partial or no payment and principles of reimbursement for provider costs in effect from time to time under Titles XVIII and XIX of the Social Security Act.

Other requirements of this section notwithstanding, the commission may approve any rate of payment to any provider or class of providers if such rate, in the opinion of the commission, contains an incentive to achieve greater efficiency and economy in the manner of providing health care services without adversely affecting the quality of such services.

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 non-acute hospital and such examination shall be made under the direction and supervision of the commission. The commission may enter into an annual agreement with a nonprofit hospital service corporation for the services of such auditors or accountants as may be required in any such examination; provided, that the entire costs of such salaries of auditors or accountants and necessary expenses connected therewith, including related expenses of the commission, shall be borne by such corporation. The commission may also enter into an annual agreement with a nonprofit hospital service corporation for such health care specialists, statisticians and other personnel as may be required by the commission in performing its duties under this chapter. Expenses incurred in connection with any agreement authorized under this paragraph shall be treated as part of the cost of benefits furnished by said corporation.

Within thirty days of the filing of any proposed contract or rate of payment between a nonprofit hospital service corporation and a non-acute hospital, the commission shall either (1) approve the contract or rate of payment without holding a public hearing; or (2) disapprove the contract or rate of payment without holding a public hearing, filing in its office a statement setting forth its reasons for its disapproval; or (3) hold a public hearing on all or such portion of said proposed contract or rate of payment as it shall designate in the notice of hearing which it shall file in its office.

If the commission disapproves a proposed contract or rate of payment, it shall promptly notify, in writing, such corporation and each interested nonacute hospitals of its disapproval. The disapproval shall be final unless, within ten days of the filing of its statement of disapproval, such corporation or any interested hospital or provider of other health services shall file with the commission a written request for a public hearing on the disapproval. The public hearing, at which such corporation and each interested hospital and provider of other health services shall be entitled to appear, shall be held within fourteen days of the filing of the request for such hearing with the commission, and the decision thereon shall be made within twenty-eight days of the date of the filing of such request, unless the corporation and each interested non-acute hospital involved agrees, in writing, to an extension of either date.

If the commission decides to hold a public hearing without prior acting on the proposed contract or rate of payment, it shall promptly notify, in writing, such corporation, each interested hospital and provider of its decision. The public hearing, at which such corporation, each interested hospital and provider of other health services shall be entitled to appear, shall be held within twenty-one days of filing of the notice thereof in its office. The decision thereon shall be made within twenty-one days of the commencement of the hearing, unless such corporation and each interested non-acute hospital involved agrees, in writing, on an extension of the date.

If the commission disapproves of a previously approved contract or rate of payment, it shall file in its office a statement setting forth its reasons for its disapproval, and it shall promptly notify, in writing, such corporation and nonacute hospital of such disapproval. Such notice of disapproval shall state the effective date of the disapproval which shall not be sooner than sixty days from the date of the filing of such disapproval in its office. The disapproval shall be final on the date indicated in said notice unless, within ten days of the filing of its statement of disapproval, such corporation, any interested hospital or provider of other health services shall file with the commission a written request for a public hearing on the disapproval. The public hearing, at which such corporation, each interested non-acute hospital shall be entitled to appear, shall be held within fourteen days of the filing of the request for a hearing with the commission, and the decision thereon shall be made within twenty-eight days of the date of the filing of such request, unless the corporation and each interested non-acute hospital involved agrees, in writing, on an extension of either date.

Any nonprofit hospital service corporation, non-acute 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 nonprofit hospital service corporation and a non-acute 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.

Upon the filing of a petition for review under this section, an order of notice returnable not later than twenty days from the filing of such petition shall forthwith issue and be served upon the commission. Within ten days after service of a copy of the petition for review upon the commission or within such further time as the court may allow, the commission shall file in the court the original or a certified copy of the records of the proceeding under review. The review shall be governed by paragraphs (2), (3), (4) with the exception of the first sentence thereof, (5), (6), (7) and (8) of section fourteen of chapter thirty A, and review by the supreme judicial court shall be governed by section fifteen of said chapter thirty A.

The commissioner of insurance shall on December thirty-first, nineteen hundred and seventy and annually thereafter require a statement from any nonprofit hospital service corporation relative to the number and type of contracts written hereunder, utilization of extended care facilities and other health services, and such other information, and in the form, as he may require.