Connecticut 2021 Regular Session

Connecticut Senate Bill SB00238 Compare Versions

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7	7		General Assembly Substitute Bill No. 238
8	8		January Session, 2021
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14	14		AN ACT INCREASING OV ERSIGHT OF MERGERS A ND
15	15		ACQUISITIONS OF GROU P PRACTICES.
16	16		Be it enacted by the Senate and House of Representatives in General
17	17		Assembly convened:
18	18
19	19		Section 1. Subsection (h) of section 19a-486i of the general statutes is 1
20	20		repealed and the following is substituted in lieu thereof (Effective July 1, 2
21	21		2021): 3
22	22		(h) Not later than [January 15, 2018] January 15, 2022, and annually 4
23	23		thereafter, each group practice [comprised of thirty or more physicians] 5
24	24		that is not the subject of a report filed under subsection (g) of this section 6
25	25		shall file with the Attorney General and the executive director of the 7
26	26		Office of Health Strategy a written report concerning the group practice. 8
27	27		Such report shall include, for each such group practice: (1) The names 9
28	28		and specialties of each physician practicing medicine with the group 10
29	29		practice; (2) the names of the business entities that provide services as 11
30	30		part of the group practice and the address for each location where such 12
31	31		services are provided; (3) a description of the services provided at each 13
32	32		such location; and (4) the primary service area served by each such 14
33	33		location. 15
34	34		Sec. 2. Section 19a-639 of the general statutes is repealed and the 16
35	35		following is substituted in lieu thereof (Effective July 1, 2021): 17 Substitute Bill No. 238
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42	42		(a) In any deliberations involving a certificate of need application 18
43	43		filed pursuant to section 19a-638, as amended by this act, the unit shall 19
44	44		take into consideration and make written findings concerning each of 20
45	45		the following guidelines and principles: 21
46	46		(1) Whether the proposed project is consistent with any applicable 22
47	47		policies and standards adopted in regulations by the Office of Health 23
48	48		Strategy; 24
49	49		(2) The relationship of the proposed project to the state-wide health 25
50	50		care facilities and services plan; 26
51	51		(3) Whether there is a clear public need for the health care facility or 27
52	52		services proposed by the applicant; 28
53	53		(4) Whether the applicant has satisfactorily demonstrated how the 29
54	54		proposal will impact the financial strength of the health care system in 30
55	55		the state or that the proposal is financially feasible for the applicant; 31
56	56		(5) Whether the applicant has satisfactorily demonstrated how the 32
57	57		proposal will improve quality, accessibility and cost effectiveness of 33
58	58		health care delivery in the region, including, but not limited to, 34
59	59		provision of or any change in the access to services for Medicaid 35
60	60		recipients and indigent persons; 36
61	61		(6) The applicant's past and proposed provision of health care 37
62	62		services to relevant patient populations and payer mix, including, but 38
63	63		not limited to, access to services by Medicaid recipients and indigent 39
64	64		persons; 40
65	65		(7) Whether the applicant has satisfactorily identified the population 41
66	66		to be served by the proposed project and satisfactorily demonstrated 42
67	67		that the identified population has a need for the proposed services; 43
68	68		(8) The utilization of existing health care facilities and health care 44
69	69		services in the service area of the applicant; 45 Substitute Bill No. 238
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76	76		(9) Whether the applicant has satisfactorily demonstrated that the 46
77	77		proposed project shall not result in an unnecessary duplication of 47
78	78		existing or approved health care services or facilities; 48
79	79		(10) Whether an applicant, who has failed to provide or reduced 49
80	80		access to services by Medicaid recipients or indigent persons, has 50
81	81		demonstrated good cause for doing so, which shall not be demonstrated 51
82	82		solely on the basis of differences in reimbursement rates between 52
83	83		Medicaid and other health care payers; 53
84	84		(11) Whether the applicant has satisfactorily demonstrated that the 54
85	85		proposal will not negatively impact the diversity of health care 55
86	86		providers and patient choice in the geographic region; and 56
87	87		(12) Whether the applicant has satisfactorily demonstrated that any 57
88	88		consolidation resulting from the proposal will not adversely affect 58
89	89		health care costs or accessibility to care. 59
90	90		[(b) In deliberations as described in subsection (a) of this section, 60
91	91		there shall be a presumption in favor of approving the certificate of need 61
92	92		application for a transfer of ownership of a large group practice, as 62
93	93		described in subdivision (3) of subsection (a) of section 19a-638, when 63
94	94		an offer was made in response to a request for proposal or similar 64
95	95		voluntary offer for sale.] 65
96	96		[(c)] (b) The unit, as it deems necessary, may revise or supplement the 66
97	97		guidelines and principles, set forth in subsection (a) of this section, 67
98	98		through regulation. 68
99	99		[(d)] (c) (1) For purposes of this subsection and subsection [(e)] (d) of 69
100	100		this section: 70
101	101		(A) "Affected community" means a municipality where a hospital is 71
102	102		physically located or a municipality whose inhabitants are regularly 72
103	103		served by a hospital; 73
104	104		(B) "Hospital" has the same meaning as provided in section 19a-490; 74 Substitute Bill No. 238
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111	111		(C) "New hospital" means a hospital as it exists after the approval of 75
112	112		an agreement pursuant to section 19a-486b, as amended by this act, or a 76
113	113		certificate of need application for a transfer of ownership of a hospital; 77
114	114		(D) "Purchaser" means a person who is acquiring, or has acquired, 78
115	115		any assets of a hospital through a transfer of ownership of a hospital; 79
116	116		(E) "Transacting party" means a purchaser and any person who is a 80
117	117		party to a proposed agreement for transfer of ownership of a hospital; 81
118	118		(F) "Transfer" means to sell, transfer, lease, exchange, option, convey, 82
119	119		give or otherwise dispose of or transfer control over, including, but not 83
120	120		limited to, transfer by way of merger or joint venture not in the ordinary 84
121	121		course of business; and 85
122	122		(G) "Transfer of ownership of a hospital" means a transfer that 86
123	123		impacts or changes the governance or controlling body of a hospital, 87
124	124		including, but not limited to, all affiliations, mergers or any sale or 88
125	125		transfer of net assets of a hospital and for which a certificate of need 89
126	126		application or a certificate of need determination letter is filed on or after 90
127	127		December 1, 2015. 91
128	128		(2) In any deliberations involving a certificate of need application 92
129	129		filed pursuant to section 19a-638, as amended by this act, that involves 93
130	130		the transfer of ownership of a hospital, the unit shall, in addition to the 94
131	131		guidelines and principles set forth in subsection (a) of this section and 95
132	132		those prescribed through regulation pursuant to subsection [(c)] (b) of 96
133	133		this section, take into consideration and make written findings 97
134	134		concerning each of the following guidelines and principles: 98
135	135		(A) Whether the applicant fairly considered alternative proposals or 99
136	136		offers in light of the purpose of maintaining health care provider 100
137	137		diversity and consumer choice in the health care market and access to 101
138	138		affordable quality health care for the affected community; and 102
139	139		(B) Whether the plan submitted pursuant to section 19a-639a, as 103
140	140		amended by this act, demonstrates, in a manner consistent with this 104 Substitute Bill No. 238
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147	147		chapter, how health care services will be provided by the new hospital 105
148	148		for the first three years following the transfer of ownership of the 106
149	149		hospital, including any consolidation, reduction, elimination or 107
150	150		expansion of existing services or introduction of new services. 108
151	151		(3) The unit shall deny any certificate of need application involving a 109
152	152		transfer of ownership of a hospital unless the executive director finds 110
153	153		that the affected community will be assured of continued access to high 111
154	154		quality and affordable health care after accounting for any proposed 112
155	155		change impacting hospital staffing. 113
156	156		(4) The unit may deny any certificate of need application involving a 114
157	157		transfer of ownership of a hospital subject to a cost and market impact 115
158	158		review pursuant to section 19a-639f, as amended by this act, if the 116
159	159		executive director finds that (A) the affected community will not be 117
160	160		assured of continued access to high quality and affordable health care 118
161	161		after accounting for any consolidation in the hospital and health care 119
162	162		market that may lessen health care provider diversity, consumer choice 120
163	163		and access to care, and (B) any likely increases in the prices for health 121
164	164		care services or total health care spending in the state may negatively 122
165	165		impact the affordability of care. 123
166	166		(5) The unit may place any conditions on the approval of a certificate 124
167	167		of need application involving a transfer of ownership of a hospital 125
168	168		consistent with the provisions of this chapter. Before placing any such 126
169	169		conditions, the unit shall weigh the value of such conditions in 127
170	170		promoting the purposes of this chapter against the individual and 128
171	171		cumulative burden of such conditions on the transacting parties and the 129
172	172		new hospital. For each condition imposed, the unit shall include a 130
173	173		concise statement of the legal and factual basis for such condition and 131
174	174		the provision or provisions of this chapter that it is intended to promote. 132
175	175		Each condition shall be reasonably tailored in time and scope. The 133
176	176		transacting parties or the new hospital shall have the right to make a 134
177	177		request to the unit for an amendment to, or relief from, any condition 135
178	178		based on changed circumstances, hardship or for other good cause. 136 Substitute Bill No. 238
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185	185		[(e)] (d) (1) If the certificate of need application (A) involves the 137
186	186		transfer of ownership of a hospital, (B) the purchaser is a hospital, as 138
187	187		defined in section 19a-490, whether located within or outside the state, 139
188	188		that had net patient revenue for fiscal year 2013 in an amount greater 140
189	189		than one billion five hundred million dollars or a hospital system, as 141
190	190		defined in section 19a-486i, as amended by this act, whether located 142
191	191		within or outside the state, that had net patient revenue for fiscal year 143
192	192		2013 in an amount greater than one billion five hundred million dollars, 144
193	193		or any person that is organized or operated for profit, and (C) such 145
194	194		application is approved, the unit shall hire an independent consultant 146
195	195		to serve as a post-transfer compliance reporter for a period of three years 147
196	196		after completion of the transfer of ownership of the hospital. Such 148
197	197		reporter shall, at a minimum: (i) Meet with representatives of the 149
198	198		purchaser, the new hospital and members of the affected community 150
199	199		served by the new hospital not less than quarterly; and (ii) report to the 151
200	200		unit not less than quarterly concerning (I) efforts the purchaser and 152
201	201		representatives of the new hospital have taken to comply with any 153
202	202		conditions the unit placed on the approval of the certificate of need 154
203	203		application and plans for future compliance, and (II) community 155
204	204		benefits and uncompensated care provided by the new hospital. The 156
205	205		purchaser shall give the reporter access to its records and facilities for 157
206	206		the purposes of carrying out the reporter's duties. The purchaser shall 158
207	207		hold a public hearing in the municipality in which the new hospital is 159
208	208		located not less than annually during the reporting period to provide 160
209	209		for public review and comment on the reporter's reports and findings. 161
210	210		(2) If the reporter finds that the purchaser has breached a condition 162
211	211		of the approval of the certificate of need application, the unit may, in 163
212	212		consultation with the purchaser, the reporter and any other interested 164
213	213		parties it deems appropriate, implement a performance improvement 165
214	214		plan designed to remedy the conditions identified by the reporter and 166
215	215		continue the reporting period for up to one year following a 167
216	216		determination by the unit that such conditions have been resolved. 168
217	217		(3) The purchaser shall provide funds, in an amount determined by 169 Substitute Bill No. 238
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224	224		the unit not to exceed two hundred thousand dollars annually, for the 170
225	225		hiring of the post-transfer compliance reporter. 171
226	226		[(f)] (e) Nothing in subsection [(d)] (c) or [(e)] (d) of this section shall 172
227	227		apply to a transfer of ownership of a hospital in which either a certificate 173
228	228		of need application is filed on or before December 1, 2015, or where a 174
229	229		certificate of need determination letter is filed on or before December 1, 175
230	230		2015. 176
231	231		Sec. 3. Subdivision (9) of section 19a-630 of the general statutes is 177
232	232		repealed and the following is substituted in lieu thereof (Effective July 1, 178
233	233		2021): 179
234	234		(9) ["Large group practice"] "Group practice" means [eight] two or 180
235	235		more full-time equivalent physicians, legally organized in a partnership, 181
236	236		professional corporation, limited liability company formed to render 182
237	237		professional services, medical foundation, not-for-profit corporation, 183
238	238		faculty practice plan or other similar entity (A) in which each physician 184
239	239		who is a member of the group provides substantially the full range of 185
240	240		services that the physician routinely provides, including, but not limited 186
241	241		to, medical care, consultation, diagnosis or treatment, through the joint 187
242	242		use of shared office space, facilities, equipment or personnel; (B) for 188
243	243		which substantially all of the services of the physicians who are 189
244	244		members of the group are provided through the group and are billed in 190
245	245		the name of the group practice and amounts so received are treated as 191
246	246		receipts of the group; or (C) in which the overhead expenses of, and the 192
247	247		income from, the group are distributed in accordance with methods 193
248	248		previously determined by members of the group. An entity that 194
249	249		otherwise meets the definition of group practice under this section shall 195
250	250		be considered a group practice although its shareholders, partners or 196
251	251		owners of the group practice include single-physician professional 197
252	252		corporations, limited liability companies formed to render professional 198
253	253		services or other entities in which beneficial owners are individual 199
254	254		physicians. 200
255	255		Sec. 4. Subdivision (3) of subsection (a) of section 19a-638 of the 201 Substitute Bill No. 238
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262	262		general statutes is repealed and the following is substituted in lieu 202
263	263		thereof (Effective July 1, 2021): 203
264	264		(3) A transfer of ownership of a [large] group practice to any entity 204
265	265		other than a (A) physician, or (B) group of two or more physicians, 205
266	266		legally organized in a partnership, professional corporation or limited 206
267	267		liability company formed to render professional services and not 207
268	268		employed by or an affiliate of any hospital, medical foundation, 208
269	269		insurance company or other similar entity; 209
270	270		Sec. 5. Subsections (d) and (e) of section 19a-639a of the general 210
271	271		statutes are repealed and the following is substituted in lieu thereof 211
272	272		(Effective July 1, 2021): 212
273	273		(d) Upon determining that an application is complete, the unit shall 213
274	274		provide notice of this determination to the applicant and to the public 214
275	275		in accordance with regulations adopted by the department. In addition, 215
276	276		the unit shall post such notice on its Internet web site. The date on which 216
277	277		the unit posts such notice on its Internet web site shall begin the review 217
278	278		period. Except as provided in this subsection, (1) the review period for 218
279	279		a completed application shall be ninety days from the date on which the 219
280	280		unit posts such notice on its Internet web site; and (2) the unit shall issue 220
281	281		a decision on a completed application prior to the expiration of the 221
282	282		ninety-day review period. The review period for a completed 222
283	283		application that involves a transfer of a [large] group practice, as 223
284	284		described in subdivision (3) of subsection (a) of section 19a-638, as 224
285	285		amended by this act, when the offer was made in response to a request 225
286	286		for proposal or similar voluntary offer for sale, shall be sixty days from 226
287	287		the date on which the unit posts notice on its Internet web site. Upon 227
288	288		request or for good cause shown, the unit may extend the review period 228
289	289		for a period of time not to exceed sixty days. If the review period is 229
290	290		extended, the unit shall issue a decision on the completed application 230
291	291		prior to the expiration of the extended review period. If the unit holds a 231
292	292		public hearing concerning a completed application in accordance with 232
293	293		subsection (e) or (f) of this section, the unit shall issue a decision on the 233
294	294		completed application not later than sixty days after the date the unit 234 Substitute Bill No. 238
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301	301		closes the public hearing record. 235
302	302		(e) Except as provided in this subsection, the unit shall hold a public 236
303	303		hearing on a properly filed and completed certificate of need application 237
304	304		if three or more individuals or an individual representing an entity with 238
305	305		five or more people submits a request, in writing, that a public hearing 239
306	306		be held on the application. For a properly filed and completed certificate 240
307	307		of need application involving a transfer of ownership of a [large] group 241
308	308		practice, as described in subdivision (3) of subsection (a) of section 19a-242
309	309		638, as amended by this act, when an offer was made in response to a 243
310	310		request for proposal or similar voluntary offer for sale, a public hearing 244
311	311		shall be held if twenty-five or more individuals or an individual 245
312	312		representing twenty-five or more people submits a request, in writing, 246
313	313		that a public hearing be held on the application. Any request for a public 247
314	314		hearing shall be made to the unit not later than thirty days after the date 248
315	315		the unit determines the application to be complete. 249
316	316		Sec. 6. Subsection (b) of section 19a-486b of the general statutes is 250
317	317		repealed and the following is substituted in lieu thereof (Effective July 1, 251
318	318		2021): 252
319	319		(b) The executive director and the Attorney General may place any 253
320	320		conditions on the approval of an application that relate to the purposes 254
321	321		of sections 19a-486a to 19a-486h, inclusive. In placing any such 255
322	322		conditions the executive director shall follow the guidelines and criteria 256
323	323		described in subdivision (4) of subsection [(d)] (c) of section 19a-639, as 257
324	324		amended by this act. Any such conditions may be in addition to any 258
325	325		conditions placed by the executive director pursuant to subdivision (4) 259
326	326		of subsection [(d)] (c) of section 19a-639, as amended by this act. 260
327	327		Sec. 7. Subsection (d) of section 19a-639f of the general statutes is 261
328	328		repealed and the following is substituted in lieu thereof (Effective July 1, 262
329	329		2021): 263
330	330		(d) The cost and market impact review conducted pursuant to this 264
331	331		section shall examine factors relating to the businesses and relative 265 Substitute Bill No. 238
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338	338		market positions of the transacting parties as defined in subsection [(d)] 266
339	339		(c) of section 19a-639, as amended by this act, and may include, but need 267
340	340		not be limited to: (1) The transacting parties' size and market share 268
341	341		within its primary service area, by major service category and within its 269
342	342		dispersed service areas; (2) the transacting parties' prices for services, 270
343	343		including the transacting parties' relative prices compared to other 271
344	344		health care providers for the same services in the same market; (3) the 272
345	345		transacting parties' health status adjusted total medical expense, 273
346	346		including the transacting parties' health status adjusted total medical 274
347	347		expense compared to that of similar health care providers; (4) the quality 275
348	348		of the services provided by the transacting parties, including patient 276
349	349		experience; (5) the transacting parties' cost and cost trends in 277
350	350		comparison to total health care expenditures state wide; (6) the 278
351	351		availability and accessibility of services similar to those provided by 279
352	352		each transacting party, or proposed to be provided as a result of the 280
353	353		transfer of ownership of a hospital within each transacting party's 281
354	354		primary service areas and dispersed service areas; (7) the impact of the 282
355	355		proposed transfer of ownership of the hospital on competing options for 283
356	356		the delivery of health care services within each transacting party's 284
357	357		primary service area and dispersed service area including the impact on 285
358	358		existing service providers; (8) the methods used by the transacting 286
359	359		parties to attract patient volume and to recruit or acquire health care 287
360	360		professionals or facilities; (9) the role of each transacting party in serving 288
361	361		at-risk, underserved and government payer patient populations, 289
362	362		including those with behavioral, substance use disorder and mental 290
363	363		health conditions, within each transacting party's primary service area 291
364	364		and dispersed service area; (10) the role of each transacting party in 292
365	365		providing low margin or negative margin services within each 293
366	366		transacting party's primary service area and dispersed service area; (11) 294
367	367		consumer concerns, including, but not limited to, complaints or other 295
368	368		allegations that a transacting party has engaged in any unfair method of 296
369	369		competition or any unfair or deceptive act or practice; and (12) any other 297
370	370		factors that the unit determines to be in the public interest. 298
371	371		Sec. 8. Subsection (j) of section 19a-639f of the general statutes is 299 Substitute Bill No. 238
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378	378		repealed and the following is substituted in lieu thereof (Effective July 1, 300
379	379		2021): 301
380	380		(j) The unit shall retain an independent consultant with expertise on 302
381	381		the economic analysis of the health care market and health care costs 303
382	382		and prices to conduct each cost and market impact review, as described 304
383	383		in this section. The unit shall submit bills for such services to the 305
384	384		purchaser, as defined in subsection [(d)] (c) of section 19a-639, as 306
385	385		amended by this act. Such purchaser shall pay such bills not later than 307
386	386		thirty days after receipt. Such bills shall not exceed two hundred 308
387	387		thousand dollars per application. The provisions of chapter 57, sections 309
388	388		4-212 to 4-219, inclusive, and section 4e-19 shall not apply to any 310
389	389		agreement executed pursuant to this subsection. 311
390	390		Sec. 9. Subdivision (15) of section 19a-630 of the general statutes is 312
391	391		repealed and the following is substituted in lieu thereof (Effective July 1, 313
392	392		2021): 314
393	393		(15) "Transfer of ownership" means a transfer that impacts or changes 315
394	394		the governance or controlling body of a health care facility, institution 316
395	395		or [large] group practice, including, but not limited to, all affiliations, 317
396	396		mergers or any sale or transfer of net assets of a health care facility. 318
397	397		This act shall take effect as follows and shall amend the following
398	398		sections:
399	399
400	400		Section 1 July 1, 2021 19a-486i(h)
401	401		Sec. 2 July 1, 2021 19a-639
402	402		Sec. 3 July 1, 2021 19a-630(9)
403	403		Sec. 4 July 1, 2021 19a-638(a)(3)
404	404		Sec. 5 July 1, 2021 19a-639a(d) and (e)
405	405		Sec. 6 July 1, 2021 19a-486b(b)
406	406		Sec. 7 July 1, 2021 19a-639f(d)
407	407		Sec. 8 July 1, 2021 19a-639f(j)
408	408		Sec. 9 July 1, 2021 19a-630(15)
409	409
410	410		PH Joint Favorable Subst. Substitute Bill No. 238
411	411
412	412
413	413		LCO {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-00238-
414		-	~~R03~~-SB.docx }
	414	+	R02-SB.docx }
415	415		12 of 12
416	416
417		-	APP Joint Favorable
418	417