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repealed and the following is substituted in lieu thereof (Effective July 1, 2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 Section 19a-639 of the general statutes is repealed and the 16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