*SB0298.1*
January 13, 2022
SENATE BILL No. 298
_____
DIGEST OF SB 298 (Updated January 12, 2022 12:13 pm - DI 104)
Citations Affected: IC 16-18; IC 16-21.
Synopsis: Certificates of public advantage. Defines "merger" and
"merger agreement" for purposes of the certificate of public advantage
(certificate) for certain hospital mergers. States findings and specifies
the state's best interest and intent in the passage of the certificate.
Requires the state department of health (state department) to actively
supervise a merger. Requires holders of a certificate to pay for
reasonable charges incurred by the state department.
Effective: Upon passage.
Charbonneau
January 10, 2022, read first time and referred to Committee on Health and Provider
Services.
January 12, 2022, amended, reported favorably — Do Pass.
SB 298—LS 6529/DI 104 January 13, 2022
Second Regular Session of the 122nd General Assembly (2022)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2021 Regular Session of the General Assembly.
SENATE BILL No. 298
A BILL FOR AN ACT to amend the Indiana Code concerning
health.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 16-18-2-226.2 IS ADDED TO THE INDIANA
2 CODE AS A NEW SECTION TO READ AS FOLLOWS
3 [EFFECTIVE UPON PASSAGE]: Sec. 226.2. (a) "Merger", for
4 purposes of IC 16-21-15, has the meaning set forth in
5 IC 16-21-15-1.5(a).
6 (b) "Merger agreement", for purposes of IC 16-21-15, has the
7 meaning set forth in IC 16-21-15-1.5(b).
8 SECTION 2. IC 16-21-15-0.5 IS ADDED TO THE INDIANA
9 CODE AS A NEW SECTION TO READ AS FOLLOWS
10 [EFFECTIVE UPON PASSAGE]: Sec. 0.5. The general assembly
11 finds the following:
12 (1) A hospital merger may benefit the public by maintaining
13 or improving the quality, efficiency, and accessibility of health
14 care services offered to the public.
15 (2) Benefits resulting from a hospital merger may outweigh
16 any anticompetitive effects of joining together competitors,
17 including addressing unique challenges in providing health
SB 298—LS 6529/DI 104 2
1 care services in rural areas.
2 (3) It is in the state's best interest to supplant state and federal
3 antitrust law with a process for regulatory approval and
4 active supervision by the state department, as provided in this
5 chapter.
6 (4) It is the intent of the general assembly that this chapter
7 immunize, to the fullest extent possible, the following from all
8 federal and state antitrust laws:
9 (A) The execution of merger agreements approved under
10 this chapter and the transactions concerning the merger.
11 (B) Postmerger activities supervised under this chapter.
12 SECTION 3. IC 16-21-15-1.5 IS ADDED TO THE INDIANA
13 CODE AS A NEW SECTION TO READ AS FOLLOWS
14 [EFFECTIVE UPON PASSAGE]: Sec. 1.5. (a) As used in this
15 chapter, "merger" means any change of ownership, including:
16 (1) an acquisition or transfer of assets; or
17 (2) the purchase of stock effectuated by a merger agreement.
18 (b) As used in this chapter, "merger agreement" means an
19 agreement between two (2) or more hospitals for the consolidation
20 by merger or other acquisition or transfer of assets by which
21 ownership or control over substantially all of the stock, assets, or
22 activities of one (1) or more previously licensed and operating
23 hospitals is placed under the control of another licensed hospital or
24 other entity that controls hospitals.
25 SECTION 4. IC 16-21-15-3, AS ADDED BY P.L.104-2021,
26 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
27 UPON PASSAGE]: Sec. 3. (a) Any hospital entering into a merger
28 agreement with another hospital may submit an application to the state
29 department for a certificate of public advantage to govern the merger
30 agreement in the manner prescribed by the state department. However,
31 a hospital may not submit an application under this chapter after July
32 1, 2026.
33 (b) The application for a certificate of public advantage must
34 include the following:
35 (1) A written copy of the merger agreement.
36 (2) A written description of the nature and scope of the merger.
37 (c) Any documentation submitted under this section with the
38 application that is deemed to be proprietary information shall be clearly
39 identified as proprietary information and a copy of the application with
40 the proprietary information redacted for public records must be
41 submitted by the applicant.
42 (d) An applicant must also file a complete copy of the application
SB 298—LS 6529/DI 104 3
1 for a certificate of public advantage with:
2 (1) the office of the secretary of family and social services in a
3 manner prescribed by the office of the secretary; and
4 (2) the office of the attorney general in a manner prescribed by the
5 office of the attorney general.
6 (e) The state department shall assess a filing fee for an application
7 for a certificate of public advantage that is reasonably sufficient to fully
8 fund the costs of the review of the application and ongoing supervision
9 if the application is granted, including any fees for consultants and
10 experts. The state department may not spend any money on the
11 implementation of this chapter until the state department has received
12 a filed application and received the filing fee.
13 (f) If the state department incurs costs of the review of the
14 application and administration of the program that exceed the
15 application fee collected, the applicant for a certificate of public
16 advantage shall pay the reasonable charges incurred by the state
17 department, as determined by the state department.
18 (g) The reasonable costs of services concerning the program:
19 (1) include the cost of fees for consultants and experts; and
20 (2) must be commensurate with the usual compensation for
21 like services.
22 SECTION 5. IC 16-21-15-4, AS ADDED BY P.L.104-2021,
23 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
24 UPON PASSAGE]: Sec. 4. (a) The state department, in consultation
25 with the office of the secretary of family and social services, shall
26 review an application for a certificate of public advantage and the
27 documentation filed under section 3 of this chapter to determine
28 whether there is clear evidence that the proposed merger agreement:
29 (1) would benefit the population's health outcomes, health care
30 access, and quality of health care; and
31 (2) meets the standards described in this section.
32 (b) The state department shall consider in the review of the
33 application and documentation the effect of the merger agreement on
34 the following:
35 (1) The quality and price of hospital and health care services
36 provided to Indiana residents, including the demonstration of
37 population health improvement of the region serviced and the
38 extent to which medically underserved populations have access
39 to and are projected to use the proposed services.
40 (2) The preservation of sufficient health care services within the
41 geographic area to ensure public access to acute care.
42 (3) The cost efficiency of services, resources, and equipment
SB 298—LS 6529/DI 104 4
1 provided or used by the hospitals that are a party to the merger
2 agreement, including avoidance of duplication of services to
3 better meet the needs of the community.
4 (4) The ability of health care payors to negotiate payments and
5 service agreements with hospitals proposed to be merged under
6 the merger agreement.
7 (5) Employment.
8 (6) Economic impact.
9 (c) The state department shall grant the certification if the state
10 department determines in the review of the application and
11 documentation that, under the totality of the circumstances, the
12 following:
13 (1) There is clear evidence that the proposed merger would
14 benefit the population's health outcomes, health care access, and
15 quality of care in the county.
16 (2) The likely benefits resulting from the proposed merger
17 agreement outweigh any disadvantages attributable to a potential
18 reduction in competition that is authorized to may result from the
19 proposed merger.
20 The holder of a certificate of public advantage issued by the state
21 department under this chapter receives immunity from claims of made
22 pursuant to federal or state antitrust laws for the duration of the
23 certificate.
24 (d) The state department has one hundred twenty (120) days from
25 the filing of the application to review and make a determination on the
26 application. The state department's determination on whether to grant
27 the application must:
28 (1) be in writing;
29 (2) specify the basis for the determination; and
30 (3) be provided to the applicant on the date of the determination.
31 (e) The state department may include terms or conditions of
32 compliance with the issuance of a certificate of public advantage under
33 this chapter.
34 (f) The state department shall maintain records of all of the
35 applications filed under this chapter, including records of any terms or
36 conditions of issuing a certificate of public advantage that are imposed
37 by the state department.
38 (g) The office of the attorney general may, at any time after an
39 application is filed under this chapter and before the state department
40 makes a determination on the application, require by civil investigative
41 demand the attendance of witnesses and the production of documents
42 for purposes of investigating whether the merger agreement satisfies
SB 298—LS 6529/DI 104 5
1 the requirements of this chapter. Any documents produced or testimony
2 given under this subsection are subject to confidentiality if the
3 information is deemed proprietary information. The attorney general
4 may seek compliance with the issuance of a civil investigative demand
5 with the appropriate district court of the county in which the merger is
6 to occur.
7 SECTION 6. IC 16-21-15-6, AS ADDED BY P.L.104-2021,
8 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
9 UPON PASSAGE]: Sec. 6. (a) The state department shall annually
10 review a certificate of public advantage issued by the state department
11 under this chapter.
12 (b) The holder of a certificate of public advantage shall pay the
13 reasonable costs incurred by the state department shall require a
14 reasonably sufficient fee for the renewal of the certification of public
15 advantage that covers the reasonable costs of the ongoing supervision
16 of the certification, including any fees for consultants and experts.
17 (c) In conducting the review, the state department shall consider
18 whether the hospital continues to meet the standards required for the
19 issuance of a certificate under this chapter.
20 (d) This section expires July 1, 2026.
21 SECTION 7. IC 16-21-15-7, AS ADDED BY P.L.104-2021,
22 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
23 UPON PASSAGE]: Sec. 7. (a) The state department shall actively
24 supervise and monitor a hospital operating under a certificate of public
25 advantage issued under this chapter to ensure that the conduct of the
26 hospital furthers the purposes of this chapter.
27 (b) The holder of a certificate of public advantage shall pay the
28 reasonable costs incurred by the state department shall assess an
29 annual monitoring fee to a hospital issued a certificate of public
30 advantage under this chapter that covers to cover the reasonable costs
31 of the ongoing monitoring and supervision of the certification,
32 including any fees for consultants and experts.
33 (c) A hospital operating under a certificate of public advantage may
34 not increase the charge for each individual service the hospital offers
35 by more than the increase in the preceding year's annual average of the
36 Consumer Price Index for Medical Care as published by the federal
37 Bureau of Labor Statistics.
38 (d) For the first five (5) years that a hospital is operating under a
39 certificate of public advantage the hospital must:
40 (1) invest the realized cost savings from the identified efficiencies
41 and improvements included in the certificate of public advantage
42 application in the areas of Indiana the hospital serves for the
SB 298—LS 6529/DI 104 6
1 benefit of the community; and
2 (2) summarize the realized cost savings and investments in the
3 hospital's annual report submitted under section 8 of this chapter.
4 SECTION 8. An emergency is declared for this act.
SB 298—LS 6529/DI 104 7
COMMITTEE REPORT
Madam President: The Senate Committee on Health and Provider
Services, to which was referred Senate Bill No. 298, has had the same
under consideration and begs leave to report the same back to the
Senate with the recommendation that said bill be AMENDED as
follows:
Page 1, line 12, after "(1)" insert "A hospital merger may benefit
the public by maintaining or improving the quality, efficiency, and
accessibility of health care services offered to the public.
(2) Benefits resulting from a hospital merger may outweigh
any anticompetitive effects of joining together competitors,
including addressing unique challenges in providing health
care services in rural areas.
(3)".
Page 1, line 16, delete "(2)" and insert "(4)".
Page 3, line 13, delete "shall" and insert "must".
and when so amended that said bill do pass.
(Reference is to SB 298 as introduced.)
CHARBONNEAU, Chairperson
Committee Vote: Yeas 11, Nays 0.
SB 298—LS 6529/DI 104