LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6529 NOTE PREPARED: Feb 23, 2022
BILL NUMBER: SB 298 BILL AMENDED: Feb 22, 2022
SUBJECT: Certificates of Public Advantage.
FIRST AUTHOR: Sen. Charbonneau BILL STATUS: As Passed House
FIRST SPONSOR: Rep. Morrison
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
XFEDERAL
Summary of Legislation: The bill defines "merger" and "merger agreement" for purposes of the certificate
of public advantage (COPA) for certain hospital mergers.
It requires the Department of Health (IDOH) to actively supervise a merger. It also allows the IDOH to enter
into an agreement with a nonprofit organization or a postsecondary educational institution to study the
impacts of the COPA on the community's health metrics and outcomes.
The bill requires holders of a COPA to pay for reasonable charges incurred by the IDOH.
Effective Date: Upon passage.
Explanation of State Expenditures: Summary - If additional merging hospitals apply for COPAs as a result
of the bill, the IDOH, the Family and Social Services Administration (FSSA), and the Attorney General’s
Office could potentially experience additional workload for reviewing applications and conducting ongoing
monitoring and enforcement measures for hospitals with active COPAs. This impact is expected to be minor
due to the narrow eligibility requirements for merging hospitals to obtain a COPA under existing law. Any
expenditures relating to the review and administration of hospital COPAs are required under the bill and
existing law to be funded by fees collected from applicant hospitals. Additionally, the bill could have an
indeterminable, but likely minor impact on health care costs under the state’s Medicaid and employee health
care plans.
Additional Information -
SB 298 1 Impact Study: The IDOH may enter into one agreement with a nonprofit organization or postsecondary
educational institution and is not required to pay for the study. A hospital with a COPA must supply data for
the study, but is not required to provide data that is not owned or maintained by the hospital. If a study is
undertaken, the preliminary report is to be completed within 4 years of the COPA issuance and the final
report is due within 10 years of the COPA.
Antitrust Immunity: Under existing law, the holder of a COPA issued by the IDOH is immune from claims
of state antitrust law. The bill includes a statement of legislative intent declaring that the regulatory approval
and IDOH supervision provided under a COPA is meant to supplant state and federal antitrust law. To the
extent the Federal Trade Commission gives deference to state law when investigating hospital mergers, the
bill may provide state and federal antitrust immunity to COPA eligible hospitals seeking to merge in the
future.
State Health Care Costs: When reviewing COPA applications, current law requires the IDOH to consider
the effects of proposed mergers on hospital prices, cost efficiency, and health outcomes, as well as the ability
of health care payers to negotiate payments with the merging hospitals. Additionally, the law prohibits a
hospital operating under a COPA from increasing charges by more than the increase in the Consumer Price
Index for Medical Services from the previous year. Despite these requirements, the merger of two hospitals
in a county with no other hospitals may still have an indeterminate impact on hospital prices in the county.
Changes in hospital prices could potentially influence future contract negotiations between a consolidated
hospital and the state employee health care plan and the state’s Medicaid managed care entities. Any
increases in General Fund or dedicated fund expenditures for health benefits as a result of the bill would be
dependent on the number of proposed mergers that are granted COPAs. The total number of COPAs issued
by the IDOH is expected to be small.
Explanation of State Revenues: Summary - The bill strengthens the language in existing statute requiring
COPA applicants and holders to pay fees assessed by the IDOH to fund the agency’s costs for COPA review
and monitoring activities. The bill also adds a requirement for COPA applicants to pay additional charges
for expenses incurred by the IDOH in excess of application fees collected. All COPA fees collected would
be deposited in the General Fund. If additional COPAs are issued as a result of the bill, there could be a
minor reduction in future hospital license fees collected by the IDOH, as well as an indeterminable impact
to Hospital Assessment Fee (HAF) revenue. Additionally, if the Attorney General’s Office files any civil
actions against COPA holders, General Fund and State User Fee Fund revenue from court fees could
increase. Overall impact to state revenues as a result of this bill is expected to be minimal due to the limited
number of COPAs likely to be issued within the constraints of existing law.
Additional Information -
Hospital License Fees: If two hospitals merge as a result of the bill, the IDOH would only collect license fees
from the consolidated hospital instead of two hospitals. Hospital license fees range between $1,000 and
$5,000 annually, depending on the hospitals’ total operating expenses, and are deposited in the General Fund.
Hospital Assessment Fees (HAF): If the combined capacity of a consolidated hospital differs from that of
the two hospitals before their merger, there could be an indeterminable impact to the HAF amount paid by
the consolidated hospital. [Out of the total Base HAF, 71.5% is used to leverage federal Medicaid matching
funds to increase hospital Medicaid reimbursement up to specified limits. Any remainder of this 71.5% not
used to increase hospital reimbursement is distributed to the Hospital Medicaid Fee Fund. In addition, 28.5%
of the Base HAF revenue is distributed to the General Fund to offset Medicaid costs incurred by the state.]
SB 298 2 Court Fee Revenue: If the Attorney General files a civil action against a COPA holder and prevails, revenue
from court fees may be collected from the defendant. A civil costs fee of $100 would be assessed when a
civil case is filed. If additional civil actions occur and court fees are collected, revenue to the state General
Fund may increase. A portion of the fee revenue is transferred to the Indiana Bar Foundation, and one fee
is deposited into the State User Fee Fund. Additional fees may be collected at the discretion of the judge and
depending upon the particular type of case.
Explanation of Local Expenditures: County-Owned Hospitals: Before July 1, 2026, county-owned
hospitals seeking to merge with another hospital could potentially be eligible to apply for a COPA under
existing law, as modified by the bill, if they are located in a county that:
• has a population of less than 140,000;
• is not contiguous to a county with a population of more than 250,000;
• has only two hospitals that are both in the statewide comprehensive care trauma care system, with
one of the hospitals being a teaching hospital with a medical residency program; and
• is predominately rural.
Local Health Plans: The bill potentially impacts local units of government that offer health insurance
coverage for employees. Any increase to local health coverage costs may be mitigated with adjustments to
other benefits or to the total employee compensation packages, or through the division of costs between the
local unit and employees.
Explanation of Local Revenues: Court Fee Revenue: If additional civil actions occur and court fees are
collected, local governments would receive additional revenue from both a portion of the civil costs fee and
other fees that would be collected.
State Agencies Affected: Department of Health; Family and Social Services Administration; Attorney
General’s Office; State Personnel Department.
Local Agencies Affected: County owned hospitals; local units offering employee health care plans; trial
courts, city and town courts.
Information Sources: Legislative Services Agency, Indiana Handbook of Taxes, Revenues, and
Appropriations, FY 2021.
Fiscal Analyst: Karen Rossen, 317-234-2106.
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