Maine proposes a regulatory approval scheme for ‘material change transactions’ involving ‘healthcare entities’.Goodwin

On March 28, 2023, the Maine Legislature authorized certain “medical institutions,” including medical and other professional services, licensed medical facilities, and providers of administrative services to such institutions, to He proposed a bill that would prohibit making “material change transactions.” without approval from the Maine Attorney General (AG).” Maine’s proposal follows trends in the adoption of laws requiring notification or approval of certain medical transactions, including requirements in California, Connecticut, Massachusetts, Nevada, New York, Oregon, and Washington. is.

Maine’s bill, HP 894, prohibits medical institutions from making material change transactions without AG’s approval. A health care entity includes (1) any person or entity qualified or licensed to provide health care services (including medical, surgical, mental health, and substance use disorder services) under state law; . (2) licensed medical facilities; (3) Any entity or organization that is in the business of providing or managing health care and represents health care providers in contracts with insurance companies. A significant transaction is defined as including (1) an acquisition, change of control, or merger involving a medical entity; (2) establishing an organization or entity for the purpose of administering contracts with carriers, third-party administrators, pharmacy benefits administrators, or providers; (3) Transactions resulting in a change of control of the hospital board. However, medical institution affiliations formed for the purpose of collaborating in clinical trials, graduate or medical education programs, or hiring or hiring physicians are not considered material change transactions and are therefore exempt from the approval process.

The proposed law gives Maine AG the power to approve, subject to certain conditions or reject approval of material change transactions. The bill provides the following non-exclusive list of factors that the AG may consider: (b) whether the benefits to the public are likely to outweigh any adverse market effects; (c) whether the proposed transaction would be in the public interest; (d) the impact that the proposed transaction is likely to have (1) on the cost of patient medical services; (2) the availability or accessibility of healthcare services in geographic regions provided by healthcare entities formed as a result of a material modification transaction; cost trends for health care services. This is evaluated relative to the statewide cost of comparable medical services. (4) access to medical services in underserved areas; (5) medical services and insurance markets; (6) Health Care Outcomes and Equity in Maine. (7) Access to Essential Health Care Services for Maine Residents. Conditions imposed on approvals are monitored by AG and may be enforced through the courts. AG may recover enforcement costs in enforcement proceedings.

Under the proposed law, healthcare entities would have to give notice of their intention to enter into a material change transaction at least 60 days before committing to enter into that transaction, and provide certain information specified by regulation to the AG. must be provided to Within 10 days of receiving notice, AG must post information about the transaction on her website at AG, including: (1) a summary of the proposed transaction; (2) a description of groups or individuals likely to be affected by the transaction; (3) Services currently provided by the entity and planned reductions as a result of the transaction. (4) A copy of the notice submitted by the medical institution. (5) the time and place of the public hearing;

Providers will receive written notification of preliminary review results within 30 days of submission of notification. A preliminary review may result in the approval of a material change transaction, the conditions under which a material change transaction may proceed without a comprehensive review, or a determination that a comprehensive review is required. If a transaction results in the transfer of assets worth more than $2 million, a comprehensive review is required and AG will assess factors such as market concentration, market power and the impact of the transaction on cost and quality. may determine that a comprehensive review is required. , or access to medical services in any area of ​​Maine.

A comprehensive review will include at least one public comment hearing within 30 days of notification of the results of the preliminary review. AG may request additional information from parties to material change transactions. A comprehensive review will include an expert review of specific economic and systemic considerations similar to the factors AG considers in its review (as described above). Positive factors include whether the entity is serving at-risk, underserved, or government payer patient populations, and material change transactions could result in lower margin services. or whether an entity is formed that provides low-margin services. The expert report must be submitted to the AG by him within 185 days, unless the AG determines that more time is required to prepare the report.

HP 894 will impose a lengthy and costly approval process on many medical transactions in Maine. Any party involved in a material change transaction will be responsible for AG’s reasonable costs, both in making decisions and in ongoing monitoring, which may include the use of experts. At 1, 2, and 5 years after the significant change transaction, the institution or owner demonstrated compliance with the conditions imposed in the approval process and summarized cost trends associated with the services provided by the parties. A report must be submitted to the AG. Critical change transaction.

Maine’s HP 894 is subject to New York Governor Kathy Hochul’s budget proposal, which requires state approval for healthcare transactions involving medical practice. It’s not clear if New York or Maine legislation will pass, but these proposals are part of a trend toward increased scrutiny of health care transactions. For example, 2018 Connecticut law requires notice of certain transactions involving the consolidation of a physician’s practice or combination with a hospital or healthcare system. Similarly, Massachusetts is required to notify any transaction involving her provider in excess of $25 million received from government and private payers (excluding her ERISA plan, which was excluded). Both Massachusetts and Connecticut law expressly authorize their respective state attorneys general to use information gleaned from the notice to conduct and enforce investigations pursuant to the state’s antitrust laws. In addition, California, Nevada, Oregon, and Washington have also created notification requirements for certain medical transactions in recent years. However, unlike Maine under the proposed legislation, none of these states currently require approval before consummating a transaction.

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