Bill Summary for S 16 (2023-2024)
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AN ACT PRESERVING COMPETITION IN HEALTH CARE BY REGULATING THE CONSOLIDATION AND CONVEYANCE OF HOSPITALS.Intro. by Burgin, Corbin, Mayfield.
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Enacts new Article 11C, Preserving Competition in Health Care Act, to GS Chapter 131E. Sets forth defined terms. Defines hospital entity to include any licensed hospital, whether corporate or governmental, and any affiliated entity. Defines transaction as:
- the disposition of a material amount of assets or operations of any hospital entity to any person or entity other than another hospital entity that controls, is controlled by, or is under common control with such hospital entity;
- the transfer of control or governance of a hospital entity to a person or entity other than another hospital entity that controls, is controlled by, or is under common control with such hospital entity;
- any binding legal obligation between two or more persons that results in a transfer of control, responsibility, or governance of a substantial portion of a hospital entity's assets to an acquiring entity;
- any transaction that would be subject to review under the Article if it was structured as a purchase, merger, or joint venture;
- any transaction determined by the Attorney General (AG) to merit review because the transaction would have a meaningful effect on competition in any part of the State among hospital entities;
- any of the above transactions that is entered into by a hospital entity or by any person or entity that controls, is controlled by, or is under common control with such hospital entity; or
- dispositions of a substantial portion of a hospital entity's assets made in the course of a bankruptcy proceeding.
Excludes from the Article's scope transactions that are in the usual and regular course of a hospital entity's activities which the AG has provided a written waiver for the transaction. Deems the AG's determination final and not subject to judicial review unless found to be arbitrary and capricious.
Establishes the following procedure for hospital entities to notify the AG of proposed transactions and the AG to review and make determinations with respect to transactions subject to the Article.
Requires hospital entities subject to the Article to provide the AG with written notice of a proposed transaction and certification that a copy of the Article has been provided to each member of the governing board or board of trustees of the hospital entity. Allows for a single written notice to suffice for both the hospital entity and acquiring entity, subject to the AG requesting more information as needed. Provides for the effect of the notice and directs the AG to adopt rules regarding required content and manner of the written notice. Requires the AG to provide the hospital entity and acquiring entity with written acknowledgement of receipt of the written notice, at which time a 90-day review period begins within which the AG must notify the hospital entity in writing of its decision to either object to or take no action regarding the proposed transaction. Provides for the AG to extend the review period for up to 60 days. Prohibits the parties consummating the transaction during the review period.
Additionally requires the hospital entity to give written notice of the proposed transaction by publication in at least one newspaper in general circulation in each relevant county, as specified, within five days after providing written notice to the AG. Details requirements of the published written notice and deems failure to provide this notice as sufficient grounds for the AG to object to the proposed transaction. Requires the hospital entity and acquiring entity to hold at least one public hearing within 30 days after providing written notice to the AG, but not within 14 days after publication of written notice. Details hearing requirements, including seven days' written notice to the AG of the time, date, and location of the public hearing. Also requires the hospital entity and acquiring entity to give written notice to the relevant local governing bodies, as specified. Requires AG approval to conduct the public hearing electronically. Provides specific hearing requirements for hospital entities that are nonprofits or publicly owned entities. Allows the AG to conduct an additional public hearing, subject to similar notice requirements. Deems the parties to the proposed transaction responsible for the costs of all public hearings. Excludes dispositions made in the course of a bankruptcy proceeding. Allows the AG to partially or completely waive the public hearing requirements.
Lists eight considerations the AG must address in making a determination about the proposed transaction, including whether the proposed transaction is in the public interest and whether there is an objection by a local governing body. Includes an additional eight considerations the AG must address in making a determination about a proposed transaction that would alter the control or governance of a nonprofit or publicly owned hospital entity, including whether the proposed transaction would result in private inurement to any person. Finally, requires the AG to consider whether the transaction complies with Article 2 of the Chapter for those that involve a hospital owned by a municipality or a hospital authority.
Authorizes the AG to demand the hospital entity giving notice to provide information the AG deems reasonably necessary to complete a review of the transaction. Deems failure to timely provide such information sufficient grounds to object to the transaction. Grants the AG authority to contract, consult and receive advice from any State or US agency, or contract with experts or consultants, to assist in transaction review. Allows the AG to request from the Department of Health and Human Services (DHHS) a report of the anticipated effects of any proposed transaction on access to, or the pricing of, health care services in any part of the State; allows extension of the review period upon requests of such reports so long as the total review period does not exceed 180 days from the AG's notice that the parties have submitted a complete notice. Authorizes the AG to impose specified fees upon the acquiring entity, including contractual costs of the AG, and up to $50,000 for the AG's actual review costs and DHHS's actual costs for report preparations. Allows the acquiring entity to seek an order from a court to limit its liability for imposed fees. Details procedures for such an objection and the effect of failing to pay imposed fees.
Establishes requirements for instances in which the AG objects to the proposed transaction. Requires the AG to file an action seeking injunctive relief in superior court within 30 days after notifying the parties of the objection, subject to the parties mutually agreeing to extend the filing deadline. Details procedures of such actions based on whether the hospital entity is a nonprofit or publicly owned entity, or a for-profit entity. In either instance, the court can issue a final determination approving the transaction, approving the transaction subject to modification, or disapproving the transaction. Allows appeal of the court's decision, except prohibits the AG from appealing a court's approval of the transaction subject to the same modification the AG initially sought. Allows any party to decline to enter into a transaction modified by court order. Deems modified transactions entered into not subject the AG's objection.
Following the AG not objecting to the proposed transaction or a final determination by a court approving the transaction, subjects the acquiring entity to post-transaction monitoring by an independent health care access monitor for at least three years. Details requirements for such monitoring through a contract between DHHS and the acquiring entity. Requires the independent health care access monitors retained by DHHS to quarterly report to the AG and DHHS as specified. Authorizes the AG to extend the post-transaction monitoring period for up to seven years, but caps monitoring at ten years following consummation of the transaction, and requires DHHS and the Department of Justice to each pay 25% of the remaining monitoring costs beyond the initial three year monitoring period. Establishes annual reporting requirements for the acquiring entity or any foundation or charitable trust established in a transaction in which the hospital entity was a nonprofit or publicly owned entity. Creates a procedure for the AG to file an action to unwind the transaction or a court to alter control or governance of assets involved in a transaction if upon review of the post-transaction monitoring, the AG deems it reasonable and necessary.
Prohibits an acquiring entity from changing the financial assistance policy regarding uninsured or underinsured in effect immediately proceeding consummation of the transaction without first providing 120 days' written notice to the AG, its hospital staff, and patients who have previously benefited from the hospital entity's policy, with a limited exception for increases to applicable eligibility income limits. Details notice requirements for patients who previously benefited from the policy. Includes education requirements for the acquiring entity's physicians regarding new financial assistance policies and verbally informing patients of the new policy during the notice period.
Deems any transaction in violation of the Article void. Subjects each member of the governing board and each chief financial officer of the transaction entered in violation of the Article up to $1 million per transaction, with the AG instituting the action and a court determining the penalty amount. Prohibits DHHS from issuing hospital licensed to any party of a transaction entered in violation of the notice, public hearing, and review requirements of the Article. Specifies the effect of the Article on the AG's authority and the effect of the Article's penalties and remedies.
Effective December 1, 2023, and applies to activities occurring on or after that date.