bill requiring notice of health care mergers

The text as introduced · 1,437 words

By: Frank
H.B. No. 2747

A BILL TO BE ENTITLED

AN ACT

relating to requiring certain health care entities to submit notice

of material change transactions to the attorney general and the

attorney general's authority to conduct certain related studies;

imposing civil and administrative penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Healthcare patients and consumers benefit when

there are robust markets for goods and services, in which providers

of coverage and care compete to offer higher-quality care and

better prices. Consolidation in healthcare markets has reduced

competition and driven up prices. The purpose of this Act is to

promote competitive markets by strengthening the state's ability to

enforce laws and prevent anti-competitive behavior.

SECTION 2. Title 2, Business & Commerce Code, is amended by

adding Chapter 15A to read as follows:

CHAPTER 15A. MATERIAL CHANGE TRANSACTIONS INVOLVING HEALTH CARE

ENTITIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 15A.0001. DEFINITIONS. In this chapter:

(1) "Attorney general" and "person" have the meanings

assigned by Section 15.03.

(2) "Health care entity" means a health care provider,

health care facility, provider organization, pharmacy benefit

manager, or health carrier that offers a health benefit plan in this

state.

(3) "Health care facility" means a facility licensed

to provide health care services, including:

(A) a hospital or other inpatient facility for

providing health care services;

(B) a health system consisting of jointly owned

or managed health care entities;

(C) a skilled nursing facility licensed under

Chapter 242, Health and Safety Code;

(D) an ambulatory surgical center licensed under

Chapter 243, Health and Safety Code;

(E) a freestanding emergency medical care

facility licensed under Chapter 254, Health and Safety Code;

(F) a general residential operation licensed

under Chapter 42, Human Resources Code, that provides treatment

services;

(G) a diagnostic, laboratory, or imaging center;

(H) an outpatient clinic licensed in this state

to provide health care services; or

(I) a rehabilitation center or other therapeutic

center licensed in this state to provide health care services.

(4) "Health care provider" means an individual

qualified or licensed to perform or provide health care services in

this state.

(5) "Health care services" means:

(A) services provided for the care, prevention,

diagnosis, treatment, cure, or relief of a medical, dental, or

behavioral health condition, including:

(i) inpatient, outpatient, habilitative,

rehabilitative, dental, palliative, therapeutic, supportive, home

health, or behavioral services provided by a health care entity;

(ii) retail and specialty pharmacy

services, including drugs, devices, and medical supplies provided

by a pharmacy; and

(iii) performance of functions to refer,

arrange, or coordinate health care services;

(B) equipment used to provide services described

by Paragraph (A), including durable medical equipment and

diagnostic, infusion, and surgical devices; and

(C) technology associated with the provision of

services and equipment described by Paragraphs (A) and (B),

including telehealth services, telemedicine medical services,

electronic health records, software, claims processors, and

utilization systems.

(6) "Health carrier" has the meaning assigned by

Section 1507.002, Insurance Code.

(7) "Management services organization" means an

organization or entity that contracts with a health care provider

or provider organization to perform management or administrative

services relating to, supporting, or facilitating the provision of

health care services.

(8) "Material change transaction" means a transaction

that entails a material change to ownership, operations, or

governance structure of a legal entity.

(9) "Pharmacy benefit manager" has the meaning

assigned by Section 4151.151, Insurance Code.

(10) "Provider organization" means an incorporated or

unincorporated corporation, partnership, business trust,

association, or organized group of persons that is in the business

of health care service delivery or management and that represents

at least one health care provider in contracting with a health

carrier for the payment of health care services. The term includes

a physician organization, physician-hospital organization,

independent practice association, provider network, accountable

care organization, management services organization, or other

organization that contracts with a health carrier for the payment

of health care services.

Sec. 15A.0002. APPLICABILITY OF CHAPTER TO MATERIAL CHANGE

TRANSACTIONS; EXCEPTIONS. (a) This chapter applies only to the

following material change transactions, whether occurring as a

single transaction or a series of related transactions within a

consecutive 12-month period:

(1) a merger that includes one or more health care

entities;

(2) a sale or other acquisition, including by lease,

transfer, exchange, option, receipt through conveyance, and

creation of a joint venture, of:

(A) one or more health care entities, including

insolvent health care entities; or

(B) a material amount of the assets or operations

of one or more health care entities;

(3) a contract or other arrangement, including an

association, partnership, or joint venture, that results in a

person acquiring direct or indirect control over all or a

substantial part of a health care entity's operations or

governance;

(4) the formation of a partnership, joint venture,

accountable care organization, parent organization, or management

services organization for the purpose of administering contracts

with health carriers, third-party administrators, pharmacy benefit

managers, or health care providers;

(5) the sale, purchase, lease, affiliation, or

transfer of control of a health care entity's board of directors or

other governing body; or

(6) a real estate sale or lease agreement involving a

material amount of health care entity assets.

(b) This chapter does not apply to the following:

(1) a clinical affiliation of health care entities

formed solely to collaborate on clinical trials;

(2) a graduate medical education program; or

(3) an offer of employment to, or the hiring of, not

more than one physician.

Sec. 15A.0003. CONFIDENTIALITY OF CERTAIN INFORMATION. (a)

All documents and other information provided to the attorney

general under this chapter, including the notice required under

Section 15A.0051, are not public information under Chapter 552,

Government Code, and may not be released or made public on subpoena

or otherwise except as provided by this section.

(b) The attorney general may release documents or

information:

(1) with the consent of the entity that submitted the

information; or

(2) to an expert or consultant under contract with the

attorney general solely for the purpose of conducting or aiding in

the creation of a study under Section 15A.0101, provided that the

expert or consultant is bound by the same confidentiality

requirements as the attorney general.

SUBCHAPTER B. NOTICE OF MATERIAL CHANGE TRANSACTIONS

Sec. 15A.0051. REQUIRED NOTICE OF PROPOSED MATERIAL CHANGE

TRANSACTIONS. (a) A health care entity shall submit written notice

to the attorney general of any material change transaction

involving the entity not less than 90 days before the date the

change is to take effect.

(b) The attorney general by rule shall prescribe the method

and form of the written notice required under this section.

Sec. 15A.0052. CIVIL PENALTY; INJUNCTION. (a) A person who

violates Section 15A.0051 is liable to this state for a civil

penalty in an amount not to exceed $10,000 for each violation.

(b) The attorney general may bring an action to:

(1) recover the civil penalty imposed by Subsection

(a); and

(2) restrain or enjoin a person from violating Section

15A.0051.

(c) The attorney general may recover reasonable attorney's

fees and other reasonable expenses incurred in investigating and

bringing an action under this section.

(d) The attorney general shall deposit a civil penalty

collected under this section in the state treasury to the credit of

the general revenue fund. Money deposited under this section may

only be appropriated to the attorney general for the purpose of

operating the attorney general's antitrust division.

SUBCHAPTER C. MARKET STUDIES

Sec. 15A.0101. STUDIES ON HEALTH CARE MARKETS. (a) The

attorney general may conduct studies on the following topics:

(1) the conditions of a health care market in this

state or in a region or political subdivision of this state,

including:

(A) the degree of health care entity ownership or

other concentration;

(B) the strength of competitive forces on price

and quality of health care services; and

(C) trends in the price, quality, and

availability of health care services; and

(2) the impacts of completed material change

transactions on a market.

(b) The attorney general may request necessary documents or

other information from health care and other relevant entities

involved in the health care market to conduct the studies required

by this section.

(c) Entities shall provide requested information not later

than the 30th day after the date of the request.

Sec. 15A.0102. ADMINISTRATIVE PENALTY. The attorney

general may assess an administrative penalty in an amount not to

exceed $1,000 against an entity that does not submit the requested

information in accordance with Section 15A.0101. Each day a

violation continues is considered a separate violation for purposes

of imposing the administrative penalty under this section.

SECTION 3. This Act takes effect September 1, 2025.