Health care deals face new review rules

Summary#

LD 2201, An Act to Implement Certain Recommendations Related to the Regulatory Review and Approval of Certain Health Care Transactions Involving Private Equity Companies, Hedge Funds or Management Services Organizations from the Commission to Evaluate the Scope of Regulatory Review and Oversight over Health Care Transactions That Impact the Delivery of Health Care Services in the State, is enacted. It creates a new review process and adds ownership-reporting requirements in Title 22 of Maine law. Its stated goal is to oversee certain health care transactions; the law takes effect January 1, 2027.

  • A health care entity must give the Department of Health and Human Services (DHHS) notice at least 180 days before a covered transaction: a private equity company, hedge fund or qualifying management services organization acquiring a majority interest or operational control of a health care entity in Maine.
  • DHHS must review the notice and may approve the transaction, approve it with conditions, or require a more detailed review. After review, DHHS may approve, conditionally approve or disapprove the transaction. The deal cannot close until DHHS gives its decision.
  • A detailed review is required for transactions involving assets valued over $100 million, transactions that lessen competition, or transactions DHHS determines are likely to materially affect health care cost, quality, equity or access in a region.
  • Health care entities must report ownership and control information by July 1, 2027, and again after completing a covered transaction. An organization named in the law must publish annual information about ownership and control.
  • The law excludes nursing facilities and providers or provider organizations that provide only dental services from its definition of a health care entity. It also exempts independent provider organizations with six or fewer individual providers and no ownership or control entities from specified review or reporting requirements.

What it means for you#

  • Health care entities and transaction parties: Covered deals face a 180-day notice period and cannot close before DHHS decides. For detailed reviews, DHHS must hold at least one public hearing or meeting in the county where the health care entity is located.
  • Private equity companies, hedge funds and management services organizations: A covered acquisition may be conditioned or disapproved. “Operational control” includes power to influence or direct an entity’s actions or policies, or to choose, appoint or terminate people involved in its operational oversight.
  • Patients, workers and the public: In a detailed review, the assessment may consider effects on patient access, services, workforce, quality, equity, costs and competition. The bill does not create a direct new patient benefit or give workers a separate approval right.
  • Taxpayers and the public: Some transaction information must be posted publicly. Trade-secret or qualifying proprietary information may be kept confidential. The law does not itself ban private equity ownership or automatically transfer anyone’s property.

Money#

The law authorizes filing fees and recovery of review and monitoring costs, but no total cost estimate is supplied.

  • The health care entity must pay a nonrefundable filing fee. Initial fees must be set by rule between $2,000 and $10,000; DHHS may also set other fees to carry out the law.
  • DHHS may charge transaction parties for actual, reasonable, direct review and monitoring costs, including expert and consultant costs.
  • Fees must go to accounts restricted to administering transaction reviews and related staffing and expenses. DHHS may also keep administrative penalties in an account for review costs.
  • Violations can bring an administrative penalty of $10,000 per day. The law does not estimate how much will be collected or spent.

What is unclear#

  • The bill text does not identify which “organization” receives ownership reports and publishes annual reports. The supplied materials do not establish what entity that term refers to.
  • The law leaves details of filing, review, reporting and fees to rules. It does not specify how DHHS must decide among approval, conditions and denial beyond listing factors it may consider.
  • It sets review deadlines but does not say what happens if an agency misses one.
  • The supplied materials do not include current law, so it is not possible to verify how this process overlaps with existing transaction reviews or reporting requirements. The bill says other state agencies retain their existing authority.
  • The text does not estimate staffing needs, implementation costs or the fees likely to be charged.

Case for#

  • A possible argument for the law is that ownership or control changes can affect health care costs, access, services and workers, so state review before a deal closes could help identify risks.
  • The law requires more detailed review for large transactions, those that lessen competition, or those DHHS finds likely to have a material regional impact.
  • Public notices, hearings and reports can make some information about proposed deals and their possible effects available to the public.
  • Ownership reporting could give state officials and the public a clearer picture of who owns or controls health care entities and their affiliates.

Case against#

  • One concern is that the 180-day notice requirement, possible detailed review and power to impose conditions or deny a deal could delay or prevent transactions.
  • “Operational control” is broad, and DHHS may require a detailed review based on its own judgment of likely effects. The bill does not give a precise threshold for that judgment.
  • Filing, review and monitoring costs may fall on health care entities or transaction parties, but the amount is unknown and additional fees are left to rules.
  • The law gives DHHS significant discretion over approval and conditions, while the bill does not set out a specific appeal process or detailed decision rules.