House Bill 1666 establishes a board consisting of five people that would approve deals based on criteria like the effect it would have on health care availability and whether it is “in the public interest.” That might also include considering if the entities have disclosed any potential conflicts of interests and the deal complies with current law. (Lauren Chapman/IPB News)
Last year, Indiana lawmakers passed legislation requiring hospitals and other health care entities to notify the attorney general of any mergers or acquisitions more than $10 million. This year, lawmakers want to go even further to create competition. The House passed legislation that would require almost all health care mergers and acquisitions to be approved by a state board.
House Bill 1666 establishes a board consisting of five people that would approve deals based on criteria like the effect it would have on health care availability and whether it is “in the public interest.” That might also include considering if the entities have disclosed any potential conflicts of interests and the deal complies with current law.
Scott Barnhart, director of the Consumer Protection Division of the attorney general’s office, said this legislation would create a more transparent system that allows the state to better understand the costs that consumers are paying.
“The landscape of this area is particularly complex, and companies use opaqueness in order to kind of hide where that where the money is flowing.”
Barnhart said other states have adopted similar legislation to address the space where health care entities can act like monopolies before requiring action from the Federal Trade Commission. HB 1666 removes the previous threshold put into law last year.
“This kind of addresses the fact that there is a threshold below $120 million that the FTC simply doesn't have the resources or the interest in reviewing,” Barnhart said.
The bill gives the attorney general the ability to bring in outside counsel or expertise to understand if a merger or acquisition would have a significant effect on health care competition or health care availability.
Barnhart said this gives Indiana the ability to stop the elimination of competition before it is too late.
“States like Indiana, that are smaller, companies can come in and try to create market power and monopolize certain areas and do so through mergers and acquisitions,” Barnhart said.
However, practices that are fully owned by a physician are exempt from needing approval. The author of the bill said that language was to avoid unfairly burdening dentists and optometrists.
The five members on the board would include the attorney general, the secretary of health and family, the secretary of business affairs and two additional members appointed by the governor. Both secretaries can be represented by an individual designated by the governor. The attorney general can also choose someone to represent their office in their place.
The General Assembly would make recommendations to the governor for those two additional members — but the governor does not have to select from that pool.
Indiana lawmakers also want to create more transparency around who owns hospitals and other health care facilities. HB 1666 would require health care entities to report ownership information to various state departments.
Health care entities include any organization or business that provides diagnostic, medical, surgical or rehabilitative care.
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In addition to providers and hospitals, the bill requires insurers, third party administrators and pharmacy benefit managers to report ownership details, including private equity interest to the state.
Under the bill, the ownership information has to be accessible to the public through the Indiana Department of Health's website. But it places that burden on the various state departments that act as regulators — including agencies like the Professional Licensing Agency and Indiana Department of Insurance.
The bill’s author, Rep. Julie McGuire (R-Indianapolis), said transparency helps regulators and the public spot issues early.
“Who's owning it?” McGuire said. “Has the quality of care gone up? Has it gone down? Have prices gone up? Have prices gone down? It helps us to understand our markets better.”
But some lawmakers, like Rep. Maureen Bauer (D-South Bend), said this will just increase costs.
“This bill imposes significant administrative burdens on these health care entities, diverting resources away from the patient and care towards compliance efforts,” Bauer said.
Several lawmakers asked the author what the state and public are supposed to do with the ownership information. McGuire said it would help people making decisions understand who is behind what spaces, which is important especially when it comes to understanding the role of private equity in the health care industry.
The bill now heads to the Senate.
Abigail is our health reporter. Contact them at aruhman@wboi.org.
