Roadrunner Capitol Reports
Legislation Detail

*CS/SB 15/a HEALTH CARE CONSOLIDATION OVERSIGHT ACT

Sen Katy Duhigg

Actions: [3] SCC/SHPAC/SJC-SCC [4]germane-SHPAC [6] DNP-CS/DP-SJC [7] DP/a - fl/a- PASSED/S (27-15) [13] HJC-HJC [14] DP - PASSED/H (47-20)

Scheduled: Not Scheduled

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Summary:
 SB15 creates health care business transaction oversight through the Health Care Consolidated Oversight Act.  
Legislation Overview:
 Synopsis: SB 15 relates to insurance by enacting the Health Care Consolidation Oversight Act and requiring review of proposed health care mergers and acquisitions and other material changes in control of health care entities including health insurance entities  and providing exceptions and granting the Office of Superintendent of to review proposed transactions and providing for public comment and stakeholder advisory committees and authorizing the approval or conditional disapproval of, or conditional approval of transactions and protecting confidentiality of trade secrets and assessing cost and providing post-transaction oversight  and prescribing a penalty and declaring an emergency. 
Analysis: Senate Bill 15 (SB15) creates the Health Care Consolidation Oversight Act. The many facets of the Act include requiring review of proposed health care mergers and acquisitions and other material changes in control of health care entities including health insurance entities  and providing exceptions and granting the Office of Superintendent of to review proposed transactions and providing for public comment and stakeholder advisory committees and authorizing the approval or conditional disapproval of, or conditional approval of transactions and protecting confidentiality of trade secrets and assessing cost and providing post-transaction oversight  and prescribing a penalty and declaring an emergency. 
The oversight power of the Office and Authority pursuant to the Health Care Consolidation Oversight Act applies to proposed transactions that involve a New Mexico health care entity or the creation of a health care entity that will be doing business in New Mexico and at least one party to the transaction had an average annual revenue of twenty million dollars ($20,000,000) or more in the immediately preceding three years or, in the case of a new entity, is projected to have at least ten million dollars ($10,000,000) in average annual revenue over the first three years of operation at normal levels of operation or utilization.
There is an extensive listing of those organizations and businesses that are not subject to the Act. 
Modifications of the Insurance Code now provide that all documents, materials and supporting information submitted to the Office as part of a proposed material change transaction are public records and subject to the provisions of the Inspection of Public Records Act except a reference to trade secrets is included in the Act. 
If a party believes that information contained in the notice of proposed material change transaction contains a trade secret, the party shall: (1) at the time the information is submitted to the Office, submit a written request for designation of the information as a trade secret in the manner prescribed by the Office; (2) identify with particularity the information to be designated as a trade secret; and (3) submit the information at issue in a separate filing from information submitted that does not contain trade secrets and clearly mark each page that contains a trade secret with the term "trade secret"; provided that if a document contains both trade secret information and non-trade-secret information, the submitting party shall redact the trade secret information from the document and identify it in the separate filing. 
If the Office determines that the information meets the standard for a trade secret, the Office shall maintain the confidentiality of the information. If the Office shares confidential information with another state agency or an outside expert, that agency or the outside expert is also bound by the confidentiality provided in this section and any other applicable confidentiality provisions of state law.
A new section of the New Mexico Insurance Code which provides that if another state is the final Authority to approve of a transaction, the Superintendent may impose conditions on the transaction if it effects affordability accessibility or other impactful effects. 
The party must submit the proposed transaction to the Office by rules and regulations constructed by the Office. If additional information is requested by the Office, the timing of the transaction will be tolled. 
If a party to a transaction is a health insurance company the submittal shall be considered as an addendum to a prior filing covered under Sections 59A-37-4 through 59A-37-10 NMSA 1978 which has to do with the Insurance Code. 
The written notice of the proposed transaction shall include information required by the Office, including: (1) a list of the parties, the terms of the proposed transaction and all transaction-related documents; (2) a statement describing the goals of the proposed transaction and whether and how the proposed transaction affects current and future health care services in New Mexico.
(3) the geographic service area of any health care entity affected by the proposed transaction; (4) a description of the groups or individuals likely to be affected by the transaction; and (5) a summary of the health care services currently provided by any of the parties; commitments by the health care entity to continue those services; and any health care services that will be added, reduced or eliminated, including an explanation of why any services will be reduced or eliminated in the service area in which they are currently provided. 
Within fifteen (15) days of submittal of the transaction, the Office must publish on its website (1) the summaries, descriptions and statements provided in the written notice; (2) details about how to submit written comments regarding the transaction; and (3) information about any public comment forums that will be conducted regarding the transaction.
The Office shall consult with the Authority about the potential effect of the proposed transaction as part of a preliminary review and incorporate the Authority's review into the Office's final determination.
Another new section of the insurance code will now read: A. No later than forty-five days after receiving complete notice of a proposed transaction, the Office shall conduct a preliminary review. B. As part of its preliminary review, the Office shall consider whether the transaction: (1) is in the interest of patients and consumers of health care services; (2) is urgently necessary to maintain the solvency of a health care entity; and (3) may have negative effects on the availability, accessibility, affordability and quality of health care for patients and other consumers of health care services.
Following the preliminary review, the Superintendent may notiy the parties that a comprehensive review is not necessary, and the parties may proceed or that a comprehensive review is required. 
In conducting a comprehensive review of a proposed transaction, the Office shall consider the likely effect of the proposed transaction on: (1) the potential loss or change in access to essential services; (2) the accessibility of current and future health care services to any community affected by the transaction, including the accessibility of culturally responsive care; (3) the quality of current and future health care services provided to any of the communities affected by the transaction; (4) health care market share of a party and whether the transaction may foreclose competitors of a party from a segment of the market or otherwise increase barriers to entry in a health care market in New Mexico; (5) the labor market and competition for health care workers; (6) wages, salaries, benefits and working conditions of employees of health care entities; (7) employment protections, restrictions and other terms and conditions of employment for employees of health care entities; (8) patient costs. (9) payer costs.
And (10) health care provider networks; (11) health plan premiums and out-of-pocket costs; (12) cost trends and containment of total state health care spending; (13) access to services in medically underserved areas; (14) the functioning of the New Mexico markets for health care and health insurance; (15) the potential for the material change transaction to affect health outcomes for New Mexico residents; (16) consumer concerns, including complaints or other allegations against a health care entity that is a party to the transaction related to availability, accessibility, affordability and quality of care or coverage; and (17) any other factors the Office determines to be in the public interest.
After the comprehensive review and the receipt of recommendations from the Authority and other state agencies consulted and any advisory committee created by the Office for the comprehensive review process, the Office shall approve the proposed transaction, approve the proposed transaction with conditions or disapprove the proposed transaction. 
After approval of the proposed transaction, the Office shall determine that certain criteria has been met including accessibility, cost to the patient, improve health outcomes, and other positive effects on the public. 
The Office may establish stakeholder advisory committees to have input on proposed transactions. The Superintendent shall appoint members of the affected community, consumer advocates and health care experts. Other criteria are listed for membership in the stakeholder advisory committee.
The Superintendent is to monitor after a conditional permission or approval is made. The Superintendent may contract for oversight resources.
Failure to provide or omit required information is subject to a misdemeanor penalty.
The Act seeks to declare an emergency. 



 
Amendments:
 Amended February 7, 2024 in SJC
SJCcs/SB15cs/a: The Senate Judiciary Committee amended SB15cs with the following modifications: 1. On page 5, line 4, strike "entity" and insert in lieu thereof "person". 2. On page 11, line 9, strike "entity or other".
Referring to amendment 1, “Being subject to the Health Care Consolidation Oversight Act does not preclude or negate any entity regulated pursuant to the Insurance Holding Company Law.”
The reference to “entity” is now to read “person”.
Referring to amendment language in 2., “The entity or other person that acquired control over the hospital through an approved or conditionally approved transaction shall submit reports to the office and the authority in the form and manner prescribed by the office….”
The words “entity or other” is struck. 

 
Committee Substitute:
 Amended February 5,2024 in SHPAC
SHPACcs/SB15: The Senate Health and Human Services Committee enacts a new Section of the Insurance Code entitled "Health Care Consolidation Oversight Act". SB15cs relates to insurance by enacting the above Act and requiring review of proposed hospital acquisitions and other changes in control of hospitals by granting the Office of the Superintendent of Insurance and the Health Care Authority Department, the authority to review proposed transactions and authorizing approval. The Act seeks recognition as an emergency.
In Section 3, the Health Care Consolidation Oversight Act applies to proposed transactions that involve a New Mexico hospital. 
Being subject to the Health Care Consolidation Oversight Act does not preclude or negate any entity regulated pursuant to the Insurance Holding Company Law. 
Control is presumed to exist if a person, directly or indirectly, owns, controls, holds fifteen percent or more of the power to vote or holds proxies representing fifteen percent or more of the voting securities of any other person. The presumption may be rebutted by a showing in the manner provided by Section 59A-37-19 NMSA 1978 that control does not in fact exist. 
The reference to the above Section 59A means that rebuttel can be had if the party has no control over the issue. 
All documents and other information is considered confidential when obtained or disclosed to the Health Care Authority (HCA) or Office of the Superintendent (Office).
Section 5 refers to tolling and states: A notice of a proposed transaction shall be deemed complete by the office on the date when all the information required by the Health Care Consolidation Oversight Act or requested by the office is submitted by all the parties to the transaction, as applicable. Shall the scope of the transaction be modified, the review shall be restarted.
A written notice of the transaction shall be submitted to the Office and cost of the review for services such as experts will be borne by the submitter in accordance with Health Care Consolidation Oversight Act.
Section 6 states in part: If entry into a binding agreement before a transaction is effectuated is not a violation of the Health Care Consolidation Oversight Act if the transaction remains subject to regulatory review and approval.
If a party to the proposed transaction is a health insurer, the notice shall be submitted as an addendum to any filing required by Sections 59A-37-4 through 59A-37-10 NMSA 1978.
The notice of a proposed transaction is provided in the Act and is extensive. Some of the requirements include: the geographic service area defined, a statement of goals to be accomplished by the transaction, a list of the parties involved and the terms of the transaction, and a listing of services being reduced or eliminated, or how services may be improved for New Mexicans.
Approval or disapproval must be granted within one hundred and twenty days of receipt of a completed notice of proposed transaction. 
In Section 7 it states that the Office must give certain consideration that are listed in the Act, to include in part: the reduction or elimination of critical services by the transaction, the availability of health care services in the area, the health care market impacted by the transaction, and reducing the cost of care and premiums. 

The Office may conduct post transaction oversight and require the hospital submit reports to the office and the authority in the form and manner prescribed by the office annually for three years after approval or conditional approval.
Section 10 states: It is necessary for public peace, health and safety that this act take effect immediately.