Health Insurance Regulation And Oversight: European Agencies And Authorities

Health Insurance Regulation And Oversight: European Agencies And Authorities – The growth of private investor control of health care practices continues to draw scrutiny from regulators into the impact on patient care, health care costs, and access to services. State regulators play an important role in monitoring and challenging anticompetition behavior at the local level but have varying degrees of authority across the country to review or approve health care consolidation transactions. A growing number of states are planning or enacting laws requiring regulatory review of health care businesses that will also be important in the healthcare investment landscape. States typically limit the review and approval of health care transactions to larger types of providers, such as hospitals. Recently, however, some states have expanded the legal requirements for the review of health care transactions to physician provider associations and even managed service organizations. For example, Massachusetts, Nevada and Washington all have laws enacted that require notice of material changes for certain transactions involving physician practices and other entities. Recently, New York and California, two of the states most active in the review and enforcement of the industry’s drug bans and the practices of doctor’s offices, have taken more direct steps towards expanding the reach of state regulatory authority to cover a wide range. of businesses and objects.

On February 1, 2023, Governor Kathy Hochul released the New York State Executive Budget (“State Budget”) for the 2023-24 fiscal year. Included in the executive budget is a proposal that would give the Department of State Health (DOH) new authority to review and approve certain “material transactions” involving physician practices and other “health care facilities” that held in the state (“Plan”) . If enacted, this bill would add a new Section 45-A to New York’s Health Care Act and subject health care transactions involving private equity and investor-sponsored entities to review. In explaining the purpose of the Proposal, the Governor pointed to the increasing number of medical practices managed by the companies of the investor, noting that these companies have received the characteristics associated with companies medicine, professionals, and hospitals and treatment centers, but it is “without regulation by the state.”

Health Insurance Regulation And Oversight: European Agencies And Authorities

The regulation defines “a health care entity” to include a management services organization or similar entity providing all or substantially all management or administrative services under contract with one or more physician practices, provider organizations, health insurance plan, or any other type. facility, organization, or plan that provides health care services. In addition, “material transaction” is defined broadly to include mergers, acquisitions or relationships with a health care company, as well as “a relationship or agreement created between a health care company and another person ” and “Establishment of … [MSO] ] for the purpose of managing contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers.”

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Under the Act, health care facilities conducting material transactions must submit written notice of the transaction to the DOH at least 30 days before the expiration date. If the DOH does not respond within the 30-day period, the transaction will be considered approved, but the DOH may extend the 30-day period if it is necessary to conduct a full examination and complete analysis” of the transaction. The regulation authorizes the DOH to hire independent third-party agencies to assist in the review and to charge the cost of retaining such third-party items to the applicant. Also, the DOH will post publicly all written comments received regarding the proposed transactions and will solicit public comments on the transactions.

In its review, the DOH will be authorized to consider various factors, such as the financial status of the negotiating parties, the character and capacity of the parties, the source of funds for the transaction, and whether the benefits of the transaction outweigh the negative effects that maximum on cost, access, health equity, and health outcomes.

The ordinance would give the DOH the power to impose a civil penalty of up to $10,000 for each day a transaction is noncompliant, which would presumably continue indefinitely until and unless the application is abandoned. The regulation will also allow the DOH to pursue an order against the closure of a utility business that has not been submitted for review to the DOH.

The regulation expands the scope of the DOH’s regulatory authority to various “health care organizations,” which includes ordinary administrative service organizations, such as MSOs. The approval and public comment process under the Act could significantly affect the landscape of health care-related transactions within New York State, particularly given that factors should be considered in approving such a transaction. with higher subjective propositions, such as “the character and power of the parties. ” Investors and entities in the health care field should carefully follow the progress of the proposal, which may prevent new investments in particular in health care companies if accepted.

European Medicines Agency

On June 30, 2022, California Governor Gavin Newsom signed SB-184 into law, which created a new Office of Health Care Affordability (OHCA) within the California Department of Health Care Access and Information. To “increase public transparency,” the OHCA is authorized to “review[r] and evaluate consolidation, market power, and other market failures through cost and market impact reviews of mergers, acquisitions, or partnership with health care service systems, health professionals. , hospitals, physician groups, pharmacy benefit managers, and other health care organizations.”

The law defines a “health care entity” as a “payer, provider, or comprehensive delivery system,” including health care service plans, health insurers, hospitals, hospital plans, benefit managers pharmacy, certain physician groups, other providers (eg, hospital). companies), and other borrowers. [1] Items excluded from the definition of health care entity include dentists, pharmacies, drug providers, DME providers, home health centers, and emergency medical transport service providers.

Generally, transactions involving a change in ownership, operations, or management structure that (i) sell, transfer, lease, exchange, option, encumber, transfer, or otherwise change the material value of a health care asset to one or more things; or (ii) the transfer control, responsibility, or control of the material value of the assets or services of the health care company to one or more companies shall be subject to review. [2]

The price and market impact review process requires negotiating parties to notify OHCA at least 90 days before closing. Within 60 days after receiving the notification, OHCA will notify the notified party that OHCA will conduct a cost and market impact review or provide a written waiver from the review. During the pricing and market impact review process, OHCA will evaluate (i) changes in size or market share in a given service or geographic area, (ii) relative prices to other providers, (iii) quality, equity, access , and other factors. in the public interest, and (iv) the benefits of the transaction, such as improvements in access, quality, and efficiency. [3] The review process includes an investigation by the OHCA, which may invite health care companies and other relevant market participants to submit data and documents. A contract or negotiation subject to a cost and market impact review may not proceed until 60 days after OHCA issues a final report. During this time, OHCA may refer the transaction to the attorney general for review, and the attorney general may pursue a lawsuit to block the transaction or allow it to continue subject to certain conditions, such as the implementation of monitoring or ongoing reporting requirements. .

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Advance review of these health care transactions is scheduled to begin on April 1, 2024, and OHCA will begin accepting required transaction notices in January 2024. OHCA is expected to issue regulations to provide additional details on which transactions are subject to review and eligibility. trigger.

Although the law does not give the OHCA authority to prevent or challenge health care transactions, the OHCA has the power to delay transactions in particular that fall under its purview, because no transaction for which the OHCA reviews can be closed for days 60 after your delivery. a final report. Similar to the New York proposal, SB-184 covers many businesses, including those that involve, for example, MSOs, to the extent that the business will cause a change in responsibility for the services of a healthcare company. Investors who use MSOs as an investment vehicle for health care companies should carefully navigate the new requirements and oversight imposed by SB-184, beginning in 2024, and follow the announcement of regulations in the coming months. is forthcoming, which will further explain the scope and nature of the law.

If you have any questions about current trends in pharmacovigilance, please contact Wendy Chow or Rachel Park.

Wendy C. ChowOf Counsel Wendy Chow draws on nearly two decades of experience leading legal teams in the healthcare industry from advising clients on a wide range of healthcare compliance and negotiations. With deep knowledge and experience of healthcare laws and regulations, intellectual property licensing, and business and product transactions, More

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