PRINTER'S NO. 1861
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1272
Session of
2022
INTRODUCED BY KEARNEY, KANE, CAPPELLETTI, A. WILLIAMS, SAVAL AND
COSTA, JULY 18, 2022
REFERRED TO HEALTH AND HUMAN SERVICES, JULY 18, 2022
AN ACT
Providing for approval by the Department of Health for health
systems to enter into certain agreements and transactions;
and imposing duties on the Attorney General.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Health
Systems Protection Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Health of the Commonwealth.
"Health system." A for-profit entity owning and operating
one or more hospitals, hospice agencies or nursing homes.
"Material amount." Ten percent of the fair market value of
the health system.
Section 3. Notice and approval.
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(a) General rule.--A health system shall provide written
notice to the department and the Attorney General, and obtain
the written consent of the department, before entering into an
agreement or transaction to do either of the following:
(1) Sell, transfer, lease, exchange, option or otherwise
encumber a material amount of the health system's assets.
(2) Transfer control, responsibility or governance of a
material amount of the health system's assets or operations.
(b) Transfers.--The following shall be deemed a transfer for
purposes of this section:
(1) The substitution of a new corporate member or
members that transfers the control of, responsibility for or
governance of the corporation.
(2) The substitution of one or more members of the
governing body, or an arrangement, written or oral, that
would transfer voting control of the members of the governing
body.
(c) Notice.--The written notice under subsection (a) shall
be submitted at the same time that any other Federal or State
agency is notified under applicable law, or at least 90 days
before the agreement or transaction takes effect, and shall
include and contain the information that the department and the
Attorney General deem necessary. The notice, including any other
information that is provided to the department and the Attorney
General under this section and that is in the public record,
shall be made available by the department and the Attorney
General to the public in written form, as soon as is practicable
after it is received by the department and the Attorney General.
(d) Recommendation by Attorney General.--Within 90 days of
the receipt of the written notice under subsection (a), the
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Attorney General shall make a recommendation to the department
as to whether the department shall consent to, give conditional
consent to or not consent to an agreement or transaction
described under subsection (a).
(e) Determination.--The department shall have discretion to
consent to, give conditional consent to or not consent to an
agreement or transaction described under subsection (a). In
making the determination, the department shall consider the
Attorney General's recommendation under subsection (d) and any
factors that the department deems relevant, including all of the
following:
(1) Whether or not the proposed agreement or transaction
may have a significant impact on market competition or costs
for health care payers, purchasers or consumers.
(2) Whether or not the proposed agreement or transaction
may have a significant impact on the quality of care,
including the ability to offer culturally competent and
appropriate care.
(3) Whether or not the proposed agreement or transaction
may have a significant impact on the access to or
availability of health care for payers, purchasers or
consumers.
(4) Whether or not the proposed agreement or transaction
is in the public interest.
(5) Whether or not the proposed agreement or transaction
is likely to maintain access to care in a rural community,
low-income community or disadvantaged community.
(f) Timing.--Within 30 days of the receipt of the Attorney
General's recommendation under subsection (d), the department
shall notify the health system of the decision to consent to,
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give conditional consent to or not consent to the agreement or
transaction. The department may extend this period for one
additional 45-day period if any of the following conditions
apply:
(1) The extension is necessary to obtain additional
information.
(2) The proposed agreement or transaction is
substantially modified after the original notice was provided
to the department and the Attorney General.
(3) The proposed agreement or transaction involves a
multifacility health system serving multiple communities,
rather than a single facility or entity.
(g) Appeal.--If the department does not approve an agreement
or transaction, the health system may, within 30 calendar days
of notification under subsection (f), appeal the decision of the
department. The Commonwealth Court shall have jurisdiction for
an appeal from a determination by the department under this
section pursuant to 42 Pa.C.S. ยง 763 (relating to direct appeals
from government agencies).
(h) Foreign entities.--This section applies to a foreign
entity that operates or controls a health system if that foreign
entity operates, manages or controls any domestic entities that
provide similar health care or if that foreign entity provides
similar health care to a domestic entity regardless of whether
it is currently operating or has a suspended license.
(i) Construction.--This section shall not be construed to
narrow, abrogate or otherwise alter the authority of the
Attorney General to maintain competitive markets and prosecute
Federal and State antitrust and unfair competition violations.
Section 4. Public meetings.
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(a) General rule.--Before issuing a written decision under
section 3, the Attorney General shall conduct one or more public
meetings on an agreement or transaction.
(b) Specific entities.--If the agreement or transaction
involves a medical group or a hospital or hospital system, one
of the public meetings shall be in the county in which the
acquired entity is located, to hear comments from interested
parties.
(c) Notice.--At least 14 days before conducting a public
meeting, the Attorney General shall provide written notice of
the time and place of the public meeting through publication in
one or more newspapers of general circulation in the affected
community and to the governing body of the county or counties in
which the health system is located.
(d) Substantive changes to proposal.--If a substantive
change in the proposed agreement or transaction is submitted to
the Attorney General after the initial public meeting, the
Attorney General may conduct an additional public meeting to
hear comments from interested parties with respect to that
change.
Section 5. Contracts.
(a) General rule.--The following shall apply:
(1) The Attorney General may do the following:
(i) Contract with, consult and receive advice from a
State agency on the terms and conditions that the
Attorney General deems appropriate.
(ii) At the Attorney General's sole discretion,
contract with experts or consultants to assist in
reviewing the proposed material change in control.
(2) Contract costs shall not exceed an amount that is
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reasonable and necessary to conduct the review and
evaluation. A contract entered into under this section shall
be on a noncompetitive bid basis. Upon request, the Attorney
General shall be paid promptly by the entities seeking
consent for all contract costs.
(3) The Attorney General shall be entitled to
reimbursement from the entities seeking consent for all
actual, reasonable and direct costs incurred in reviewing,
evaluating and making the determination under section 3,
including administrative costs. The entities seeking consent
shall promptly pay the Attorney General, upon request, for
all such costs.
(b) Contracts to monitor compliance.--The following shall
apply:
(1) To effectively monitor ongoing compliance with the
terms and conditions of a material change of control subject
to section 3, the Attorney General may, at the Attorney
General's sole discretion, contract with experts and
consultants to assist with monitoring compliance.
(2) Contract costs shall not exceed an amount that is
reasonable and necessary to conduct the review and
evaluation. A contract entered into under this section shall
be on a noncompetitive bid basis. The entities seeking
consent shall pay the Attorney General promptly for all
contract costs.
(3) The Attorney General shall be entitled to
reimbursement from either the selling or the acquiring
entity, depending upon which one the burden of compliance
falls, for all actual, reasonable and direct costs incurred
in monitoring ongoing compliance with the terms and
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conditions of the sale or transfer of assets, including
contract and administrative costs. The Attorney General may
bill either the selling or the acquiring entity and the
entity billed by the Attorney General shall promptly pay for
all such costs.
Section 6. Severability.
The provisions of this act are severable. If any provision of
this act or its application to any person or circumstance is
held invalid, the invalidity shall not affect other provisions
or applications of this act which can be given effect without
the invalid provision or application.
Section 7. Regulations.
The department may promulgate rules and regulations necessary
to implement this act.
Section 8. Effective date.
This act shall take effect in 60 days.
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