Bill Text: TX SB1529 | 2019-2020 | 86th Legislature | Introduced


Bill Title: Relating to merger agreements among certain hospitals; imposing fees.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced) 2019-04-04 - Left pending in committee [SB1529 Detail]

Download: Texas-2019-SB1529-Introduced.html
  86R16271 JCG-F
 
  By: Perry S.B. No. 1529
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to merger agreements among certain hospitals; imposing
  fees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle F, Title 4, Health and Safety Code, is
  amended by adding Chapter 314A to read as follows:
  CHAPTER 314A. MERGER AGREEMENTS AMONG CERTAIN HOSPITALS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 314A.001.  DEFINITIONS. In this chapter:
               (1)  "Attorney general" means the attorney general of
  Texas or any assistant attorney general acting under the direction
  of the attorney general of Texas.
               (2)  "Commission" means the Health and Human Services
  Commission.
               (3)  "Executive commissioner" means the executive
  commissioner of the Health and Human Services Commission.
               (4)  "Hospital" means a nonpublic general or special
  hospital licensed under Chapter 241 or a private mental hospital
  licensed under Chapter 577.
               (5)  "Merger agreement" or "merger" means an agreement
  among two or more hospitals for the consolidation by merger or other
  acquisition or transfer of assets by which ownership or control
  over substantially all of the stock, assets, or activities of one or
  more previously licensed and operating hospitals is placed under
  the control of another licensed hospital or hospitals or another
  entity that controls the hospitals.
         Sec. 314A.002.  APPLICABILITY. This chapter applies only to
  a merger agreement among hospitals located within a county that:
               (1)  contains two or more hospitals; and
               (2)  has a population of:
                     (A)  less than 100,000 and is not adjacent to a
  county with a population of 250,000 or more; or
                     (B)  more than 100,000 and less than 150,000 and
  is not adjacent to a county with a population of 100,000 or more.
         Sec. 314A.003.  LEGISLATIVE FINDINGS AND PURPOSES; OTHER LAW
  NOT AFFECTED. (a) The legislature finds that:
               (1)  a merger among hospitals may benefit the public by
  maintaining or improving:
                     (A)  the quality, efficiency, and accessibility
  of health care services offered to the public; and
                     (B)  the ability of hospital administrators to
  operate health care facilities and take measures to improve public
  health; and
               (2)  a merger among hospitals may provide the benefits
  described by Subdivision (1) despite that it may be anticompetitive
  within the meaning and intent of state and federal antitrust laws.
         (b)  The legislature believes it is in the state's best
  interest to supplant state and federal antitrust laws with a
  process for regulatory approval and active supervision by the
  commission as provided by this chapter.
         (c)  Nothing in this chapter affects antitrust immunity that
  may be provided through another provision of state law.
         Sec. 314A.004.  RULEMAKING. The executive commissioner
  shall adopt rules for the administration and implementation of this
  chapter by the commission.
  SUBCHAPTER B. CERTIFICATE OF PUBLIC ADVANTAGE
         Sec. 314A.051.  REVIEW AND CERTIFICATION OF MERGER
  AGREEMENTS REQUIRED. (a) Two or more hospitals may negotiate and
  enter into a merger agreement, subject to approval by the
  commission as provided by this subchapter.
         (b)  No merger agreement shall receive immunity under this
  chapter unless the commission issues a certificate of public
  advantage governing the merger agreement.
         Sec. 314A.052.  APPLICATION. (a) One or more parties to a
  merger agreement may submit an application to the commission for a
  certificate of public advantage governing the merger agreement.
  The application must include a written copy of the merger agreement
  and describe the nature and scope of the merger.
         (b)  If an applicant believes the documents or other
  information required to be submitted with an application under
  Subsection (a) contains proprietary information that is required to
  remain confidential, the applicant shall:
               (1)  clearly identify the information; and
               (2)  submit duplicate applications, one application
  that has complete information for the commission's use and one
  redacted application that will be made available for public
  release.
         (c)  A copy of the application and copies of all additional
  related materials must be submitted to the attorney general and to
  the commission at the same time.
         Sec. 314A.053.  APPLICATION FEE. The commission may assess
  a fee for filing an application under Section 314A.052 in an amount
  not to exceed $75,000. The amount of the fee must be sufficient to
  cover the reasonable costs of the commission and attorney general
  in reviewing and approving or denying applications under this
  subchapter.
         Sec. 314A.054.  REVIEW OF APPLICATION BY COMMISSION; GRANT
  OR DENIAL OF APPLICATION. (a) The commission shall review an
  application for a certificate of public advantage in accordance
  with the standard prescribed by Section 314A.056(a).
         (b)  The commission shall grant or deny the application not
  later than the 120th day after the date of the filing of the
  application. The commission's decision must:
               (1)  be in writing;
               (2)  specify the basis for the decision; and
               (3)  provide a copy of the decision to the applicants on
  the date of the decision.
         Sec. 314A.055.  REVIEW OF APPLICATION BY ATTORNEY GENERAL.
  (a) The attorney general shall review an application for a
  certificate of public advantage and all supporting documents and
  information provided by the applicants. On completion of the
  review and subject to Subsection (b), the attorney general shall
  advise the commission whether the proposed merger agreement would
  likely benefit the public and meet the standard prescribed by
  Section 314A.056(a).
         (b)  The attorney general shall review an application for a
  certificate of public advantage as soon as practicable, taking into
  consideration the deadline prescribed by Section 314A.054.
         (c)  If the attorney general advises the commission to deny
  an application, the attorney general shall state the basis and
  reasons for the recommended denial.
         Sec. 314A.056.  ISSUANCE OF CERTIFICATE OF PUBLIC ADVANTAGE.
  (a) The commission, after reviewing the application and consulting
  with the attorney general in accordance with Section 314A.055,
  shall issue a certificate of public advantage for a merger
  agreement if the commission determines under the totality of the
  circumstances that:
               (1)  the proposed merger would likely benefit the
  public by maintaining or improving:
                     (A)  the quality, efficiency, and accessibility
  of health care services offered to the public; and
                     (B)  the ability of hospital administrators to
  operate health care facilities and take measures to improve public
  health; and
               (2)  the likely benefits resulting from the proposed
  merger agreement described by Subdivision (1) outweigh any
  disadvantages attributable to a reduction in competition that may
  result from the proposed merger.
         (b)  In making the determination under Subsection (a), the
  commission shall consider the effect of the merger agreement on the
  following nonexclusive list of factors:
               (1)  the quality and price of hospital and health care
  services provided to citizens of this state;
               (2)  the preservation of sufficient hospitals within a
  geographic area to ensure public access to acute care;
               (3)  the cost efficiency of services, resources, and
  equipment provided or used by the hospitals that are a party to the
  merger agreement;
               (4)  the ability of health care payors to negotiate
  payment and service arrangements with hospitals proposed to be
  merged under the agreement; and
               (5)  the extent of any reduction in competition among
  physicians, allied health professionals, other health care
  providers, or other persons providing goods or services to, or in
  competition with, hospitals.
         (c)  The commission may include terms or conditions of
  compliance in connection with a certificate of public advantage
  issued under this subchapter if necessary to ensure that the
  proposed merger likely benefits the public as specified in
  Subsections (a)(1) and (2).
         Sec. 314A.057.  RECORDS. The commission shall maintain
  records of all merger agreements the commission has approved under
  this chapter, including any terms or conditions of issuing a
  certificate of public advantage that are imposed by the commission.
         Sec. 314A.058.  TERMINATION OF CERTIFICATE OF PUBLIC
  ADVANTAGE BY HOSPITAL. A hospital resulting from a merger
  agreement approved under this chapter may voluntarily terminate its
  certificate of public advantage by giving the commission notice at
  least 30 days before the date of the termination.
         Sec. 314A.059.  ANNUAL REVIEW OF CERTIFICATE. (a) The
  commission shall annually review an approved certificate of public
  advantage.
         (b)  The attorney general may annually review an approved
  certificate of public advantage.
         (c)  The commission may not complete its annual review of an
  approved certificate of public advantage under this section until:
               (1)  the attorney general informs the commission
  whether the attorney general intends to conduct any review of the
  certificate of public advantage as authorized under this section;
  and
               (2)  if the attorney general informs the commission of
  the attorney general's intent to conduct a review of an entity's
  approved certificate of public advantage, the attorney general has
  had the opportunity to conduct the review.
  SUBCHAPTER C. SUPERVISION OF MERGED HOSPITALS UNDER APPROVED
  MERGER AGREEMENT
         Sec. 314A.101.  SUPERVISION OF MERGED HOSPITALS. The
  commission shall supervise in the manner provided by this
  subchapter each hospital operating under a certificate of public
  advantage issued under this chapter to ensure that the immunized
  conduct of a merged entity furthers the purposes of this chapter.
         Sec. 314A.102.  RATE REVIEW. (a) An increase in rates for
  hospital services by a hospital operating under a certificate of
  public advantage issued under this chapter may not take effect
  without prior approval of the commission as provided by this
  section.
         (b)  At least 90 days before the implementation of any
  proposed increase in rates for inpatient or outpatient hospital
  services and, if applicable, at least 60 days before the execution
  of a reimbursement agreement with a third party payor, a hospital
  operating under a certificate of public advantage shall submit to
  the commission:
               (1)  any proposed increase in rates for inpatient and
  outpatient hospital services;
               (2)  if applicable, any increase in reimbursement rates
  under a reimbursement agreement with a third party payor; and
               (3)  any information concerning costs, patient volume,
  acuity, payor mix, and other information requested by the
  commission.
         (c)  After reviewing the proposed increase in rates
  submitted under Subsection (b), the commission shall approve or
  deny the proposed rate increase. The commission shall approve the
  proposed rate increase if the commission determines that:
               (1)  the proposed rate increase likely benefits the
  public by maintaining or improving:
                     (A)  the quality, efficiency, and accessibility
  of health care services offered to the public; and
                     (B)  the ability of hospital administrators to
  operate health care facilities and take measures to improve public
  health; and
               (2)  the proposed rate does not inappropriately exceed
  competitive rates for comparable services in the hospital's market
  area.
         (d)  If the commission determines that the proposed rate
  inappropriately exceeds competitive rates for comparable services
  in the hospital's market area, and that the proposed rate is
  inconsistent with the standard prescribed by Section 314A.056(a),
  the commission shall deny or modify the proposed rate increase.
         (e)  The commission shall notify the hospital in writing of
  the commission's decision to approve, deny, or modify the proposed
  rate increase not later than the 30th day before the implementation
  date of the proposed increase.
         Sec. 314A.103.  ANNUAL REPORT. Each hospital operating
  under a certificate of public advantage shall submit an annual
  report to the commission. The report must include:
               (1)  information about the extent of the benefits
  attributable to the issuance of the certificate of public
  advantage;
               (2)  if applicable, information about the hospital's
  actions taken:
                     (A)  in furtherance of any commitments made by the
  parties to the merger; or
                     (B)  to comply with terms imposed by the
  commission as a condition for approval of the merger agreement;
               (3)  a description of the activities conducted by the
  hospital under the merger agreement;
               (4)  information relating to the price, cost, and
  quality of and access to health care for the population served by
  the hospital and the health improvements of that population; and
               (5)  any other information required by the commission
  to ensure compliance with this chapter, including information
  relating to compliance with any terms or conditions for issuance of
  the certificate of public advantage.
         Sec. 314A.104.  CORRECTIVE ACTION PLAN. (a) The commission
  shall require a hospital operating under a certificate of public
  advantage to adopt a plan to correct a deficiency in the hospital's
  activities if the commission determines that an activity of the
  hospital does not benefit the public as described by Section
  314A.056(a) and no longer meets the standard prescribed by that
  subsection.
         (b)  The corrective action plan must include each provision
  required by the commission and must be submitted at the
  commission's direction.
         Sec. 314A.105.  SUPERVISION FEE. The commission may assess
  an annual supervision fee in an amount not to exceed $75,000 against
  each hospital operating under a certificate of public advantage
  under this chapter. The amount of the fee must be sufficient to
  cover the reasonable costs incurred by the commission in
  supervising hospitals under this subchapter and in implementing and
  administering this chapter.
  SUBCHAPTER D. ENFORCEMENT AUTHORITY BY COMMISSION
         Sec. 314A.151.  INVESTIGATION; REVOCATION OF CERTIFICATE.
  With respect to each hospital resulting from a merger agreement for
  which the commission issued a certificate of public advantage under
  this chapter, and to ensure that the hospital's activities continue
  to benefit the public under the standard prescribed by Section
  314A.056(a) and the purposes of this chapter, the executive
  commissioner may:
               (1)  investigate the hospital's activities; and
               (2)  require the hospital to perform a certain action
  or refrain from a certain action or revoke the hospital's
  certificate of public advantage, if the commission determines that:
                     (A)  the hospital is not complying with this
  chapter or a term or condition of compliance with the certificate of
  public advantage governing the hospital's immunized activities;
                     (B)  the commission's approval and issuance of the
  certificate of public advantage was obtained as a result of
  material misrepresentation;
                     (C)  the hospital has failed to pay any fee
  required under this chapter; or
                     (D)  the benefits resulting from the approved
  merger no longer outweigh the disadvantages attributable to the
  reduction in competition resulting from the approved merger.
         Sec. 314A.152.  JUDICIAL REVIEW OF COMMISSION ACTION. (a) A
  person aggrieved by a decision of the commission in granting,
  denying, or refusing to act on an application for a certificate of
  public advantage submitted under Subchapter B or revoking a
  certificate of public advantage issued under this chapter may
  appeal the final order by filing a petition for judicial review in a
  district court of Travis County.
         (b)  The filing of a petition for judicial review of a
  decision by the commission to revoke a certificate of public
  advantage stays enforcement of the commission's decision.
         (c)  Not later than the 45th day after the date a person files
  a petition for judicial review under this section, the commission
  shall submit to the district court the original copy or a certified
  copy of the entirety of the commission's record regarding the
  decision under review. By stipulation of all parties, the record
  may be shortened. The district court may require or permit later
  corrections or additions to the record. The district court may
  extend the period prescribed by this subsection for submitting the
  commission's record to the court.
         (d)  The district court shall conduct the review sitting
  without a jury.
         (e)  The district court may reverse a decision by the
  commission regarding revocation of a certificate of public
  advantage if the court finds that the decision is:
               (1)  in violation of a constitutional or statutory
  provision;
               (2)  in excess of the commission's statutory authority;
               (3)  made through unlawful procedure;
               (4)  arbitrary or capricious or characterized by abuse
  of discretion or clearly unwarranted exercise of discretion; or
               (5)  unsupported by substantial and material evidence
  in light of the record as a whole.
         (f)  Under Subsection (e)(5), in determining the
  substantiality of the evidence, the district court:
               (1)  shall consider other evidence that detracts from
  the substantiality; and
               (2)  may not substitute its judgment for the judgment
  of the commission on the weight of the evidence as to a question of
  fact.
         (g)  The district court shall issue a written decision
  setting forth the court's findings of fact and conclusions of law.
  The commission shall add the court's decision to the commission's
  record.
  SUBCHAPTER E. ATTORNEY GENERAL INVESTIGATION AND ENFORCEMENT
  AUTHORITY
         Sec. 314A.201.  CIVIL INVESTIGATIVE DEMAND. (a) The
  attorney general, at any time after an application is filed under
  Section 314A.052 and before the commission makes a determination on
  the application, or in connection with the commission's annual
  review of a certificate of public advantage under Section 314A.059,
  may require by civil investigative demand the attendance and
  testimony of witnesses and the production of documents in Travis
  County or the county in which the applicants are located for the
  purpose of investigating whether the merger agreement satisfies or,
  after issuance of the certificate of public advantage, continues to
  satisfy the standard prescribed by Section 314A.056(a).
         (b)  All nonpublic documents produced for and testimony
  given to the attorney general under Subsection (a) are subject to
  the prohibitions on disclosure and use under Section 15.10(i),
  Business & Commerce Code.
         (c)  The attorney general may seek an order from the district
  court compelling compliance with a civil investigative demand
  issued under this section.
         Sec. 314A.202.  ACTION TO REVOKE CERTIFICATE OF PUBLIC
  ADVANTAGE FOLLOWING CHANGED CIRCUMSTANCES. (a) If, following an
  annual review of a certificate of public advantage, the attorney
  general determines that as a result of changed circumstances the
  benefits resulting from a certified merger agreement as described
  by Section 314A.056(a) no longer outweigh any disadvantages
  attributable to a reduction in competition resulting from the
  merger agreement, the attorney general may bring an action in a
  district court in Travis County seeking to revoke the certificate
  of public advantage in accordance with the procedures prescribed by
  this section.
         (b)  Except as provided by Subsection (c), in an action
  brought under this section, the attorney general has the burden of
  establishing by clear and convincing evidence that as a result of
  changed circumstances the benefits resulting from the certified
  merger agreement and the unavoidable costs of revoking the
  certificate of public advantage are outweighed by disadvantages
  attributable to a reduction in competition resulting from the
  merger agreement.
         (c)  In any action brought under this section, if the
  attorney general first establishes by clear and convincing evidence
  that the commission's certification was obtained as a result of
  material misrepresentation to the commission or the attorney
  general or as the result of coercion, threats, or intimidation
  directed toward any party to the merger agreement, then the parties
  to the merger agreement bear the burden of establishing by clear and
  convincing evidence that despite changed circumstances the
  benefits resulting from the certified merger agreement and the
  unavoidable costs of revoking the certificate of public advantage
  are not outweighed by disadvantages attributable to a reduction in
  competition resulting from the merger agreement.
         SECTION 2.  This Act takes effect September 1, 2019.
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