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A03583 Summary:

BILL NOA03583
 
SAME ASNo Same As
 
SPONSORHunter
 
COSPNSR
 
MLTSPNSR
 
Amd §2801-a, Pub Health L
 
Provides for requirements for approval for proposals to merge, consolidate, partner, acquire through the establishment of control or proposals for any other transaction or affiliation of certain health care providers.
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A03583 Actions:

BILL NOA03583
 
01/27/2021referred to health
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A03583 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3583
 
SPONSOR: Hunter
  TITLE OF BILL: An act to amend the public health law, in relation to requirements for approval for merger and consolidation of certain health care providers by the public health and health planning council   PURPOSE: The legislation would provide the Public Health and Health Planning Council with additional authority in the oversight of provider mergers, acquisitions and affiliations.   SUMMARY OF PROVISIONS: Section 1 amends Subdivision 3 of Section 2801-a of the public health laws by creating a new subsection (b) that would give the Public Health and Health Planning Council (PHHPC) greater authority to review issues related to provider mergers and acquisitions. Under this section, as part of their application to PHHPC, providers that propose merging, acquiring or affiliating with another provider would be required to demonstrate to. PHHPC how such transaction will improve access to medically underserved individuals, lower the costs to consumers, and advance the public health goals of the state. Additionally, PHHPC would have the ability to prohibit the applicant from increasing prices for services that exceed the CPI for medical care for the five years imme- diately following any approval of such merger, consolidation, acquisi- tion, or other transaction or affiliation. Further, it would require the entities to submit an annual report for five years following an approval identifying the steps they have taken to limit or lower costs to consum- ers and otherwise benefit patients in the service area of the applicant.   JUSTIFICATION: The wave of mergers, acquisitions and affiliations among providers is reshaping the health care delivery system. Among the reasons that providers often cite for joining together is to improve quality, reduce costs, and support population health. However, there is a growing body of research demonstrating that, in many cases, provider consolidation has not resulted in greater efficiencies, better integration and improved quality. Rather, the data has shown increased costs with no notable improvement in the quality of care for patients. In fact, studies have shown that provider consolidation is fueling unjustifiable increases in the costs for services and that the quality of care has dropped or remained flat at hospitals that have been acquired in recent years. Consolidation in the health care industry (both hospital mergers and hospital acquisitions of physician practices) is widely recognized as leading to greater market power for large health systems and thus higher prices charged to insurers. The NY State Health Foundation's December 2016 report, Why are Hospital Prices Different? An Examination of New York Hospital Reimbursement, found that "a hospital's market leverage- its bargaining power when negotiating with insurers-is a key factor in the prices a hospital can command." The study reported that hospitals with greater market share are generally higher priced, and those higher prices extend to hospitals that are part of a hospital system with large regional market share, regardless of an individual hospital's size or market share. While there are valid reasons for mergers and transactions, PHHPC's review of such transactions does not include the impact on the price of health care following a transaction. Similarly, there are no retrospec- tive reviews on how care was improved for consumers, how the transaction advanced the public policies of the State and benefited medically under- served populations. In addition, there are no commitments required by applicants to keep costs stable for employers and consumers in the years following a transaction. Instead, the PHHPC's authority to review 'a transaction is limited to the financial feasibility of the project-es- sentially whether the applicant can afford to carry it out, and what the longterm impact of the project would be on the applicant's financial health. In a rapidly changing environment, it is necessary to expand the scope of the PHHPC's review authority in order to ensure that provider consolidation is to the benefit of employers and consumers. Ultimately, provider consolidations should benefit employers and consum- ers through lower costs, not enhanced bargaining power, with the combined entities expected to truly function as a system, resulting in clinical integration and better performance. This legislation seeks to promote greater accountability of these transactions to ensure that they do not result in higher costs. Providing a process to review these and other transactions is essential not only to ensure that the transaction will benefit the public interest, but also to. ensure that the promises made in advocating for specific transactions are promises kept in the future.   LEGISLATIVE HISTORY: 2020: A.10142   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately.
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A03583 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          3583
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 27, 2021
                                       ___________
 
        Introduced by M. of A. HUNTER -- read once and referred to the Committee
          on Health
 
        AN  ACT  to amend the public health law, in relation to requirements for
          approval for merger and consolidation of certain health care providers
          by the public health and health planning council

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Subdivision 3 of section 2801-a of the public health law,
     2  as amended by section 57 of part A of chapter 58 of the laws of 2010, is
     3  amended to read as follows:
     4    3. The public health and health planning council shall not  approve  a
     5  certificate  of  incorporation,  articles of organization or application
     6  for establishment unless it is satisfied, insofar as applicable,  as  to
     7  (a) the public need for the existence of the institution at the time and
     8  place  and  under the circumstances proposed, provided, however, that in
     9  the case of an institution proposed to be established or operated by  an
    10  organization  defined in subdivision one of section one hundred seventy-
    11  two-a of the executive law, the needs of the members  of  the  religious
    12  denomination  concerned,  for care or treatment in accordance with their
    13  religious or ethical convictions, shall be deemed to be public need; (b)
    14  the character,  competence,  and  standing  in  the  community,  of  the
    15  proposed  incorporators,  directors,  sponsors, stockholders, members or
    16  operators; with respect to any proposed incorporator, director, sponsor,
    17  stockholder, member or operator who is already or within  the  past  ten
    18  years  has  been  an  incorporator, director, sponsor, member, principal
    19  stockholder, principal member, or  operator  of  any  hospital,  private
    20  proprietary  home  for  adults, residence for adults, or non-profit home
    21  for the aged or blind which has been issued an operating certificate  by
    22  the  state  department of social services, or a halfway house, hostel or
    23  other residential facility or  institution  for  the  care,  custody  or
    24  treatment  of  the mentally disabled which is subject to approval by the
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05941-01-1

        A. 3583                             2
 
     1  department of mental hygiene, no approval shall be  granted  unless  the
     2  public  health  and health planning council, having afforded an adequate
     3  opportunity to members  of  health  systems  agencies,  if  any,  having
     4  geographical  jurisdiction  of  the  area where the institution is to be
     5  located to be heard, shall affirmatively find by substantial evidence as
     6  to each such incorporator, director, sponsor, principal  stockholder  or
     7  operator  that a substantially consistent high level of care is being or
     8  was being rendered in  each  such  hospital,  home,  residence,  halfway
     9  house,  hostel,  or other residential facility or institution with which
    10  such person is or was affiliated; for the purposes  of  this  paragraph,
    11  the  public  health  and  health  planning council shall adopt rules and
    12  regulations, subject to the approval of the commissioner,  to  establish
    13  the  criteria to be used to determine whether a substantially consistent
    14  high level of care has been  rendered,  provided,  however,  that  there
    15  shall  not  be  a  finding that a substantially consistent high level of
    16  care has been rendered where there have been  violations  of  the  state
    17  hospital  code,  or  other  applicable  rules  and regulations, that (i)
    18  threatened to directly affect the  health,  safety  or  welfare  of  any
    19  patient  or  resident,  and  (ii)  were  recurrent  or were not promptly
    20  corrected; (c) the financial resources of the proposed  institution  and
    21  its  sources of future revenues; [and] (d) an applicant that proposes to
    22  merge,  consolidate,  partner,  acquire  through  the  establishment  of
    23  control,  or  proposes  any  other transaction or affiliation with other
    24  health care providers governed under this  article,  that  such  merger,
    25  consolidation,  acquisition,  or  other  transaction or affiliation with
    26  other health care providers governed under this article,  shall  improve
    27  access  to medically underserved individuals, lower the costs to consum-
    28  ers, advance the public health goals of the  state,  and  the  applicant
    29  shall  not  increase charges for services that exceed the consumer price
    30  index for medical care for the  five  years  immediately  following  any
    31  approval  of  such  merger,  consolidation, acquisition, or other trans-
    32  action or affiliation; and  pursuant  to  this  section.  Such  approved
    33  applicant  shall  submit  an annual report to the department by December
    34  thirty-first of each year for the five  years  following  such  approval
    35  demonstrating  how the approval of a certificate of incorporation, arti-
    36  cles of organization or application  for  establishment,  benefited  the
    37  public,  including  but  not  limited  to,  lowering costs to consumers,
    38  providing efficiencies, and otherwise benefiting the service area of the
    39  applicant; and (e) such other matters as it shall deem pertinent.
    40    § 2. This act shall take effect immediately.
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