On March 1, 2024, New Mexico joined a growing number of states in enacting legislation to increase oversight of certain health care transactions. Senate Bill 15 (SB 15) adds a new provision to the New Mexico Insurance Act (Act) called the “Healthcare Integration Oversight Act'' (Act), which becomes effective May 1, 2024.
Overview of the law
The law authorizes the New Mexico Department of Insurance Commissioners (the Department) to review and approve, conditionally approve, or disapprove proposed transactions involving New Mexico hospitals.
Similar to the Medical Transaction Review Act, other states covered in Previous blog poststhis legislation focuses on the impact of hospital consolidation on access to services, quality of care, and cost. Specifically, New Mexico's law concerns the acquisition of small, often rural, community hospitals by large hospital systems, resulting in a change in control of the community hospital. These acquisitions will now require written approval from the Insurance Commissioner (Supervisor).
Transactions subject to law
“Transaction” is defined to mean any of the following:
- Merger of New Mexico hospitals with other hospitals.
- acquisitionn[i] ahOne or more hospitals in New Mexico.
- Regardless of affiliationn[ii] or any contract or other arrangement resulting in a change in the management of a New Mexico hospital, including a contract with a management services organization.[iii] or a health insurance company.
- Formation of a new corporation, partnership, joint venture, trust, parent organization, or management services organization that changes control of an existing New Mexico hospital.and
- Any agreement resulting in the sale, purchase, lease, new partnership, or management of New Mexico hospitals.
The term “control” refers to directing or causing the direction of a hospital's operations and policies, directly or indirectly, such as through ownership of voting securities, through licensing or franchise agreements, or through non-commercial agreements. means authority. However, that authority does not arise from a public office held by an individual or from a corporate position. Control is presumed to exist if a person directly or indirectly owns, controls, or retains 15% or more of the voting power of another person's voting securities. This presumption may be rebutted by filing a disclaimer that control in the manner provided in Code section 59A-37-19 does not in fact exist.
Notification regarding proposed transaction
This law requires at least one person[iv] This means that the parties to the proposed transaction must submit a written notification to the Office in the form prescribed by the Office.
The notification must include:
- The parties, the terms of the proposed transaction, and copies of all transaction agreements.
- A statement describing the goals of the proposed transaction and whether and how the proposed transaction will impact health care services in New Mexico.
- Geographic service areas of hospitals affected by the proposed transaction.
- A description of the groups or individuals that may be affected by the transaction.and
- A summary of the health services currently provided by the party and the health services that will be added, reduced, or eliminated, including an explanation of why the services are being reduced or eliminated.
Although the law does not prohibit impacts on New Mexico health care services from being included in the notification, as described below, the law does include impacts that the Office may consider in its review. Contains a list of factors (access, quality, cost, etc.). , availability, etc.) as a guide.
All documents, materials, or other information provided to or disclosed to public authorities during the course of an investigation under the Act are confidential.
Review of proposed transactions, experts, and costs
When examining a proposed transaction, the Patent Office may consider:
- Potential reduction or elimination of access to essential services;[v];
- availability, accessibility, and quality of health services to affected communities;
- the parties' health care market share and whether the transaction may exclude competitors of the parties from the market segment or increase barriers to entry into the health care market;
- Changes in practice restrictions for licensed health care workers working in hospitals.
- Patient costs, including insurance premiums and copays.
- Healthcare provider network.and
- the potential for the proposed transaction to impact the health outcomes of New Mexico residents;
The Agency is authorized to employ actuaries, accountants, attorneys, or other professionals with expertise in the type of transaction proposed to assist in conducting the review. The parties to the proposed transaction will be required to pay the reasonable costs and expenses incurred by the Secretariat in carrying out its duties, including costs associated with engaging experts.
The Authority will also consult with the Department of Health Authorities (the Authority) regarding the potential impact of the proposed transaction and will incorporate the Authority's recommendations into the Authority's final decision. Within 120 days after the Office receives complete notification of the proposed transaction, the Office will complete its review and consultation with the Agency and either approve, conditionally approve, or disapprove the proposed transaction. is needed. This period is charged during the period in which the Office requests additional information necessary to complete the review and waits to receive additional information from the parties.
The law provides that the agency shall approve a proposed transaction if it determines that:
- The parties have demonstrated that this transaction will benefit the public in the following ways:
- Control increases in patient costs such as insurance premiums and co-payments.or
- maintain or increase access to services, particularly in underserved areas;
- The proposed deal would improve the health outcomes of New Mexico residents.and
- There is virtually no possibility that:
- A significant decline in patient availability, accessibility, affordability, or quality of care.or
- The anticompetitive effects of the proposed transaction outweigh the benefits of the transaction.
The Superintendent will notify the submitter in writing of the office's decision and its reasons.
Post-trade monitoring
After acquiring control of a hospital through an approved or conditionally approved transaction, the acquirer is required to file reports with government offices and agencies. authority It will be approved annually for three years after approval or conditional approval in the form and manner prescribed by the Secretariat. Reports are required for the following purposes:
- Describe compliance with conditions imposed on the transaction.
- Describe growth, decline, and other changes in the services provided by individuals.and
- Provides analysis of hospital cost trends and cost growth trends.
Recommendations
Parties considering a transaction involving a change of control of a New Mexico hospital should first consider and determine whether their transaction is subject to the Act and, if so, provide notice and You should start preparing for the approval process early. Pursuant to the Act, parties may request a pre-notice conference to determine whether a notice must be filed or to discuss the scope of a potential review. Parties must utilize a pre-notification conference. This serves as a way to inform regulators about the filing of a notification and establish a standing relationship to assist in their review.
[i] The term “acquisition” includes any arrangement that results in the acquisition, directly or indirectly, of control of a New Mexico hospital, including through the acquisition of voting securities, membership rights, stock rights or assets. SB 15, §2.A.
[ii] “Affiliation” means a business arrangement in which one person is controlled by, is under common control with, or has control over another person, directly or indirectly. point. SB 15, §2.B.
[iii] “Managed Services Organization” means an individual who provides all or substantially all of the administrative services under a contract with a hospital, such as managing contracts with health plans, third-party administrators, and pharmacy benefit managers. point. SB 15, §2.I.
[iv] “Person” includes any individual, association, organization, partnership, company, syndicate, trust, corporation, or other legal entity. SB 15, §2.L.
[v] The term “essential services” means “health care services covered by the New Mexico Medicaid program, health care services required to be included in a health plan under state or federal law, and health care services required to be included in an eligible health plan.” ” means. This plan is offered through the New Mexico Health Insurance Exchange. ” SB 15, §2.E.
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