SENATE BILL 15
56th legislature - STATE OF NEW MEXICO - second session, 2024
INTRODUCED BY
Katy M. Duhigg and Reena Szczepanski
AN ACT
RELATING TO INSURANCE; ENACTING THE HEALTH CARE CONSOLIDATION OVERSIGHT ACT; REQUIRING REVIEW OF PROPOSED HEALTH CARE MERGERS, ACQUISITIONS AND OTHER MATERIAL CHANGES IN CONTROL OF HEALTH CARE ENTITIES, INCLUDING HEALTH INSURANCE ENTITIES; PROVIDING EXCEPTIONS; GRANTING THE OFFICE OF SUPERINTENDENT OF INSURANCE AND THE HEALTH CARE AUTHORITY DEPARTMENT THE AUTHORITY TO REVIEW PROPOSED TRANSACTIONS; PROVIDING FOR PUBLIC COMMENT AND STAKEHOLDER ADVISORY COMMITTEES; AUTHORIZING THE APPROVAL, DISAPPROVAL OR CONDITIONAL APPROVAL OF TRANSACTIONS; PROTECTING CONFIDENTIALITY OF TRADE SECRETS; ASSESSING COSTS; PROVIDING POST-TRANSACTION OVERSIGHT; PRESCRIBING A PENALTY; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Health Care Consolidation Oversight Act"."
SECTION 2. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] DEFINITIONS.--As used in the Health Care Consolidation Oversight Act:
A. "acquisition" means any agreement or activity the consummation of which results in a person acquiring directly or indirectly the control of a health care entity in New Mexico and includes the acquisition of voting securities or assets, bulk reinsurance and mergers;
B. "affiliation" means a business arrangement in which one person directly or indirectly is controlled by, is under common control with or controls another person;
C. "authority" means the health care authority department;
D. "control" means the possession of the power to direct or cause the direction of the management and policies of a health care entity, whether directly or indirectly, through the ownership of voting securities; through licensing or franchise agreements; by contract other than a commercial contract for goods or nonmanagement services; or otherwise, unless the power is the result of an official position with or corporate office held by an individual;
E. "essential services" means any health care services covered by the state medicaid program; any health care services that are required to be included in health plans pursuant to state or federal law, including health care services that are required to be included in qualified health plans offered through the New Mexico health insurance exchange; and any additional services identified by rule of the office;
F. "health care entity" means a person that provides or supports the provision of health care services, including a health insurance entity, health care provider, health care provider organization, health care facility, management service organization or organization of health care providers or facilities;
G. "health care facility" means a hospital or other facility licensed by the department of health or its successor agency to provide health care services or a health care setting, including inpatient facilities, ambulatory surgical or treatment centers, diagnostic, laboratory and imaging centers, free-standing emergency facilities, freestanding birth centers, outpatient clinics, and rehabilitation and other therapeutic health settings; provided that "health care facility" does not include long-term care facilities, adult daycare facilities, intermediate care facilities, boarding homes, child care facilities or shelter care homes;
H. "health care provider" means a person qualified or licensed under state law to perform or provide health care services;
I. "health care provider organization" means a person that is in the business of delivering or managing the delivery of health care services, whether incorporated or not, and that represents one or more health care providers in contracting with health insurance entities for the payment of health care services;
J. "health care services" means:
(1) the provision and payment or reimbursements for services, drugs, devices and other medical goods for the diagnosis, prevention, treatment, cure or relief of a physical, dental, vision, behavioral or mental health condition, substance use disorder, illness, injury or disease;
(2) performance of and payments or reimbursement for the referral, arrangement or coordination of the delivery of health care;
(3) medical or behavioral health ground transportation; and
(4) technology associated with the provision of services or equipment related to Paragraphs (1) and (2) of this subsection such as telehealth, electronic health records, claims processing and utilization systems;
K. "health insurance entity" means a person required to be licensed or subject to the Insurance Code in connection with the business of health insurance or health care, excluding insurance producers;
L. "hospital" means a facility providing emergency or urgent care, inpatient medical care and nursing care for acute illness, injury, surgery or obstetrics. "Hospital" includes a facility licensed by the department of health or its successor agency as a critical access hospital, general hospital, long-term acute care hospital, psychiatric hospital, rehabilitation hospital, limited services hospital and special hospital;
M. "management services organization" means a person that provides all or substantially all the personnel for or manages all or substantially all the operations of a health care entity;
N. "office" means the office of superintendent of insurance;
O. "party" means a person taking part in a transaction subject to the Health Care Consolidation Oversight Act;
P. "person" means an individual, association, organization, partnership, firm, syndicate, trust, corporation or other legal entity;
Q. "revenue" means gross revenue;
R. "superintendent" means the superintendent of insurance; and
S. "transaction" means any of the following:
(1) a merger of a health care entity in New Mexico with another health care entity or any other person within or without the state;
(2) an acquisition of one or more health care entities, one of which is in New Mexico or the acquisition of which may affect a health care entity in New Mexico;
(3) any affiliation or contract that results in a change of control of a health care entity in New Mexico;
(4) new contracts, new clinical affiliations or new contracting affiliations that may eliminate or significantly reduce essential services in New Mexico;
(5) formation of a new corporation, partnership, joint venture, accountable care organization, parent organization or management services organization to provide health care services or to administer contracts with insurance carriers, third party administrators, pharmacy benefit managers or health care providers that affect New Mexico health care entities or health care service to New Mexico residents; and
(6) a sale, purchase, lease, new affiliation or transfer of control of a hospital located in New Mexico."
SECTION 3. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] APPLICABILITY--EXEMPTIONS--PROVISIONS ADDITIONAL--CONTROL PRESUMPTIONS.--
A. The oversight power of the office and authority pursuant to the Health Care Consolidation Oversight Act applies to proposed transactions that involve a New Mexico health care entity or the creation of a health care entity that will be doing business in New Mexico and at least one party to the transaction had an average annual revenue of twenty million dollars ($20,000,000) or more in the immediately preceding three years or, in the case of a new entity, is projected to have at least ten million dollars ($10,000,000) in average annual revenue over the first three years of operation at normal levels of operation or utilization.
B. The Health Care Consolidation Oversight Act does not apply to:
(1) collaboration on clinical trials, graduate medical education programs, other health professions' training programs, health sciences training programs or other education or research programs;
(2) federally qualified health centers or health care providers that meet the requirements of the federal health resources and services administration's health center program but do not receive program funding;
(3) an agreement or contract with an individual who is a health care provider;
(4) an employer that is not a health care entity that provides payment for health care services provided to its employees; and
(5) long-term care facilities, adult daycare facilities, intermediate care facilities, boarding homes, child care facilities or shelter care homes.
C. Being subject to the Health Care Consolidation Oversight Act does not preclude or negate a health insurance entity's regulation pursuant to the Insurance Holding Company Law.
D. Control is presumed to exist if a person, directly or indirectly, owns, controls, holds ten percent or more of the power to vote or holds proxies representing ten percent or more of the voting securities of any other person. This presumption may be rebutted by a showing, in the manner provided by Section 59A-37-19 NMSA 1978, that control does not in fact exist."
SECTION 4. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] CONFIDENTIALITY.--
A. All documents, materials and supporting information submitted to the office as part of a proposed material change transaction are public records and subject to the provisions of the Inspection of Public Records Act except as provided in this section.
B. If a party believes that information contained in the notice of proposed material change transaction contains a trade secret, the party shall:
(1) at the time the information is submitted to the office, submit a written request for designation of the information as a trade secret in the manner prescribed by the office;
(2) identify with particularity the information to be designated as a trade secret; and
(3) submit the information at issue in a separate filing from information submitted that does not contain trade secrets and clearly mark each page that contains a trade secret with the term "trade secret"; provided that if a document contains both trade secret information and non-trade-secret information, the submitting party shall redact the trade secret information from the document and identify it in the separate filing.
C. If the office determines that the information meets the standard for a trade secret, the office shall maintain the confidentiality of the information. If the office shares confidential information with another state agency or an outside expert, that agency or the outside expert is also bound by the confidentiality provided in this section and any other applicable confidentiality provisions of state law."
SECTION 5. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] INTERVENTION WHEN FINAL AUTHORITY RESTS WITH ANOTHER STATE.--When final authority to approve a proposed transaction rests with another state, the office may place conditions on health care entities operating in New Mexico if the transaction may have negative effects on the availability, accessibility, affordability and quality of health care services."
SECTION 6. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] TIMING OF REVIEW OF NOTICE AND TOLLING.--
A. A notice of a proposed transaction shall be deemed complete by the office on the date when all the information required by the Health Care Consolidation Oversight Act and rules promulgated in accordance with that act or requested by the office is submitted by all parties to the transaction, as applicable.
B. Should the scope of the proposed transaction be significantly modified from that outlined in the initial notice, the time periods set out in the Health Care Consolidation Oversight Act shall be restarted by the office.
C. The time periods shall be tolled during any time in which the office has requested and is awaiting further information from the parties to a transaction necessary to complete either its preliminary or comprehensive review."
SECTION 7. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] NOTICE OF PROPOSED TRANSACTION--GENERAL PROVISIONS--REQUIREMENTS--POSTING PUBLIC INFORMATION-- CONSULTATIONS--EXPERTS--PAYMENT OF COSTS.--
A. At least one person that is a party to a proposed transaction shall submit to the office a written notice of the proposed transaction in the form and manner prescribed by the office. The submitting party shall pay the reasonable costs and expenses incurred by the office in the performance of the office's or authority's duties pursuant to the Health Care Consolidation Oversight Act, including costs associated with the office's contracts with experts, unless determined otherwise by the superintendent.
B. If a party to the proposed transaction is a health insurance entity, the notice shall be submitted as an addendum to any filing required by Sections 59A-37-4 through 59A-37-10 NMSA 1978.
C. The written notice of the proposed transaction shall include information required by the office, including:
(1) a list of the parties, the terms of the proposed transaction and all transaction-related documents;
(2) a statement describing the goals of the proposed transaction and whether and how the proposed transaction affects current and future health care services in New Mexico;
(3) the geographic service area of any health care entity affected by the proposed transaction;
(4) a description of the groups or individuals likely to be affected by the transaction; and
(5) a summary of the health care services currently provided by any of the parties; commitments by the health care entity to continue those services; and any health care services that will be added, reduced or eliminated, including an explanation of why any services will be reduced or eliminated in the service area in which they are currently provided.
D. Within fifteen days of receipt of a complete notice of a proposed transaction, the office shall post on its website:
(1) the summaries, descriptions and statements provided in the written notice;
(2) details about how to submit written comments regarding the transaction; and
(3) information about any public comment forums that will be conducted regarding the transaction.
E. The office shall consult with the authority about the potential effect of the proposed transaction as part of a preliminary review and incorporate the authority's review into the office's final determination.
F. The office may consult with any other state agency to the extent the agency has expertise related to the proposed transaction or the communities or populations that may be affected by the transaction.
G. The office may retain actuaries, accountants, attorneys or other professionals who are qualified and have expertise in the type of transaction under review as necessary to assist the office in conducting the analysis of the proposed transaction as part of its preliminary review and, if applicable, its comprehensive review of the proposed transaction.
H. The parties shall not close a transaction without the written permission or approval of the superintendent. If the permission or approval contains conditions, those conditions shall be met as provided by the office. The submitting party shall notify the office in a form and manner prescribed by the office when the transaction has closed.
I. The office may exempt a health care entity from requirements of the Health Care Consolidation Oversight Act if there is an emergency situation that threatens immediate health care services and the transaction is urgently needed to protect the interest of consumers."
SECTION 8. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] PRELIMINARY REVIEW OF PROPOSED TRANSACTIONS.--
A. No later than forty-five days after receiving a complete notice of a proposed transaction, the office shall conduct a preliminary review.
B. As part of its preliminary review, the office shall consider whether the transaction:
(1) is in the interest of patients and consumers of health care services;
(2) is urgently necessary to maintain the solvency of a health care entity; and
(3) may have negative effects on the availability, accessability, affordability and quality of health care for patients and other consumers of health care services.
C. Following the conclusion of the preliminary review, the office shall:
(1) notify the parties in writing that a comprehensive review is not required and they have the superintendent's permission to proceed with the transaction; or
(2) notify the parties in writing that the transaction is subject to a comprehensive review and include the reasons for that determination."
SECTION 9. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] COMPREHENSIVE REVIEW OF PROPOSED TRANSACTION.--
A. In conducting a comprehensive review of a proposed transaction, the office shall consider the likely effect of the proposed transaction on:
(1) the potential loss or change in access to essential services;
(2) the accessibility of current and future health care services to any community affected by the transaction, including the accessibility of culturally responsive care;
(3) the quality of current and future health care services provided to any of the communities affected by the transaction;
(4) health care market share of a party and whether the transaction may foreclose competitors of a party from a segment of the market or otherwise increase barriers to entry in a health care market in New Mexico;
(5) the labor market and competition for health care workers;
(6) wages, salaries, benefits and working conditions of employees of health care entities;
(7) employment protections, restrictions and other terms and conditions of employment for employees of health care entities;
(8) patient costs;
(9) payer costs;
(10) health care provider networks;
(11) health plan premiums and out-of-pocket costs;
(12) cost trends and containment of total state health care spending;
(13) access to services in medically underserved areas;
(14) the functioning of the New Mexico markets for health care and health insurance;
(15) the potential for the material change transaction to affect health outcomes for New Mexico residents;
(16) consumer concerns, including complaints or other allegations against a health care entity that is a party to the transaction related to availability, accessibility, affordability and quality of care or coverage; and
(17) any other factors the office determines to be in the public interest.
B. Following completion of the comprehensive review and the receipt of recommendations from the authority and other state agencies consulted and any advisory committee created by the office for the comprehensive review process, the office shall approve the proposed transaction, approve the proposed transaction with conditions or disapprove the proposed transaction.
C. The office shall approve the proposed transaction after the comprehensive review if the office determines that:
(1) the parties to the proposed transaction demonstrate that the transaction will benefit the public by:
(a) reducing the growth in patient costs, including premiums and out-of-pocket costs; and
(b) maintaining or increasing access to services, especially in medically underserved areas;
(2) the proposed transaction will improve health outcomes for New Mexico residents; and
(3) there is no substantial likelihood of:
(a) a significant reduction in the accessibility, affordability and quality of care for patients and consumers of health care services; or
(b) anti-competitive effects from the proposed transaction that outweigh the benefits of the transaction."
SECTION 10. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] STAKEHOLDER ADVISORY COMMITTEE FOR REVIEWS--PUBLIC COMMENT FORUMS.--
A. The office may establish a stakeholder advisory committee to review and make recommendations regarding a proposed transaction that is subject to a review. The superintendent shall appoint members of the affected community, consumer advocates and health care experts subject to the following:
(1) no more than one-third of the members of the stakeholder advisory committee may be representatives of, contract with or be employed by a health care entity;
(2) a member cannot be a representative of, a contractor of or an employee of a health care entity that is a party to or an affiliate of a party to the transaction under review, or an individual who is within three degrees of consanguinity to an individual who is a representative of, a contractor of or employed by an entity that is a party to or an affiliate of a party to the transaction under review; and
(3) a member cannot be a representative of, a contractor of or employed by a competitor that is of a similar size to the New Mexico health care entity that is a party to the transaction.
B. If the office conducts a comprehensive review, at least one public comment forum shall be held in the New Mexico service area or areas of the health care entities that are parties to the proposed transaction. Members of the stakeholder advisory committee, if one has been appointed, shall be invited to attend public comment forums.
C. At least ten calendar days prior to a public comment forum, the office shall post to the office's website information about the public comment forum and a link in the website to materials relevant to the proposed transaction. The forum notice and the materials shall be in a format that is easy to find and easy to read and include information on how to submit comments.
D. The office shall publish the notice of a public comment forum in at least one newspaper of general circulation in the area affected by the material change transaction."
SECTION 11. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] POST-TRANSACTION OVERSIGHT.--
A. If the superintendent enforces conditions imposed by a conditional permission or approval, the office is entitled to attorney fees and costs.
B. The superintendent may contract with experts to assist with monitoring ongoing compliance with the terms and conditions of a transaction. The office shall designate the party or parties to the transaction that shall bear the reasonable and actual cost of retaining experts for post-transaction oversight.
C. The health care entity or other person that acquired direct or indirect control over the health care entity through a permitted or approved or a conditionally permitted or approved transaction shall submit one-, two- and five-year reports to the office and the authority in the form and manner prescribed by the office. Reports shall:
(1) describe compliance with conditions placed on the transaction, if any;
(2) describe the growth, decline and other changes in services provided by the entity;
(3) provide analyses of cost trends and cost growth trends of the parties; and
(4) provide any other information required by the office."
SECTION 12. A new section of the New Mexico Insurance Code is enacted to read:
"[NEW MATERIAL] CRIMINAL PENALTY FOR FALSE INFORMATION.--A person who omits or fails to disclose material information required by the Health Care Consolidation Oversight Act or submits or causes to be submitted to the office any statement, application, report or other information related to a proposed or closed transaction that is false or misleading in any material respect is guilty of a misdemeanor and shall be sentenced as provided in Section 31-19-1 or 31-20-1 NMSA 1978, as applicable."
SECTION 13. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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