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New Connecticut Law Impacting Physician Practice Acquisitions and Mergers September 24, 2014 By: Mindy S. Tompkins, Esq. REID AND RIEGE, P. C. One Financial Plaza Hartford, CT 06103 (860) 240 -1044 [email protected] com © 2014 REID AND RIEGE, P. C.
New Law = More Regulation for Physician Practices Public Act 14 -168 Signed into law on June 3, 2014. Effective October 1, 2014, or earlier. Three Areas Affecting Physician Practices: 1. Required Notice of Physician Practice Mergers and Acquisitions 2. New Certificate of Need Requirements for Certain Group Practice Transactions 3. Annual Reporting for Certain Physician Practices © 2014 REID AND RIEGE, P. C.
What is the Purpose? § To provide information to the State Attorney General to assess whether proposed transactions violate state antitrust law. § Establish regular reporting to better monitor competition. © 2014 REID AND RIEGE, P. C.
Testimony of Attorney General George Jepsen, March 5, 2014: Testimony Before the Public Health Committee on the Proposed Bill: “[The Bill] … provide[s] us with important information that will facilitate my legislative mandate to ensure that competitive health care markets are maintained in Connecticut. ” “. . . more and more large health systems have acquired their competitors and moved on to buy up physician groups and freestanding clinics. ” “. . . we know that for-profit hospitals are eager to expand their presence in the state – through acquisition of community hospitals and independent physician practices. ” “These acquisitions and mergers. . . may lead to higher prices, fewer services, and lack of competition. ” © 2014 REID AND RIEGE, P. C.
#1 Required Notice § § § Effective October 1, 2014 Requires 30 days prior written notice to the Attorney General Of a “material change to the business or corporate structure of a Group Practice”, which includes: – – – § Merger, consolidation or “other affiliation” Acquisition of all of the assets or equity Employment of all of the physicians of the group practice Acquisition of one or more insolvent group practices “Affiliation” is any relationship that permits joint negotiation of fees That either: – – © 2014 REID AND RIEGE, P. C. Involves another Group Practice and results in a Group Practice of 8 or more physicians, or The other party is a hospital or entity controlled by a hospital
Specific Notice Requirements § What is a “Group Practice”? – 2 or more Physicians – Legally organized and integrated practice § What is in the Notice? – Describe the transaction and “nature of the proposed relationship” – Names and specialties of the physicians that are moving as part of the deal – Name of entities providing services afterward – Address for each location where services will be provided – Describe services at each location – Primary Service Area served by each location © 2014 REID AND RIEGE, P. C.
#2 Certificate of Need Requirement § § § Effective July 1, 2014 Certificate of Need is required for a “Transfer of Ownership” of a “Group Practice” to an entity other than a physician or group of physicians* Group Practice = – – § 8 or more full time equivalent physicians Legally organized and integrated practice Transfer of Ownership – – Transfer that impacts or changes the governance or controlling body of the Group Practice Includes “all affiliations, mergers or any sale or transfer of assets” * Does not apply if agreement signed prior to September 1, 2014. © 2014 REID AND RIEGE, P. C.
New CON Criteria = More Scrutiny for Hospital Acquisitions § OHCA will consider if applicant has demonstrated: – – Proposal will not negatively impact diversity of providers and patient choice in the geographic region, and Consolidation will not adversely affect health care costs or accessibility to care § BUT, presumption in favor of CON approval, if proposal resulted from: – – RFP, or “similar voluntary offer for sale” § Purpose? – © 2014 REID AND RIEGE, P. C. Perhaps to control Facility Fees/Provider-Based Billing
# 3 Annual Reporting Requirement § Who has to Report? – – § Group Practices with 30 or more physicians Hospitals and Hospital Systems What must be Reported? – – – § Names and specialties of each physician in the group Name of entities providing services as part of the group practice Locations where services are provided and description of services provided there Primary Service Area of each location Hospitals must also describe the nature of the relationship with the Group Practice Where and When to File? – File with Attorney General and Commissioner of Public Health – First report must be filed by December 31, 2014 © 2014 REID AND RIEGE, P. C.
Questions? © 2014 REID AND RIEGE, P. C.
Disclaimer: This Power. Point presentation is for informational purposes only and should not be construed as legal advice on any subject matter. You should not act upon anything contained in the presentation without consulting legal counsel as individual situations and facts vary. Transmission or receipt of the presentation materials are not intended to create an attorney-client relationship nor will the act of sending e-mail to the presenter in the webinar create an attorney-client relationship. Certain portions may constitute attorney advertising and do not constitute legal advice. © 2014 REID AND RIEGE, P. C.