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Just a year after Indiana enacted its Health Care Transaction Notice Law, House Enrolled Act 1666, signed into law on May 6, continues to refine it and could significantly impact health care entities in Indiana.
The new law, which takes effect July 1, is a continuation of the conversations around transparency in health care ownership and competition in the industry that have dominated policy circles the last few years at the Statehouse.
Indiana’s current law
Effective July 1, 2024, certain Indiana health care entities became required to notify the Indiana Attorney General at least 90 days before merging with or acquiring another health care entity if the health care entities together have at least $10 million in total assets.
Notably, the law (Ind. Code § 25-1-8.5 et seq.) does not currently include “size of each party” or “size of the transaction” thresholds, as federal antitrust laws do. The current law’s notice requirement is separate from any federal pre-merger filings required by the Federal Trade Commission or the U.S. Department of Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The new law’s route
Throughout the legislative session, HEA 1666 took on many different forms with varied approaches to addressing transparency and competition in the health care industry
As it passed the House in late February, House Bill 1666 would have prohibited an Indiana health care entity from engaging in a merger or acquisition with another health care entity unless it received approval from a newly established “health care entity merger approval board,” whose members would include the Indiana Attorney General (or designee), Secretary of Health and Family (or another individual designated by the Governor), Secretary of Business Affairs (or another individual designated by the Governor), and two members appointed by the Governor after considering individuals recommended for appointment by the Legislative Council.
As part of the health care entity merger approval board, the Attorney General would have been required to utilize several specific criteria for its review of the transaction, including that there would be no significant reduction in health care services for the community, that appropriate procedures and expert assistance were utilized, the reasonably fair value of any proposed management contracts, and the fair market value for the acquired entity.
Additionally, the version passed by the House would have also extended the current law’s reporting obligations to all mergers and acquisitions between health care entities, regardless of the size of the parties.
Specifically, the proposed legislation would have removed the requirement that the parties to the transaction together have at least $10 million in assets.
Once the legislation reached the Senate, the Senate Health and Provider Services Committee significantly revised the legislation, including the removal of the proposed merger approval board and its required preapproval, as well as reinstating the $10 million asset threshold. These amendments held in the final reconciliation process. However, the enacted legislation still contains robust transparency provisions and changes to Indiana’s Healthcare Transaction Notice Law that practitioners should be aware of.
Key provisions of HEA 1666
Ownership reporting requirements: Effective July 1, HEA 1666 mandates that various health care entities disclose detailed ownership information to specific state agencies:
Hospitals: Must include ownership details in their annual fiscal reports submitted to the Indiana Department of Health.
Insurers, third-party administrators, and pharmacy benefit managers: These entities must report ownership information to the Indiana Department of Insurance.
All other health care entities: Any organization providing diagnostic, medical, surgical, dental, or rehabilitative care must report ownership information to the Indiana Secretary of State.
The required information includes:
Entity name, business address, and website
Identification numbers such as National Provider Identifier, Taxpayer Identification Number, Employer Identification Number, CMS certification number, and National Association of Insurance Commissioners identification number.
Names and identifying information of individuals or entities with: At least a 5% ownership interest; a controlling interest (as defined by Ind. Code § 23-1-43-8); an interest as a private equity partner.
Failure to comply with these reporting requirements may result in penalties ranging from $100 to $1,000 per day, depending on the entity type.
Publication and release of information: HEA 1666 also provides that the Indiana Department of Health, in collaboration with the Secretary of State and the Indiana Department of Insurance, must publish ownership information on an annual basis on their website. In publishing the report, the Indiana Department of Health may not include the name of a person or entity that has an ownership stake and may omit information they determine is not widely available to the public.
Upon request, the Indiana Department of Health must provide the ownership information to the Legislative Council, the Attorney General, or the state’s Health Care Cost Oversight Task Force.
Market concentration investigations: HEA 1666 grants the Indiana Attorney General the authority to investigate the market concentration of health care entities at any time, even in the absence of a pending transaction. This includes the power to issue Civil Investigative Demands under Indiana Code § 4-6-3, et seq. Despite the existing Healthcare Transaction Notice Law, it was clear by the end of session that the intent is to proactively monitor and address potential anti-competitive practices within Indiana’s health care sector.
Exemption for practitioner-owned practices: The new law also provides an exemption from Indiana’s existing Healthcare Transaction Notice Law (Ind. Code § 25-1-8.5 et seq.) for health care providers that are majority-owned by Indiana-licensed health care practitioners who routinely furnish health care services in the practitioner-owned practice.
Compliance strategies for health care entities: While this topic is continuing to evolve in Indiana, legal professionals should take proactive steps to advise their clients in advance of July to take the following steps to ensure compliance with HEA 1666:
Review ownership structures: Conduct thorough assessments of ownership structures to identify individuals or entities with significant ownership interests, controlling interests, or private equity partnerships.
Update reporting protocols: Develop and implement internal procedures to collect and report the required ownership information to the appropriate state agencies within the specified timelines.
Prepare for investigations: Establish protocols for responding to Civil Investigative Demands and other inquiries from the Attorney General’s office, ensuring that requested information is provided promptly and accurately.
Engage antirust experts: When it comes to reporting proposed mergers or acquisitions, clients should be prepared to engage antitrust counsel to advise on the need for expert analysis and nuanced differences between federal reporting obligations and Indiana’s Healthcare Transaction Notice Law.
Monitor legislative developments: Stay informed about potential future amendments to the law, as the legislature may revisit aspects of the health care transaction clearance regime in subsequent sessions.
Just a year after enacting Indiana’s Healthcare Transaction Notice Law, HEA 1666 represents Indiana’s continued evolution in health care regulation, emphasizing transparency and oversight.
Legal professionals must guide their clients through these changes to ensure compliance, mitigate risks, and adapt to the shifting landscape. By understanding the law’s requirements and implementing robust compliance strategies, health care entities can navigate this regulatory framework effectively.•
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Lacey Berkshire is a counsel and Matthew Elliot is an associate at Faegre Drinker. Opinions expressed are those of the authors.
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