The Oregon Health Authority (OHA) this week posted draft rules for the implementation of House Bill 2362 – a bill passed this year requiring health care entities to obtain approval from OHA for certain mergers, acquisitions, or affiliation transactions.
OHA posted the draft rules on Monday in preparation for its first Rules Advisory Committee meeting on Oct. 25 where the agency will hear stakeholder feedback. The agency will then release a new draft of the rules ahead of its Nov. 4 meeting.
The 27-page document details the types of affiliations or transactions that will require approval from OHA, along with the list of health care entity types that will be subject to the rules. Health care entities include hospitals, coordinated care organizations, health insurers, and individual health professionals, among others. The draft rules state that long-term care facilities are exempt.
Transactions subject to review include mergers or consolidations, transactions to form a new partnership or joint venture, agreements where one or more parties cede control, and new contracts that “may eliminate or significantly reduce essential services.”
According to the draft rules, OHA oversight applies to transactions where:
“At least one party to the transaction had average annual revenue of $25 million or more in the party’s three most recent fiscal years and another party to the transaction had average annual revenue of $10 million or more in that party’s three most recent three fiscal years.”
In these instances, health care entities will need to submit a “notice of material change transaction” to OHA at least 180 days before the proposed effective date of the transaction. If the transaction involves a domestic health insurer, the entities will first need to file notice with the Department of Consumer and Business Services.
OHA has also posted drafts of the forms that entities will need to submit.
After submission, OHA will complete a 30-day preliminary review and may approve transactions if they likely won’t impact access and affordability, or if the transition is unlikely to substantially alter care delivery in the state. If the agency is unable to clear the transaction in the 30-day review, it will conduct a comprehensive review.
OHA may choose to convene a community review board — comprised of community members, consumer advocates, and health care experts — as part of its comprehensive review. The board will make recommendations to the agency on the approval or disapproval of the transaction. The draft rules state: The review board would consider:
“(a) The potential loss or change in access to essential services.
(b) The potential to impact a large number of residents in this state.
(c) A significant change in the market share of an entity involved in the transaction.”
The draft rules state that when reviewing potential transactions, OHA will evaluate whether they meet the goals of improving health quality and availability, achieving health equity, reducing the cost of care, and supporting the continuity of care.
Following the comprehensive review, OHA will issue a proposed order allowing the health care entities and the public to submit written comments. The agency will then issue its final order typically within 180 days of receiving the initial notice of transaction. The draft rules also outline how parties can contest a final order.
OHA will file its proposed rules at the end of November, and the public comment period is expected to run from Dec. 1 through Dec. 21. The program’s effective date is March 1, 2022.