As we previewed in our earlier weblog article, the California Division of Well being Care Entry and Data (HCAI) hosted a dwell public workshop on August 15, 2023 for in-person and digital attendees to make feedback and pose questions concerning the proposed laws governing the Workplace of Well being Care Affordability’s (OHCA) assessment authority for sure healthcare transactions.
Takeaways of Workshop Dialogue
The general public workshop drew key stakeholders from throughout the healthcare spectrum, every with differing views on potential impacts of the proposed laws and concerns for OHCA as it really works to finalize them. Though pursuits different throughout the commentators, just a few themes stood out over the course of the session:
- Scope of Regulated Events and Transactions
Dillon Iwu, the Director of Authorities Affairs at American Funding Council (AIC), echoed issues of a number of different commentators concerning the breadth of the laws and the events and transactions topic to assessment. Particularly, Iwu inspired OHCA to think about revising and limiting the definition of “well being care entity” (“HCE”) to omit administration companies organizations (“MSOs”) from being thought of payers and take an method extra according to how the business and statutes outline “payers” (e.g., danger bearing entities and third events licensed by the state). Invoice Barcellona from American Doctor Teams additionally was involved about how MSOs are referenced within the laws and emphasised that many MSOs within the state are unaffiliated contracted organizations with no frequent possession or management over HCEs, and thus OHCA ought to take into account distinguishing and excluding such third celebration MSOs from the scope of OHCA assessment. Janice Rocco, Chief of Workers at California Medical Affiliation (“CMA”), raised a extra basic concern that the proposed definition of an HCE could be broad sufficient to incorporate extra events than inside OHCA’s authentic statutory authority.
A number of audio system introduced up the overall scope of transactions and circumstances contemplated by the laws. Lois Richardson of the California Hospital Affiliation (CHA) raised issues with the breadth of the definition of “transactions” and, notably, that the inclusion of “a change of belongings… or… operations” may increase the statute in a fashion which may implicate seemingly routine or abnormal course transactions. Alternatively, a number of commentators (akin to Beth Capell of Well being Entry California and Michelle Grisat of California Nurses Affiliation (CNA)) recommended that OHCA shouldn’t simply give attention to “transactions”, but in addition basic market opinions and urged OHCA to think about labor market impacts as an unbiased circumstance allowing OHCA to carry out a price and market affect assessment (“CMIR”).
The thresholds proposed by OHCA concerning transactions inside the scope of assessment had been additionally a sizzling subject of debate. Janice Rocco argued that the thresholds for a change in management needs to be elevated from OHCA’s authentic proposal (i.e., greater than 10% of the management of, duty for, or governance of an HCE), Equally, Barcellona highlighted that the transaction thresholds as proposed (e.g., a transaction involving a rise of $10M or extra in annual income) may set off submitting necessities for small practices and will delay hiring specialised suppliers. Alternatively, Beth Capell voiced the priority that the thresholds had been too excessive and urged OHCA to think about nearer alignment with thresholds carried out by the California Legal professional Basic.
- Distressed Hospitals and Different Distressed Property
Mark Farouk from the California Hospital Affiliation (CHA) was considered one of many commentators to specific issues concerning the breadth of the proposed laws and its potential results on distressed belongings within the healthcare house. He identified that OHCA’s assessment underneath the proposed laws may delay transactions with any exterior entity by a number of months days and warned this might have chilling results on partnerships that may function an important lifeline to distressed hospitals. JR De Vera, on behalf of Union Organizers in Monterey County, expressed issues on the alternative aspect of the coin: that permitting transactions to proceed with out such assessment course of may lead to growing healthcare prices which impacts can’t be measured notably in communities by which such hospitals are primarily serving low-wage staff. Related sentiments had been expressed by Beth Capell, Well being Entry California; Harvey Mckeon, NorCal Carpenters Union; and Shannon Oliviera Hovis, Director of NARAL Professional-Alternative California.
- Consideration of Advantages of “Materials Change Transactions”
A number of commenters, together with Farouk, recommended OHCA take into account the potential advantages of fabric change transactions (each in reconsidering the scope of the proposed laws and likewise concerning whether or not a CMIR needs to be carried out), together with bettering the flexibility of entities to enter into value-based reimbursement fashions, selling integration throughout multi-specialty companies, and facilitating effectivity by economies of scale. Beth Capell of Well being Entry California raised various issues that if advantages are thought of, the laws ought to require manufacturing of proof supporting the idea for such advantages and take into account choices for requiring validation of such assertions.
- Timing Issues, Reporting Necessities and Charges
One other frequent theme expressed in the course of the workshop was the potential size of time it may take OHCA to assessment a transaction and for events to really shut a transaction. Janice Rocco argued that if OHCA used its most potential size of time to assessment, it may hinder smaller transactions on account of smaller or distressed entities’ incapacity to keep up monetary solvency throughout such a prolonged interval. A number of audio system additionally critiqued the timeline for advance discover and really useful OHCA refine the discover requirement to be particularly based mostly on the time limit of a transaction. Marc Aprea from Aprea & Micheli proposed that OHCA set up a transparent timeframe for an expedited assessment course of, and a assure to subject a closing report inside 75 days of deciding to conduct a price/market assessment to keep away from pointless delay, referring to Oregon and Massachusetts as examples of laws that imposed related deadlines. One other attention-grabbing level was raised by Barcellona, who talked about that because the proposed laws stand, HCEs reorganizing underneath Chapter 11 could be required to file discover with OHCA 90 days earlier than the entity’s chapter proceedings, because the change of management or belongings could be triggered based mostly upon a chapter submitting.
Confidentiality was one other technical concern raised by commentators in the course of the workshop, notably concerning the extent of knowledge required to be reported and audio system sought readability with respect to the forms of monetary info that have to be offered. Particularly, Andrew Demetriou from Husch Blackwell in Los Angeles requested that the laws outline “licensed monetary statements”, one of many forms of paperwork that organizations should submit with the required discover. Demetriou identified that “licensed” doesn’t have a selected that means within the business, and smaller organizations is not going to have audited monetary statements, so OHCA ought to make clear the character of statements it wish to see.
Alternatively, different commentators opined that the reporting necessities set forth within the proposed laws needs to be expanded. For instance, Michelle Grisat recommended that events needs to be required report any deliberate or potential workforce modifications (e.g., price modifications, modifications in location of companies, reductions in shifts, or shifting to decrease acuity settings) and historic workforce transactions in patterned transactions.
Lastly, commentators indicated that the laws as proposed may, in some circumstances, lead to OHCA processing duplicative income info additionally obtained and processed by different to state companies. Invoice Barcelona expressed issues with the prices inherently attributable to the twin assessment procedures and famous that such preliminary prices may truly diminish competitors by overly burdening new gamers. Marc Aprea additionally recommended the proposed laws embody caps on affordable prices which have to be reimbursed.
Wanting Ahead
HCAI indicated in the course of the workshop that they’d supply a abstract of the feedback for OHCA’s Board to debate throughout its August assembly. Healthcare stakeholders had the chance to supply written feedback to OHCA concerning the laws till August 31, 2023.
It stays to be seen whether or not and, in that case, how OHCA revises or tweaks the laws following the general public remark interval. Based mostly on the vigorous dialogue and vital points raised in the course of the workshop, nevertheless, we count on that OHCA may have quite a bit to think about earlier than shifting to finalize them within the fall of this yr. We’ll preserve readers posted as additional updates are unveiled within the coming weeks and months.
