HF 402

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/08/2023 12:06pm

A bill for an act
relating to health; requiring notice, review, and approval for certain health care
entity transactions; requiring a health system to return charitable assets received
from the state to the general fund in certain circumstances; amending Minnesota
Statutes 2022, section 317A.811, by adding a subdivision; proposing coding for
new law in Minnesota Statutes, chapter 144.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [144.557] NOTICE, REVIEW, AND APPROVAL; CERTAIN HEALTH
CARE ENTITY TRANSACTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Affected hospital" means a hospital that is a party to a proposed transaction or is
owned or substantially controlled by a party to a proposed transaction.
new text end

new text begin (c) "Commissioner" means the commissioner of health.
new text end

new text begin (d) "Health care entity" means a hospital or a health system or other entity that owns or
exercises substantial control over a hospital.
new text end

new text begin (e) "Hospital" means a health care facility licensed as a hospital under sections 144.50
to 144.56.
new text end

new text begin (f) "Transaction" means:
new text end

new text begin (1) a merger or exchange of a health care entity with another entity;
new text end

new text begin (2) the sale, lease, or transfer of all or substantially all of the property and assets of a
health care entity to another entity;
new text end

new text begin (3) the granting of a security interest in all or substantially all of the property and assets
of a health care entity to another entity;
new text end

new text begin (4) the transfer of all the shares or other ownership interest of the health care entity to
another entity; or
new text end

new text begin (5) an addition or substitution of one or more members of a health care entity's governing
body that effectively transfers control, responsibility for, or governance of the health care
entity to another entity.
new text end

new text begin Subd. 2. new text end

new text begin Notice, review, and approval required. new text end

new text begin (a) Except as provided in subdivision
8, a health care entity shall not enter into a transaction unless:
new text end

new text begin (1) the health care entity provides notice of the proposed transaction to the commissioner;
new text end

new text begin (2) the commissioner, in consultation with the attorney general, conducts a review of
the proposed transaction; and
new text end

new text begin (3) the commissioner approves the proposed transaction or approves the proposed
transaction with conditions.
new text end

new text begin (b) For purposes of determining whether a proposed transaction is governed by this
section, the commissioner shall view all mergers; exchanges; sales; leases; transfers of
property, assets, and shares; and the granting of security interests that occur within a
24-month window as a single occurrence.
new text end

new text begin Subd. 3. new text end

new text begin Notice. new text end

new text begin (a) A health care entity seeking to enter into a transaction must:
new text end

new text begin (1) provide notice of the proposed transaction to the commissioner in a form and manner
specified by the commissioner and at least 180 days before the date of the proposed
transaction; and
new text end

new text begin (2) within 30 days after providing notice, submit to the commissioner, in a form and
manner specified by the commissioner, information necessary for the commissioner to
determine:
new text end

new text begin (i) whether the proposed transaction will benefit the public good or improve health
outcomes for Minnesota residents; and
new text end

new text begin (ii) whether any anticompetitive effects of the proposed transaction are outweighed by
the benefits of the proposed transaction.
new text end

new text begin (b) The commissioner must specify the information that a health care entity must submit
under paragraph (a), clause (2).
new text end

new text begin Subd. 4. new text end

new text begin Review. new text end

new text begin (a) Upon receiving a notice and the information required under
subdivision 3, the commissioner, in consultation with the attorney general, must conduct a
review of the proposed transaction. The commissioner may request additional information
from a health care entity that the commissioner deems necessary to conduct the review, and
a health care entity from which additional information is requested must promptly provide
the requested additional information to the commissioner. In conducting a review, the
commissioner must consider at least the following for any affected hospitals:
new text end

new text begin (1) how the proposed transaction will affect timely access by Minnesota residents to
health care provided at affected hospitals, including access by underserved populations and
by populations disproportionately impacted by health disparities;
new text end

new text begin (2) how the proposed transaction will affect the cost of health care for Minnesota residents
that is provided at affected hospitals;
new text end

new text begin (3) how the proposed transaction will affect the communities in which affected hospitals
are located;
new text end

new text begin (4) the impact of the proposed transaction on other hospitals in the same region as affected
hospitals; and
new text end

new text begin (5) how the proposed transaction will affect health outcomes for Minnesota residents.
new text end

new text begin (b) As part of a review, the commissioner may hold one or more public hearings in the
areas affected by the proposed transaction, and may accept public comments.
new text end

new text begin Subd. 5. new text end

new text begin Contracts. new text end

new text begin The commissioner may contract for any professional or technical
services needed to conduct a review under this section.
new text end

new text begin Subd. 6. new text end

new text begin Determination. new text end

new text begin (a) Following a review of the proposed transaction, the
commissioner must approve the proposed transaction, disapprove the proposed transaction,
or approve the proposed transaction with conditions. A proposed transaction may be approved
or approved with conditions only if the commissioner determines that, according to criteria
established by the commissioner:
new text end

new text begin (1) the transaction will benefit the public good or improve health outcomes for Minnesota
residents; and
new text end

new text begin (2) any anticompetitive effects of the proposed transaction are outweighed by the benefits
of the proposed transaction.
new text end

new text begin (b) The commissioner must notify the parties to the proposed transaction in writing of
the commissioner's determination. If the proposed transaction is disapproved, the notice
must include the reasons for the disapproval. If the proposed transaction is approved with
conditions, the notice must specify the conditions that must be met and the reasons for these
conditions.
new text end

new text begin (c) A proposed transaction that is disapproved by the commissioner shall not proceed.
new text end

new text begin Subd. 7. new text end

new text begin Challenge to disapproval or conditional approval. new text end

new text begin If the commissioner
disapproves a proposed transaction or approves a proposed transaction with conditions, a
party to the proposed transaction may bring an action in district court to challenge the
disapproval or any condition of an approval with conditions. To prevail in an action brought
under this subdivision, a party challenging the disapproval or condition must establish that
the disapproval or the condition being challenged is arbitrary and capricious and unnecessary
to protect the public good.
new text end

new text begin Subd. 8. new text end

new text begin Exception. new text end

new text begin The commissioner may grant a waiver of the review and approval
required in this section if the commissioner determines that a proposed transaction is urgently
needed to preserve access to health care and to protect the interests of patients and the public.
A health care entity seeking a waiver must apply to the commissioner in a time and manner
specified by the commissioner, and the commissioner must notify all parties to the proposed
transaction of a decision on the waiver application within 30 days after receiving the waiver
application.
new text end

new text begin Subd. 9. new text end

new text begin Transaction fee. new text end

new text begin A health care entity that is a party to a proposed transaction
that is reviewed by the commissioner must pay a transaction fee to the commissioner to
reimburse the commissioner for the commissioner's costs of conducting the review and
making a determination, or for the commissioner's costs of reviewing and making a decision
on a waiver application. The commissioner may assign fee amounts to each health care
entity participating in a single proposed transaction. A fee paid under this subdivision shall
be deposited in the special revenue fund in the state treasury and is appropriated to the
commissioner to administer this section.
new text end

new text begin Subd. 10. new text end

new text begin Enforcement. new text end

new text begin The commissioner may bring an action in district court to enjoin
or unwind a transaction entered into in violation of this section. This remedy is in addition
to any other remedy available in other law.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2022, section 317A.811, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Nonprofit health care entities; notice, review, and approval. new text end

new text begin (a) In addition
to the requirements of subdivision 1, a health care entity that is organized as a nonprofit
corporation under this chapter must comply with the notice, review, and approval
requirements for certain transactions under section 144.557.
new text end

new text begin (b) For purposes of this subdivision, "health care entity" has the meaning given in section
144.557, subdivision 1, paragraph (d).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3. new text begin RETURN OF CHARITABLE ASSETS.
new text end

new text begin If a health system that is organized as a charitable organization, and that includes M
Health Fairview University of Minnesota Medical Center, sells or transfers control to an
out-of-state nonprofit entity or to any for-profit entity, the health system must return to the
general fund any charitable assets the health system received from the state.
new text end