H-0450.1
HOUSE BILL 1263
State of Washington 68th Legislature 2023 Regular Session
By Representatives Simmons, Stonier, Macri, and Pollet
Read first time 01/12/23. Referred to Committee on Civil Rights &
Judiciary.
1 AN ACT Relating to material changes to the operations and
2 governance structure of participants in the health care marketplace;
3 amending RCW 19.390.010, 19.390.020, 19.390.030, 19.390.040,
4 19.390.050, 19.390.080, and 19.390.070; adding new sections to
5 chapter 19.390 RCW; creating a new section; providing an effective
6 date; and providing an expiration date.
7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
8 NEW SECTION. Sec. 1. The legislature finds and declares that:
9 (1) The existence of accessible and affordable health care
10 services that are responsive to the needs of the community is an
11 important public policy goal.
12 (2) The COVID-19 pandemic laid bare both the crucial importance
13 of our health care systems and the inequities that exist and
14 exacerbate harm to marginalized communities, including in access to
15 and delivery of affordable, quality care.
16 (3) Health entity mergers, acquisitions, and contracting
17 affiliations impact cost, quality, and access to health care, and
18 affect working conditions and employee benefits.
19 (4) Health entity mergers, acquisitions, and contracting
20 affiliations have been shown to result in anticompetitive
21 consequences, including higher prices and a lack of any meaningful
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 1 choice among health care providers within a community or geographic
2 region. These negative outcomes are exacerbated for those in rural
3 areas with few health care providers.
4 (5) The legislature is committed to ensuring that Washingtonians
5 have access to the full range of reproductive, end-of-life, and
6 gender affirming health care services. Yet, Washingtonians continue
7 to experience difficulty accessing gender affirming care, and health
8 entity mergers and acquisitions in Washington state have resulted in
9 material reductions in reproductive and end-of-life health care
10 services, to the detriment of communities and patients.
11 (6) Health entity mergers, acquisitions, and contracting
12 affiliations must improve rather than harm access to affordable
13 quality health care.
14 Sec. 2. RCW 19.390.010 and 2019 c 267 s 1 are each amended to
15 read as follows:
16 (1) It is the intent of the legislature to ensure that
17 competition beneficial to consumers in health care markets across
18 Washington remains vigorous and robust and that health care be
19 affordable and accessible. The legislature supports ((that intent))
20 these intents through this chapter, which provides the attorney
21 general with notice of all material health care transactions in this
22 state so that the attorney general has the information necessary to
23 determine whether an investigation under the consumer protection act
24 is warranted for potential anticompetitive conduct and consumer harm.
25 This chapter is intended to supplement the federal Hart-Scott-Rodino
26 antitrust improvements act, Title 15 U.S.C. Sec. 18a, by requiring
27 notice of transactions not reportable under Hart-Scott-Rodino
28 reporting thresholds and by providing the attorney general with a
29 copy of any filings made pursuant to the Hart-Scott-Rodino act. In
30 addition to ensuring vigorous and robust competition in health care
31 markets, this chapter is also intended to ensure material change
32 transactions result in the affected communities having the same or
33 greater access to quality, affordable care, including emergency care,
34 primary care, reproductive care, end-of-life care including services
35 provided in accordance with chapter 70.245 RCW, and gender affirming
36 care.
37 (2) Notwithstanding the language in this chapter regarding the
38 attorney general's authority to determine the effect of a material
39 change transaction on access to care, nothing in this chapter is
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 1 intended to derogate from or otherwise affect in any way the attorney
2 general's authority to conduct an investigation, or the process of
3 any investigation, under chapter 19.86 RCW. Nothing in this section
4 is intended to change or affect in any way any substantive law
5 regarding the antitrust analysis of a material change transaction.
6 Sec. 3. RCW 19.390.020 and 2019 c 267 s 2 are each amended to
7 read as follows:
8 The definitions in this section apply throughout this chapter
9 unless the context clearly requires otherwise.
10 (1) "Acquisition" means an agreement, arrangement, or activity
11 the consummation of which results in a person acquiring directly or
12 indirectly the control of another person, and includes the
13 acquisition of voting securities and noncorporate interests, such as
14 assets, capital stock, membership interests, or equity interests.
15 (2) "Carrier" means the same as in RCW 48.43.005.
16 (3) "Contracting affiliation" means the formation of a
17 relationship between two or more entities that permits the entities
18 to negotiate jointly with carriers or third-party administrators over
19 rates for professional medical services, or for one entity to
20 negotiate on behalf of the other entity with carriers or third-party
21 administrators over rates for professional medical services.
22 "Contracting affiliation" does not include arrangements among
23 entities under common ownership.
24 (4) "Gender affirming care" means a service or product that a
25 health care provider, as defined in RCW 70.02.010, prescribes to an
26 individual to treat any condition related to the individual's gender
27 identity and is prescribed in accordance with generally accepted
28 standards of care. Gender affirming care must be covered in a manner
29 compliant with the federal mental health parity and addiction equity
30 act of 2008 and the federal patient protection and affordable care
31 act of 2010. Gender affirming care can be prescribed to two spirit,
32 transgender, nonbinary, intersex, and other gender diverse
33 individuals.
34 (5) "Health care services" means medical, surgical, chiropractic,
35 hospital, optometric, podiatric, pharmaceutical, ambulance, mental
36 health, substance use disorder, therapeutic, preventative,
37 diagnostic, curative, rehabilitative, palliative, custodial, and any
38 other services relating to the prevention, cure, or treatment of
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 1 illness, injury, or disease. Health care services may be provided
2 virtually, on-demand, or in brick and mortar settings.
3 (((5))) (6) "Health care services revenue" means the total
4 revenue received for health care services in the previous twelve
5 months.
6 (((6))) (7) "Health maintenance organization" means an
7 organization receiving a certificate of registration pursuant to
8 chapter 48.46 RCW which provides comprehensive health care services
9 to enrolled participants of such organization on a group practice per
10 capita prepayment basis or on a prepaid individual practice plan,
11 except for an enrolled participant's responsibility for copayments
12 and deductibles, either directly or through contractual or other
13 arrangements with other institutions, entities, or persons, and which
14 qualifies as a health maintenance organization pursuant to RCW
15 48.46.030 and 48.46.040.
16 (((7))) (8) "Hospital" means a facility licensed under chapter
17 70.41 or 71.12 RCW.
18 (((8))) (9) "Hospital system" means:
19 (a) A parent corporation of one or more hospitals and any entity
20 affiliated with such parent corporation through ownership or control;
21 or
22 (b) A hospital and any entity affiliated with such hospital
23 through ownership.
24 (((9))) (10) "Merger" means a consolidation of two or more
25 organizations, including two or more organizations joining through a
26 common parent organization or two or more organizations forming a new
27 organization, but does not include a corporate reorganization.
28 (((10))) (11) "Person" means, where applicable, natural persons,
29 corporations, trusts, and partnerships.
30 (((11))) (12) "Provider" means a natural person who practices a
31 profession identified in RCW 18.130.040.
32 (((12))) (13) "Provider organization" means a corporation,
33 partnership, business trust, association, or organized group of
34 persons, whether incorporated or not, which is in the business of
35 health care delivery or management and that represents seven or more
36 health care providers in contracting with carriers or third-party
37 administrators for the payments of health care services. A "provider
38 organization" includes physician organizations, physician-hospital
39 organizations, independent practice associations, provider networks,
40 and accountable care organizations.
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 1 (((13))) (14) "Reproductive health care" means any medical
2 services or treatments, including pharmaceutical and preventive care
3 services or treatments, directly involved in the reproductive system
4 and its processes, functions, and organs involved in reproduction, in
5 all stages of life.
6 (15) "Successor persons" means persons formed by, resulting from,
7 or surviving any material change transaction under this chapter.
8 (16) "Third-party administrator" means an entity that administers
9 payments for health care services on behalf of a client in exchange
10 for an administrative fee.
11 Sec. 4. RCW 19.390.030 and 2019 c 267 s 3 are each amended to
12 read as follows:
13 (1) Not less than ((sixty)) 120 days prior to the effective date
14 of any transaction that results in a material change, the parties to
15 the transaction shall submit written notice to the attorney general
16 of such material change transaction.
17 (2) For the purposes of this ((section)) chapter, a material
18 change transaction includes a merger, acquisition, or contracting
19 affiliation between two or more entities of the following types:
20 (a) Hospitals;
21 (b) Hospital systems; or
22 (c) Provider organizations.
23 (3) A material change transaction includes proposed changes
24 identified in subsection (2) of this section between a Washington
25 entity and an out-of-state entity where the out-of-state entity
26 generates ((ten million dollars)) $10,000,000 or more in health care
27 services revenue from patients residing in Washington state, and the
28 entities are of the types identified in subsection (2) of this
29 section. Any party to a material change transaction that is licensed
30 or operating in Washington state shall submit a notice as required
31 under this section.
32 (4) For purposes of subsection (2) of this section, a merger,
33 acquisition, or contracting affiliation between two or more
34 hospitals, hospital systems, or provider organizations only qualifies
35 as a material change transaction if the hospitals, hospital systems,
36 or provider organizations did not previously have common ownership or
37 a contracting affiliation.
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 1 Sec. 5. RCW 19.390.040 and 2019 c 267 s 4 are each amended to
2 read as follows:
3 (1) ((The)) For material change transactions where none of the
4 parties are hospitals or hospital systems and none of the parties
5 have generated $10,000,000 or more in health care services revenue
6 from patients residing in Washington state in any of their preceding
7 three fiscal years, the written notice provided by the parties, as
8 required by RCW 19.390.030, must include:
9 (a) The names of the parties and their current business
10 addresses;
11 (b) Identification of all locations where health care services
12 are currently provided by each party;
13 (c) A brief description of the nature and purpose of the proposed
14 material change transaction; and
15 (d) The anticipated effective date of the proposed material
16 change transaction.
17 (2) For material change transactions where none of the parties
18 are hospitals or hospital systems and all of the parties serve
19 predominantly low-income, medically underserved individuals, and all
20 of the parties had for each of their preceding three fiscal years at
21 least 50 percent of their total patient revenue come from medicaid or
22 local, state, or federal funding to provide care to uninsured or
23 underinsured individuals, and the material change transaction would
24 not result in materially lowering the overall level of care the
25 successor persons' provide to individuals on medicaid or who are
26 uninsured or underinsured, or cause, for the successor persons, the
27 percentage of total patient revenue that comes from medicaid or
28 local, state, or federal funding to provide care to uninsured or
29 underinsured individuals to drop below 50 percent, the written notice
30 provided by the parties, as required by RCW 19.390.030, must include:
31 (a) The information and documentation required under subsection
32 (1)(a) through (d) of this section; and
33 (b) Documentation demonstrating that all the parties to the
34 material change transaction had for each of their preceding three
35 fiscal years at least 50 percent of their total patient revenue come
36 from medicaid or local, state, or federal funding to provide care to
37 uninsured or underinsured individuals, and a statement from the
38 parties describing how the material change transaction will result in
39 the successor persons complying with the requirements under this
40 subsection.
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 1 (3) For all material change transactions other than those
2 specified under subsections (1) and (2) of this section, the written
3 notice provided by the parties, as required by RCW 19.390.030, must
4 include:
5 (a) The information and documentation required under subsection
6 (1)(a) through (d) of this section;
7 (b) A copy of the material change transaction agreement;
8 (c) If applicable, a statement from each of the parties' board of
9 directors that explains the effect the material change transaction
10 will likely have on delivery and cost of health-related services to
11 the communities impacted by the material change transaction, and the
12 basis for this opinion. The statement must also describe all
13 dissenting viewpoints of which the boards of directors are aware;
14 (d) If applicable, a copy of the two most recent community needs
15 assessments or any similar evaluations or assessments prepared by or
16 for any of the hospitals, hospital systems, or provider organizations
17 that are the subject of the material change transaction, and the
18 identity of all persons who assisted or contributed to any of the
19 evaluations or assessments;
20 (e) A description of all charity care provided in the last three
21 years, as well as denials, and the projected charity care for three
22 years following the material change transaction by the parties to the
23 material change transaction, or any successor persons. This
24 description must include:
25 (i) Annual total charity care spending;
26 (ii) Inpatient, outpatient, and emergency room charity care
27 spending;
28 (iii) A description of how the amount of charity care spending
29 was calculated;
30 (iv) Annual charity care inpatient discharges, outpatient visits,
31 and emergency visits;
32 (v) A description of the types of charity care services provided
33 annually;
34 (vi) The number of charity care denials and reasons for denial;
35 and
36 (vii) A description of the policies, procedures, and eligibility
37 requirements for the provision of charity care;
38 (f) A description of the health care services currently provided
39 at each hospital, hospital system, or provider organization that is
40 the subject of the material change transaction;
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 1 (g) A description of all services provided in the past five years
2 by each hospital, hospital system, and provider organization that is
3 the subject of the material change transaction to apple health
4 patients, qualified health plan patients, and indigent patients. This
5 description must include, but is not limited to, the type and volume
6 of services provided, the payors for the services provided, the
7 demographic characteristics of and zip code data for the patients
8 served by the hospital, hospital system, or provider organization,
9 and the costs and revenues for the services provided;
10 (h) All policies, procedures, and other training materials
11 related to registration, admission, and collections, including
12 upfront, point-of-service, and postservice billing and collections;
13 (i) The following current policies for any hospital and, to the
14 extent they exist, the following current policies for any provider
15 organization that is the subject of the material change transaction:
16 (i) Admission policies; (ii) nondiscrimination policies; (iii) end-
17