As we previewed in our earlier weblog article, the California Division of Well being Care Entry and Data (HCAI) hosted a reside public workshop on August 15, 2023 for in-person and digital attendees to make feedback and pose questions relating to the proposed rules governing the Workplace of Well being Care Affordability’s (OHCA) evaluation 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 rules and concerns for OHCA as it really works to finalize them. Though pursuits different throughout the commentators, a number of 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 considerations of a number of different commentators relating to the breadth of the rules and the events and transactions topic to evaluation. Particularly, Iwu inspired OHCA to think about revising and limiting the definition of “well being care entity” (“HCE”) to omit administration providers organizations (“MSOs”) from being thought-about payers and take an strategy extra in step with 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 rules and emphasised that many MSOs within the state are unaffiliated contracted organizations with no widespread possession or management over HCEs, and thus OHCA ought to take into account distinguishing and excluding such third occasion MSOs from the scope of OHCA evaluation. Janice Rocco, Chief of Workers at California Medical Affiliation (“CMA”), raised a extra normal concern that the proposed definition of an HCE can be broad sufficient to incorporate extra events than inside OHCA’s unique statutory authority.

A number of audio system introduced up the overall scope of transactions and circumstances contemplated by the rules. Lois Richardson of the California Hospital Affiliation (CHA) raised considerations with the breadth of the definition of “transactions” and, notably, that the inclusion of “a change of property… or… operations” might increase the statute in a fashion which might implicate seemingly routine or bizarre course transactions. Alternatively, a number of commentators (equivalent to Beth Capell of Well being Entry California and Michelle Grisat of California Nurses Affiliation (CNA)) steered that OHCA shouldn’t simply give attention to “transactions”, but in addition normal 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 evaluation (“CMIR”).

The thresholds proposed by OHCA relating to transactions inside the scope of evaluation have been additionally a scorching matter of dialogue. Janice Rocco argued that the thresholds for a change in management must be elevated from OHCA’s unique 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) might set off submitting necessities for small practices and will delay hiring specialised suppliers. Then again, Beth Capell voiced the priority that the thresholds have been too excessive and urged OHCA to think about nearer alignment with thresholds applied by the California Lawyer Normal.

• Distressed Hospitals and Different Distressed Property

Mark Farouk from the California Hospital Affiliation (CHA) was certainly one of many commentators to precise considerations relating to the breadth of the proposed rules and its potential results on distressed property within the healthcare area. He identified that OHCA’s evaluation beneath the proposed rules might delay transactions with any exterior entity by a number of months days and warned this might have chilling results on partnerships that may function a necessary lifeline to distressed hospitals. JR De Vera, on behalf of Union Organizers in Monterey County, expressed considerations on the alternative aspect of the coin: that permitting transactions to proceed with out such evaluation course of might end in rising healthcare prices which impacts can’t be measured notably in communities wherein such hospitals are primarily serving low-wage employees. Comparable sentiments have been expressed by Beth Capell, Well being Entry California; Harvey Mckeon, NorCal Carpenters Union; and Shannon Oliviera Hovis, Director of NARAL Professional-Selection California.

• Consideration of Advantages of “Materials Change Transactions”

A number of commenters, together with Farouk, steered OHCA take into account the potential advantages of fabric change transactions (each in reconsidering the scope of the proposed rules and likewise relating to whether or not a CMIR must be performed), together with bettering the power of entities to enter into value-based reimbursement fashions, selling integration throughout multi-specialty providers, and facilitating effectivity via economies of scale. Beth Capell of Well being Entry California raised different considerations that if advantages are thought-about, the rules ought to require manufacturing of proof supporting the idea for such advantages and take into account choices for requiring validation of such assertions.

• Timing Concerns, Reporting Necessities and Charges

One other widespread theme expressed in the course of the workshop was the potential size of time it might take OHCA to evaluation a transaction and for events to really shut a transaction. Janice Rocco argued that if OHCA used its most doable size of time to evaluation, it might hinder smaller transactions on account of smaller or distressed entities’ incapability to take care of 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 primarily based on the deadline of a transaction. Marc Aprea from Aprea & Micheli proposed that OHCA set up a transparent timeframe for an expedited evaluation course of, and a assure to situation a ultimate report inside 75 days of deciding to conduct a price/market evaluation to keep away from pointless delay, referring to Oregon and Massachusetts as examples of rules that imposed comparable closing dates. One other fascinating level was raised by Barcellona, who talked about that because the proposed rules stand, HCEs reorganizing beneath Chapter 11 can be required to file discover with OHCA 90 days earlier than the entity’s chapter proceedings, because the change of management or property can be triggered primarily based upon a chapter submitting.

Confidentiality was one other technical concern raised by commentators in the course of the workshop, notably relating to the extent of data required to be reported and audio system sought readability with respect to the sorts of monetary info that have to be offered. Particularly, Andrew Demetriou from Husch Blackwell in Los Angeles requested that the rules outline “licensed monetary statements”, one of many sorts of paperwork that organizations should submit with the required discover. Demetriou identified that “licensed” doesn’t have a specific 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.

Then again, different commentators opined that the reporting necessities set forth within the proposed rules must be expanded. For instance, Michelle Grisat steered that events must be required report any deliberate or potential workforce modifications (e.g., fee modifications, modifications in location of providers, reductions in shifts, or shifting to decrease acuity settings) and historic workforce transactions in patterned transactions. 

Lastly, commentators indicated that the rules as proposed might, in some circumstances, end in OHCA processing duplicative income info additionally obtained and processed by different to state businesses. Invoice Barcelona expressed considerations with the prices inherently attributable to the twin evaluation procedures and famous that such preliminary prices might truly diminish competitors by overly burdening new gamers. Marc Aprea additionally steered the proposed rules embrace caps on affordable prices which have to be reimbursed.

Trying Ahead

HCAI indicated in the course of the workshop that they might provide a abstract of the feedback for OHCA’s Board to debate throughout its August assembly. Healthcare stakeholders had the chance to offer written feedback to OHCA relating to the rules till August 31, 2023.

It stays to be seen whether or not and, if that’s the case, how OHCA revises or tweaks the rules following the general public remark interval. Primarily based on the energetic dialogue and vital points raised in the course of the workshop, nevertheless, we anticipate that OHCA could have lots to think about earlier than shifting to finalize them within the fall of this yr. We are going to maintain readers posted as additional updates are unveiled within the coming weeks and months.