Decoding Massachusetts’ New Health Care Market Review Law: Expert Insights from Mintz Health Care Viewpoints

Decoding the New Massachusetts Health Care Market Review Law

Massachusetts has enacted a significant update to its health care market review process, poised to reshape how health care providers, investors, and related entities operate within the state. The new law, effective April 8, expands the authority of key state agencies and introduces financial assessments, impacting a wide range of industry players.

Expanded Oversight and Increased Clarity

The updated legislation significantly broadens the scope of oversight by the Massachusetts Attorney General’s Office, the Centre for Health Details and Analysis (CHIA), and the Health Policy Commission (HPC). These agencies now have increased authority to demand detailed financial, structural, and operational information from a more diverse range of health care providers and related entities.

Deborah Daccord, a seasoned health care transaction attorney, notes that the law “expands the authority…to require financial, structural, and operational information from a wide variety of health care providers and those seeking to provide them with investment, management, and other services.” This expansion includes:

• Equity investors
• Providers of administrative and management services (MSOs)
• Real estate investment trusts (REITs)
• Pharmaceutical manufacturing companies
• Pharmacy benefit managers (PBMs)

New Financial Assessments for Industry Players

One of the most notable changes is the introduction of financial assessments to help fund the operations of the HPC and CHIA. Historically, these entities were partially funded by the Commonwealth’s general fund, with some contributions from hospitals and ambulatory surgical centers. The new law broadens the base of entities subject to these assessments.

Kate Stewart emphasizes that entities such as “clinical laboratories,imaging facilities,and other registered provider organizations who register with CHIA all need to be carefully looking at this legislation to see if they are going to be subject to a financial assessment.”

Massachusetts False claims Act Update

The updated law also includes a significant change to the Massachusetts False Claims act (FCA). Entities with an ownership or investment interest in an entity that violates the Massachusetts FCA can now face direct liability.

Stewart explains, “entities with an ownership or investment interest in an entity that violates the Massachusetts FCA can possibly have direct liability for an FCA violation…[if they] know of the violation that took place and fail to disclose that violation to the Commonwealth within 60 days of the identification of the violation.” This parallels the federal overpayment rule, which also has a 60-day reporting requirement.

Regulatory Considerations and Potential Delays

the new health care market review process will likely add time to health care transactions. Daccord advises, “providers and their investors can plan on four to nine months of a timeline for this process,” urging proactive engagement with the HPC early in the process.

National Trend of Expanded Health Care Transaction Review

Massachusetts is not alone in expanding its health care transaction review laws. several other states are considering or have recently enacted similar legislation. These states include:

• California
• connecticut
• Illinois
• Indiana
• Iowa
• New Mexico
• New York
• Texas
• Washington

Key Takeaways

• The new massachusetts law significantly expands the oversight and reporting requirements for a wide range of health care entities.
• Financial assessments will be levied on more types of providers to fund the HPC and CHIA.
• Investors and owners can be held liable for FCA violations if they fail to disclose known violations within 60 days.
• health care transactions will likely face longer review periods,requiring early engagement with regulatory bodies.

Health care providers, investors, and related entities operating in Massachusetts must understand these changes and proactively assess their compliance obligations to avoid potential penalties and delays. Stay informed about upcoming HPC guidance and prepare for increased scrutiny of health care transactions.

What are some potential unintended consequences of the expanded regulations on innovation and investment in Massachusetts’ health care system?

Decoding Massachusetts’ New Health care Market review Law: An Expert Interview

Massachusetts has recently enacted critically important changes too its health care market review process. To help us understand the implications of this new law, we spoke with Dr. eleanor Vance, a leading health care regulatory consultant at Vance & Associates, specializing in compliance and transaction strategies. Welcome, Dr. Vance!

Understanding the Expanded Oversight

Archyde: Dr. Vance, the new law expands oversight by the massachusetts Attorney General’s Office, CHIA, and the HPC. What specifically has changed regarding who needs to pay attention now?

Dr. Vance: Its a crucial point. Previously, oversight was primarily focused on hospitals and larger provider groups. Now, the net is cast much wider. Equity investors, management service organizations (MSOs), reits operating in the health care space, pharmaceutical manufacturers, and even pharmacy benefit managers (PBMs) are all under increased scrutiny. This broadened scope requires a proactive reassessment of compliance strategies for manny stakeholders that might not have been directly involved before.

Financial assessments and Their Impact

Archyde: A significant change is the introduction of financial assessments. Who will be subject to these assessments, and what’s the potential impact on smaller organizations?

Dr. Vance: The financial assessments are designed to broaden the funding base for the HPC and CHIA. Beyond hospitals, smaller entities like clinical laboratories, imaging facilities, and other registered provider organizations are now potentially subject to these assessments. For smaller organizations, these assessments can represent a significant financial burden, potentially impacting their ability to invest in quality improvements or even maintain operations. It’s vital for these organizations to closely analyze the legislation and the forthcoming HPC guidance to understand their obligations.

False Claims Act Implications for Investors

Archyde: The amendment to the massachusetts False Claims Act (FCA) seems particularly concerning for investors.Can you elaborate on the potential liability thay face?

Dr. Vance: Absolutely. The updated FCA creates a direct liability risk for entities with ownership or investment interests in organizations that violate the FCA. If an investor knows of a violation and fails to disclose it to the Commonwealth within 60 days, they can be held directly liable. This mirrors the federal overpayment rule and places a much stronger emphasis on due diligence and ongoing compliance monitoring.Investors now need robust mechanisms to identify and address potential FCA violations within their portfolio companies.

Regulatory Delays and transaction Timelines

Archyde: With heightened regulatory scrutiny, how will this impact the timelines for health care transactions in Massachusetts?

Dr. Vance: We anticipate longer review periods for health care transactions. Providers and investors should plan for a minimum of four to nine months for this process. Early engagement with the HPC is crucial to mitigate potential delays. Proactive communication and a clear understanding of the regulatory requirements are essential for navigating this new landscape effectively.

National Trends in Health Care Transaction Review

Archyde: Massachusetts isn’t the only state expanding its health care transaction review laws. Is this part of a broader national trend?

Dr. Vance: Indeed. We’re seeing a growing trend across the country, with states like California, Connecticut, Illinois, and others actively considering or enacting similar legislation. This reflects a growing concern about consolidation in the health care industry and a desire for greater transparency and accountability. Health care organizations and investors operating nationally need to be aware of these evolving regulatory landscapes.

Practical Steps for Organizations

Archyde: What are the key steps that health care providers and investors should take now to prepare for these changes?

Dr. Vance: first and foremost, a thorough review of the new law and upcoming HPC guidance is essential. Organizations should conduct internal audits to assess their compliance with the expanded reporting requirements and the updated FCA provisions. Strengthening internal compliance programs and establishing clear protocols for reporting potential violations are crucial.engaging legal counsel and consultants with expertise in Massachusetts health care regulations is highly recommended.

A Thought-Provoking Question

Archyde: Dr. Vance,thank you for your insights. One final, thought-provoking question: Do you think these increased regulations will ultimately lead to better patient outcomes and a more equitable health care system in Massachusetts, or will they primarily serve as a barrier to innovation and investment? We’d love to hear our readers’ thoughts on this as well.

Dr. Vance: That’s a complex question with no easy answer. The intention is undoubtedly to improve patient outcomes and ensure a more equitable system. However, the effectiveness of these regulations will depend on how they are implemented and enforced, and whether they strike the right balance between oversight and fostering innovation.The potential for unintended consequences, such as reduced investment and increased administrative burdens, needs to be carefully considered. It’s an ongoing process, and we’ll continue to monitor the impact of these changes closely.

Archyde: Thank you for your time and invaluable insight, Dr. Vance!