On February 7, 2025, legislators launched Washington State Home Invoice 1881 and its companion invoice, Senate Invoice 5704 (collectively, the “Payments”), to reinforce oversight and regulation of fabric modifications inside the state’s well being care market. The Payments’ major acknowledged goals are to make sure that well being care transactions don’t adversely have an effect on the accessibility, affordability and high quality of well being care companies for Washington residents.
Background
Washington is certainly one of a rising variety of states that already require well being care entities to offer discover of a well being care transaction. Because the map under depicts, well being care consolidation is a bipartisan challenge that has seen state legislatures from reliably Republican and Democratic states, in addition to the Federal Commerce Fee (“FTC”) and U.S. Division of Justice (“DOJ”) enacting sweeping new necessities to establish and fight well being care consolidation.
Key Modifications to Washington’s Present Well being Care Materials Change Discover Necessities
The Payments purpose to amend the present well being transaction discover necessities by not solely increasing Washington’s definition of a Materials Change Transaction (as outlined under) but additionally by looping within the Washington State Well being Care Authority. As well as, the Payments create new notification necessities for particular transactions, akin to these involving well being care entities that serve low-income populations and transactions involving entities that generate greater than $10 million in annual income. The desk under breaks down a very powerful modifications to the present regulation.
| Present Requirement | Proposed Requirement | |
| Materials Change Transactions | A Materials Change Transaction features a merger, acquisition or contracting affiliation between two or extra entities of the next varieties:
(a) Hospitals; (b) Hospital techniques; or (c) Supplier organizations. (“Coated Entities”) |
Present Necessities plus transactions together with:
(a) Insurance coverage carriers and holding corporations; and (b) All different entities engaged in well being care companies. (“Proposed Entities”) |
| Transactions with Out-of-State Entities | Discover required for a transaction with a Coated Entity and an out-of-state entity with at the least $10 million in annual income from Washington residents. | Discover required for a transaction with a Coated Entity or Proposed Entity and an out-of-state entity, no matter income from Washington residents. |
| State Discover Recipient | WA Legal professional Basic (“WA AG”). | WA AG and WA Well being Care Authority (“HCA”) |
| Discover Timing | 60 days previous to transaction closing. | 90 days previous to transaction closing. |
| Discover Contents | The events to the transaction should present:
(1) The events to the transaction; (2) The events’ areas the place well being care companies are presently offered; (3) An outline of the character and goal of the proposed transaction; and (4) A duplicate of a federal HSR submitting, if relevant. |
Present Necessities apply to most transactions.
Further discover necessities apply for: (1) Transactions the place not one of the events are hospitals/hospital techniques, however all of the events serve predominantly low-income and medically underserved sufferers; and (2) Transactions the place at the least one of many events is a hospital or hospital system or at the least one of many events has generated $10 million or extra in well being care companies income in any of the previous three fiscal years. |
| Overview/Approval | Approval will not be required; nonetheless, the WA AG might request extra info inside 30 days of receiving discover. | Present Necessities apply to most transactions.
For particular transactions, the HCA should evaluation the knowledge; maintain a public listening to; conduct an Entry, Affordability, High quality, and Fairness Overview; and challenge a report and suggestion to the WA AG. The WA AG shall then approve, approve with situations or modifications, or reject the transaction based mostly on the HCA’s report. Events to the transaction might enchantment the WA AG’s determination inside 30 days of the choice. |
| Penalties | $200/per day | Any occasion who fails to adjust to these necessities is liable to the state for a civil penalty as much as ten % (10%) of the worth of the transaction, on the discretion of the WA AG. |
New Transaction Necessities
Along with up to date necessities within the above desk, the Payments additionally purpose to make sure that the pre-transaction well being care panorama will not be detrimentally modified for sufferers and shoppers.
- Materials Change Transactions are prohibited if they’d detrimentally have an effect on the continued existence of accessible, inexpensive well being care in Washington for at the least 5 years post-transaction.
- Transactions should be sure that affected communities have the identical or improved entry to high quality, inexpensive care, together with emergency, major, specialty behavioral well being, reproductive well being, gender-affirming and end-of-life care.
- The transaction should additionally end in at the least one of many following:
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- Sustaining or lowering the speed of development in affected person and well being plan sponsor prices;
- Sustaining or growing entry to companies in medically underserved areas;
- Rectifying historic and up to date components contributing to an absence of well being equities or entry to companies; or
- Sustaining or enhancing well being outcomes for residents of Washington state.
- The Payments don’t specify precisely how events to Materials Change Transactions should display the knowledge on this New Transaction Necessities part. The proposed language seems to easily point out the components that the WA AG and HCA will keep in mind when performing their evaluations.
Sensible Takeaways
- The Payments additionally supply the potential for an expedited evaluation, by which the events might present documentation to the WA AG and HCA demonstrating the existence of a unprecedented emergency state of affairs. The WA AG should then reply inside 10 days to advise the events and the HCA as as to if any info in any other case required could also be waived.
- The particular discover necessities and extra evaluation timelines by the WA AG and the HCA are advanced and differ relying on the id of the events, the scale of the transaction and the anticipated impact of the transaction itself. The HCA evaluation alone might embrace collaboration with a number of WA well being companies, public hearings, subpoenas for added info and witnesses, in addition to different discovery procedures. In complete, the brand new processes outlined within the Payments might add greater than 100 days to the present evaluation and would require lively participation by the events all through the method.
- Ought to the Payments move, as a result of their complexity and rigorous evaluation course of, Corridor Render recommends that any occasion contemplating a Materials Change Transaction contact a well being care antitrust legal professional early on within the transaction to grasp the complete scope and necessities of the brand new course of.
Subsequent Steps
These payments, together with a number of others within the U.S., might significantly have an effect on the extent of disclosure that events should submit previous to the consummation of a well being care transaction. Corridor Render will proceed to observe these developments, and additional steering can be offered ought to the payments move. Within the meantime, in case you have any questions on how the Payments might have an effect on your upcoming transaction or how one can put together and submit a remark within the meantime, please contact:
Corridor Render weblog posts and articles are supposed for informational functions solely. For moral causes, Corridor Render attorneys can not—outdoors of an attorney-client relationship—reply particular questions that will be authorized recommendation.
