Sec. 2. Amendment to the Public Health Service Act
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The Public Health Service Act ( 42 U.S.C. 201 et seq. ) is amended by adding at the end the following: In this title: The term affiliate means— a person that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of another entity, other than a person that holds such securities— in a fiduciary or agency capacity without sole discretionary power to vote such securities; or solely to secure a debt, if such entity has not in fact exercised such power to vote; a corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by another entity (referred to in this subparagraph as a covered entity ), or by an entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the covered entity, other than an entity that holds such securities— in a fiduciary or agency capacity without sole discretionary power to vote such securities; or solely to secure a debt, if such entity has not in fact exercised such power to vote; a person whose business is operated under a lease or operating agreement by another entity, or person substantially all of whose property is operated under an operating agreement with that other entity; or an entity that operates the business or substantially all of the property of another entity under a lease or operating agreement.
The term corporation means— a joint-stock company; a company or partnership association organized under a law that makes only the capital subscribed or callable up to a specified amount responsible for the debts of the association, including a limited partnership and a limited liability company; a trust; or an association having a power or privilege that a private corporation, but not an individual or a partnership, possesses. The term covered firm means a for-profit corporation that owns or is an affiliate of a health care entity.
The term health care entity means an entity that consists of 1 or more of the following health care providers: A hospital. A physician practice. A skilled nursing facility. A hospice facility. A mental or behavioral health care provider. An opioid treatment program. A provider of services (as defined in section 1861(u) of the Social Security Act ( 42 U.S.C. 1395x(u) ) or a supplier (as defined in section 1861(d) of such Act ( 42 U.S.C. 1395(d) ) enrolled in the Medicare program.
Any other entity the Secretary determines appropriate. The term private equity fund means— a person that would be considered an investment company under section 3 of the Investment Company Act of 1940 ( 15 U.S.C. 80a–3 ) but for the application of paragraph
(1)or
(7)of subsection
(c)of such section 3; a venture capital fund, as defined in section 275.203(l)–1of title 17, Code of Federal Regulations (or successor regulations); or a sovereign wealth fund; and directly, or through an affiliate, acts as a control person. The Secretary shall require each covered firm to submit to the Secretary, at such times as the Secretary determines appropriate, through the infrastructure established under paragraph (2), a report containing— for a covered firm with respect to which there is a private equity fund that is a control person of the covered firm, the information described in subsection (b); and for a covered firm not described in subparagraph (A), the information described in subsection (c). The Secretary, in consultation with the Secretary of the Treasury and the Federal Trade Commission, shall establish infrastructure to collect the data submitted under paragraph (1). The Secretary shall make the data submitted under paragraph
(1)publicly available. The Secretary shall periodically conduct audits to verify the data submitted under paragraph (1). The Secretary shall submit to Congress annual reports describing trends identified through analysis of the data submitted under paragraph
(1)relating to— the financial status of covered firms; and how the type of ownership of health care entities impacts access to health care, health care quality, and patient safety. For purposes of subsection (a), and with respect to a covered firm described in subsection (a)(1)(A) and each private equity fund that is a control person of the covered firm, the information described in this subsection is the following information with respect to each year of the previous 10-year period: The percentage of the equity of the private equity fund contributed by— the general partners of the fund; and the limited partners of the fund. The level of debt of the covered firm at the end of the applicable year. Information on the debt held by the private equity fund, including— the dollar amount of total debt; the percentage of debt for which the creditor is a financial institution in the United States; the percentage of debt for which the creditor is a financial institution outside of the United States; the percentage of debt for which the creditor is an entity that is located in the United States and is not a financial institution; and the percentage of debt for which the creditor is an entity that is located outside of the United States and is not a financial institution. The total amount of debt held by the covered firm that is categorized as— liabilities; long-term liabilities; and payment in kind or zero coupon debt. The average debt-to-equity ratio of— each covered firm with respect to the private equity fund; and the private equity fund. The average debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of each covered firm with respect to the private equity fund. The total number of covered firms with respect to the private equity fund that experienced a default during the applicable year, and the name of any such covered firm. The total gross asset value of each covered firm with respect to the private equity fund. The gross performance of the private equity fund during the applicable year. The total dollar amount of aggregate fees and expenses collected by the private equity fund, the manager of the fund, or related parties from covered firms with respect to the private equity fund, which shall— be categorized by the type of fee; and include a description of the purpose of the fees. Any transaction, monitoring, management, performance, or other fees collected by the private equity fund from the covered firm. In dollars, the total amount of regulatory assets under management by the private equity fund. In dollars, the total amount of net assets under management by the private equity fund. With respect to the applicable year, the difference obtained by subtracting the financial gains of the private equity fund by the fees that the general partners of the fund charged to the limited partners of the fund (commonly referred to as the performance net of fees ). Any management services agreements between the covered firm and the private equity fund, including a disclosure of fees paid through management services agreements. Any other services procured by the covered firm from the private equity fund or any other company owned by the private equity fund. Dividends paid by the covered firm to the private equity fund. The names of— the limited partners of the private equity fund; the board members of the private equity fund; and the leadership of the covered firm. All political spending by the covered firm, including contributions, lobbying spending, and contributions to groups that do not share their donor list. All political spending by the private equity fund, an affiliate of the fund, or an investment professional at the fund, with respect to— health care related issues; or members of congressional committees with oversight of health care. Information on the extent to which the covered firm entered into any sale lease back transactions with the private equity fund. Every asset purchased by the covered firm during the applicable year. Information that is similar to the information required to be contained in a notification filed pursuant to the rules under subsection 7A(d)(1) of the Clayton Act ( 15 U.S.C. 18a(d)(1) ). Data related to real estate, mortgage, and lease payments. Interest expenses and payments made by the private equity fund and each covered firm with respect to the private equity fund to comply with tax receivable agreements. Average interest rate paid on secured and unsecured lines of credit by the private equity fund and each covered firm with respect to the private equity fund. For the private equity fund and each covered firm with respect to the private equity fund, a list of— all transactions with the 10 largest vendors or service providers; and any new vendors or service providers. For the private equity fund and each covered firm with respect to the private equity fund, the number of payments to staffing firms. For the covered firm, the staffing of each health care provider owned by such covered firm, disaggregated by position and ratio of staff to patients. For the covered firm, the staff retention rates, number of job postings, and vacancy rates, disaggregated by position, with respect to each health care provider owned by such covered firm. For a covered firm that owns 1 or more hospitals, the number of beds in use and the capacity of each such hospital. For the covered firm, the number of health care facilities or providers owned by such covered firm that have closed during such year. For the covered firm, health care costs charged to patients and public and private health plans. For the covered firm, the percentage and number of non-patient care areas in health care facilities owned by such covered firm that have been converted into patient care areas. For the covered firm, reductions in the wages or benefits of health workers employed by health care providers owned by such covered firm. For the private equity fund and each covered firm with respect to the private equity fund, complaints of, or citations for violations of, State or Federal worker protection laws, including charges of unfair labor practices, complaints of violations of State or Federal antidiscrimination laws, complaints of violations of wage and hour laws, and whistleblower complaints. For the private equity fund and each covered firm with respect to the private equity fund, disclosure of any agreement or arrangement with a labor relations consultant or other independent contractor or organization for which a report is required to be filed under section 203(a)(4) of the Labor-Management Reporting and Disclosure Act of 1959 ( 29 U.S.C. 433(a)(4) ). Any other information that the Secretary determines relevant for evaluating the impact of private equity ownership of health care entities on the provision of health care, health care quality, and safety. For purposes of subsection
(a)and with respect to a covered firm described in subsection (a)(1)(B), the information described in this subsection is the following information with respect to each year of the previous 10-year period: The level of debt of the covered firm at the end of the applicable year. The total amount of debt held by the covered firm that is categorized as— liabilities; long-term liabilities; and payment in kind or zero coupon debt. The average debt-to-equity ratio of the covered firm. The average debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of the covered firm. Whether the covered firm experienced a default during the applicable year. The total gross asset value of the covered firm. Dividends paid by the covered firm. The names of the leadership of the covered firm. All political spending by the covered firm, including contributions, lobbying spending, and contributions to groups that do not share their donor list. Every asset purchased by the covered firm during the applicable year. Information that is similar to the information required to be included in a notification filed pursuant to the rules under subsection 7A(d)(1) of the Clayton Act ( 15 U.S.C. 18a(d)(1) ). Data related to real estate, mortgage, and lease payments. Interest expenses and payments made to comply with tax receivable agreements. Average interest rate paid on secured and unsecured lines of credit. A list of— all transactions with the 10 largest vendors or service providers; and any new vendors or servicer providers. The number of payments to staffing firms. The salaries of the executives of the covered firm and each health care entity owned by such covered firm. The board membership of the covered firm and each health care entity owned by such covered firm. The staff retention rates, number of job postings, and vacancy rates, disaggregated by position, with respect to each health care provider owned by the covered firm. The percentage and number of non-patient care areas in health care facilities owned by the covered firm that have been converted into patient care areas. Reductions in the wages or benefits of health workers employed by health care providers owned by the covered firm. Complaints of, or citations for violations of, State or Federal worker protection laws, including charges of unfair labor practices, complaints of violations of State or Federal antidiscrimination laws, complaints of violations of wage and hour laws, and whistleblower complaints. Disclosure of any agreement or arrangement with a labor relations consultant or other independent contractor or organization for which a report is required to be filed under section 203(a)(4) of the Labor-Management Reporting and Disclosure Act of 1959 ( 29 U.S.C. 433(a)(4) ). Any other information that the Secretary determines relevant for evaluating the impact of for-profit ownership of health care entities on the provision of health care, health care quality, and safety. To the maximum extent practicable, the Secretary shall— ensure that the reporting requirements under this section are not duplicative of other reporting requirements under Federal law; and reduce the administrative burden on covered firms of complying with such requirements. In this subsection, the term essential services , with respect to a health care provider of a health care entity owned by or affiliated with a covered firm, means services that are necessary for preserving health care access, health care quality, and patient safety, as determined by the Secretary, including services for which the Secretary determines— there are no equivalent services available within the same travel time; that loss of the services would result in meaningful reductions in surge capacity that will negatively impact access to services, health care quality, and patient safety; that loss of the services would limit health care access, health care quality, and patient safety for specific demographics of individuals based on sex, sexuality, race, nationality, age, or disability status; or that loss of the services would have a meaningful impact on the ability of health care entities to provide care in the surrounding geographical area of the health care provider. The Secretary shall establish a mechanism to ensure that the risks of covered firms with respect to which there is a private equity fund that is a control person of the covered firm are mitigated. Such mechanism may require each such covered firm— to establish an escrow account with sufficient funding to cover operating and capital expenditures for not less than 5 years, including, in the case of the closure of a health care provider of a health care entity owned by or affiliated with such covered firm or if there are reductions of essential health services at such a health care provider, sufficient funding— to pay out contract obligations to health care providers and other staff of such health care entity; and to provide supplemental funding to community health care or non-profit health care providers in the surrounding geographical area impacted by such closure or service reductions; to obligate a minimum capital investment in any health care entity that is owned by or affiliated with such covered firm; or to carry out such other activities as the Secretary determines appropriate to ensure that such covered firm provides a financial contribution sufficient to mitigate the impact of a potential closure, reduction of essential services, workforce shortage, or reduction in quality or safety of care or health care access. No health care entity or covered firm may enter into agreement to sell to, or lease from, a real estate investment trust (as defined in section 856 of the Internal Revenue Code of 1986) an interest in real property if the terms of such sale or lease would lead to long-term weakened financial status of the health care entity or place the public health at risk. The Secretary shall require each health care entity, or the covered firm that owns such health care entity, seeking to enter into an agreement described in paragraph
(1)to submit to the Secretary for review the terms of the sale or lease, as applicable. In conducting a review of a sale or lease under subparagraph (A), the Secretary shall determine whether the terms of such sale or lease would lead to long-term weakened financial status of the health care entity or place the public health at risk. The Secretary may consult with the relevant State attorney general in conducting a review under subparagraph (A). Except as provided in section 518 of title 28, United States Code (relating to litigation before the Supreme Court), attorneys designated by the Secretary may appear for the Department of Health and Human Services and represent the Department in any civil action brought in connection with a violation of paragraph (1). In this subsection, the term private equity firm means a for-profit corporation with respect to which there is a private equity fund that is a control person of the corporation. The Secretary shall issue licenses for private equity firms to invest, directly or indirectly, in or purchase a health care entity. The Secretary may charge a fee for applications for licenses under paragraph
(1), which shall be deposited into a special account, the amounts in which shall remain available to the Secretary, until expended and without further appropriation, for funding for the National Health Service Corps, the community health centers program under section 330, teaching health centers that operate graduate medical education programs under section 340H, and other health workforce programs carried out by the Health Resources and Services Administration, and hospitals that have received disproportionate share hospital payments under section 1886 of the Social Security Act or section 1923 of such Act. The Secretary may deny or revoke a license under this subsection— in cases in which the Secretary determines that the private equity firm— has failed to comply with any of the provisions of this title; or has engaged in price gauging, understaffing, access barriers, or such other metrics as the Secretary determines appropriate, with respect to the private equity firm’s ownership of health care entities; or for such other reason involving actions or practices of the private equity firm that may impact or interfere with access to, or quality of, health care, as the Secretary determines appropriate. A private equity firm the license of which is revoked under subparagraph
(A)shall be required to divest from any investments in any health care entity. Any private equity firm that violates a requirement of this subsection with respect to a health care entity shall be liable for a civil monetary penalty of not more than the amount that is equal to the amount of Federal funding received by the health care entity, which shall be deposited in the account described in paragraph (3). The Secretary shall establish and operate a task force to monitor changes in the health care marketplace, to address and limit the role of private equity and consolidation in health care, and to address changes to the health care marketplace and private equity or market consolidation patterns that may create, continue, or exacerbate health care disparities or disparate health outcomes based on sex, sexuality, race, nationality, ethnicity, age, disability, immigration status, socioeconomic status, or location of residence (referred to in this section as the Task Force ). The Secretary shall chair the Task Force. The Secretary shall select from among the members appointed under paragraph
(3)a co-chair of the Task Force, who shall be a practicing health care provider. The Secretary shall appoint the members of the Task Force from among the following: Academic experts and researchers with expertise on— the role of private equity in healthcare; and the impact of mergers and acquisitions in healthcare on costs and patients. Representatives from organizations focused on consumer protection, antitrust, health care equity, patient advocacy, and worker advocacy. Hospital and health care staff (and the labor organizations representing such staff). Patients. In addition to the members described in paragraph (3), the Chair of the Federal Trade Commission and the Attorney General shall serve as advisory members of the Task Force. Not later than 180 days after the date of enactment of this Act, the Secretary shall appoint the members of the Task Force— in accordance with paragraph (2); and using a competitive application process. The Task Force shall— identify best practices and, for purposes of subsection (d), develop recommendations, for limiting the role of private equity in health care, taking into account the implications on health outcomes and staff working conditions; identify emerging trends within the health care marketplace that may undermine access to health care, quality of care, or patient safety or create financial instability and risk for health providers; and develop legislative recommendations for preserving and expanding health care quality, safety, and access under this title. The Secretary shall submit to Congress annually a report— on the recommendations developed subsection (c); and that includes regulatory and legislative recommendations to address any adverse effects of health care consolidation, private equity’s involvement in health care, or any other change or emerging trend in the health care marketplace. The Secretary may prohibit a private equity fund from purchasing voting securities of a covered firm, and may prohibit any merger or acquisition that would result in a private equity fund gaining control of voting securities of a covered firm, until the date on which the Secretary determines that the Task Force has had sufficient time to study and identify whether abuses are taking place in specific health care sectors or by health care entities related to price gauging, understaffing, access barriers, or such other metrics as the Secretary determines appropriate. The Secretary shall— maintain a corporate accountability data collection program for the reporting of any person subject to the requirements of this title for failure to comply with this title; and furnish the information collected under paragraph
(1)to the National Practitioner Data Bank established pursuant to the Health Care Quality Improvement Act of 1986. Each State may require a person subject to the requirements of this title to satisfy such requirements applicable to the person. In the case of a State that fails to substantially enforce the requirements of this title with respect to applicable persons in the State, the Secretary shall enforce the requirements of this title under subsection
(b)to the extent that such requirements relate to actions prohibited under this title occurring in such State. If a person is found by the Secretary to be in violation of this title, the Secretary may apply a civil monetary penalty with respect to such person in an amount not to exceed $10,000 per violation. A civil monetary penalty under paragraph
(1)shall be in addition to any civil monetary penalty assessed under section 3403(c)(4). This title shall not be construed to supersede any provision of State law that establishes, implements, or continues in effect any requirement or prohibition except to the extent that such requirement or prohibition prevents the application of a requirement or prohibition of this title. The Secretary shall conduct or support research on— the impact of transitioning to a ban on for-profit corporations owning or investing in health care entities; the impact of private equity investment in health care entities on— health care costs; access to health care; clinical decision making; health care entity recruitment and retention; labor organization membership rates and collective bargaining power of health worker labor organizations; health care worker pay, pensions, and other benefits; health outcomes; and health disparities; the effectiveness of State law (including regulations) and State enforcement on ensuring acquisition of health care entities by covered firms does not place access to health care, health care quality, or patient safety at risk; and compliance the CMS–855A Medicare Enrollment Application and other Federal ownership transparency requirements. .
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- 15 USC 80a–3
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Sec. 2
Amendment to the Public Health Service Act
Cite15 USC 80a–3
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