By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

On July 18, 2024, the Massachusetts Senate made a significant move towards enhancing the oversight of healthcare transactions involving private equity firms, real estate investment trusts (REITs), and Management Services Organizations (MSOs) by passing S. 2871, known as An Act Enhancing the Health Care Market Review Process. This legislation reflects a growing trend to curb private equity influence in healthcare and aims to expand care and medication access, improve transparency, and ensure affordability, particularly in primary care.

Key Provisions of the Bill

Expanded Oversight of Transactions: The bill broadens the Massachusetts Health Policy Commission’s (HPC) Material Change Notice (MCN) program to include a wider range of transactions. These include significant for-profit investments, asset purchases, acquisitions of direct or indirect control of providers, and asset sales for lease-back arrangements. For-profit companies must now submit detailed financial information, corporate structures, and portfolio companies as part of their MCN filings.

Cumulative Impact Evaluation: The HPC is instructed to evaluate the cumulative impact of transactions over time during the Cost and Market Impact Review (CMIR). This change aims to provide a more comprehensive assessment of the healthcare market’s evolution.

Aggregation of Transactions: The bill allows multiple transactions to be aggregated to meet the $25 million net patient service revenue filing threshold, which could lead to more thorough scrutiny of substantial market changes.

Corporate Practice of Medicine (CPOM): Reinforcing the state’s CPOM prohibition, the bill emphasizes that MSOs and corporate employers cannot interfere with healthcare practitioners’ clinical judgment, ensuring that medical decisions remain patient-focused.

Addressing Primary Care Shortages

The bill introduces measures to tackle the primary care shortage in Massachusetts, including establishing a task force to develop strategies for stabilizing the primary care system, increasing financial investment, and improving patient access to primary care.

Financial Transparency and Insurance Reforms

Health Insurance Bureau: A new bureau within the Division of Insurance will oversee premium rates for health benefit plans, monitor the small group and individual health insurance markets, and disseminate information to consumers about health insurance coverage.

Prescription Access: The bill requires new insurance carriers to honor prior authorizations approved by previous carriers for at least 90 days following patient enrollment in a new plan. It also mandates that prior authorization approvals for chronic disease management medications be valid for up to 12 months.

Strengthening Oversight Agencies

Health Policy Commission (HPC): The bill adds members with expertise in hospital administration, pharmaceutical development, biotechnology, and medical devices to the HPC’s Board of Commissioners. It also adjusts the health care cost growth benchmark setting from one year to two years to better account for cost irregularities.

Center for Health Information and Analysis (CHIA): CHIA is authorized to collect information from additional healthcare entities, such as pharmaceutical companies and PBMs, to enhance transparency. The bill also strengthens HPC’s and CHIA’s ability to enforce data reporting requirements by increasing penalties for non-compliance.

This comprehensive bill aims to modernize and strengthen the oversight of healthcare transactions in Massachusetts, ensuring that patient care remains the primary focus amid financial and administrative changes. As this bill moves forward, it could serve as a model for other states looking to regulate private equity involvement in healthcare more stringently.

If you have any questions or comments about this Bill and its potential effect on your organization, please contact Parrella Health Law at 857.328.0382 or Chris directly at cparrella@parrellahealthlaw.com.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)