On Jan. 8, Gov. Maura Healey signed a bill into law that will increase Massachusetts' oversight of healthcare transactions.
Here's what ASCs need to know about the new law, according to a Jan. 14 report by JD Supra:
1. The law specifically aims to increase state scrutiny of private equity sponsors, significant equity investors, healthcare real estate investment trusts, management services organizations and pharmacy benefits companies.
2. It does this by making changes to the determination of need statute that will give the state health department grounds to change the DON review process.
3. The law will shift the responsibility for developing a state health resource plan to the Health Policy Commission, creating a new Health Resource Planning Council that will submit a five-year state health resource plan to the governor and General Court by Jan. 1, 2026. The plan must identify existing healthcare resources and anticipated healthcare needs and make recommendations for resource allocation based on these needs. The council will focus on health equity and disparities, alongside cost-containment goals. The state health department is required to consider the state health plan in all DON review decisions.
4. For the first time, the DON statute will now instruct the health department to review certain factors when reviewing DON applications, including:
- The state health resource plan
- The state's cost-containment goals
- The proposed project's impacts on patients, health equity, the surrounding workforce and other Massachusetts residents.
- Comments and other relevant data from the Center for Health Information and Analysis and other state agencies.
5. The new law also gives the health department additional decision-making authority over any independent cost analysis, including the ability to choose the entity that conducts the analysis from a list of three entities provided by the applicant.
6. The changes to the statute codifies existing regulatory language regarding timeframes for review when there is an independent cost analysis, or when the holder of a DON is subject to a cost and market impact review. The new law also adds a delayed approval process for any DON issued to a holder that is subject to a performance improvement plan and gives the HPC the ability to control this process more closely.
7. The law added a new section for ASCs specifically, which codifies and clarifies the regulatory requirements for ASC construction. This includes new definitions for community hospitals, designated by the HPC as an independent community hospital in the year in which the DON application is filed.
8. Independent community hospitals whose primary service area overlaps with that of a proposed project are also included in the party of record for this section.
9. Primary service area is now defined as the contiguous geographic area from which a healthcare facility draws 75% of its commercial discharges, as measured by the ZIP codes closest to the facility by drive time, and for which the facility makes up a minimum proportion of all discharges in a ZIP code. This will be determined by the department in the consultation with the HPC and based on the best available data.
10. For any DON with a primary service area that overlaps with an existing independent community hospital, the applicant must obtain a letter of support for the project from the independent community hospitals' CEO and board chair, or must be a joint venture with that facility. The health department will not review an application for any ASCs that are not in compliance with this section. Also, if a proposed project does not meet these requirements and the application is not dismissed by the health department, the independent community hospital may bring a civil action to superior court to require that the application is dismissed.