On Feb. 13, the Indiana House of Representatives passed Indiana House Bill 1666 (HB 1666), which, if signed into law, would expand the existing notification requirement for health care transactions to all health care entities and would require certain health care entities to annually report ownership information to the state. HB 1666 now moves to the Indiana Senate.

Current Indiana Law

Under current Indiana law, following the passage of Senate Bill 9, which went into effect July 1, 2024, Indiana health care entities seeking to enter into a merger or acquisition transaction with another health care entity must notify the Indiana Attorney General (AG) at least ninety days before the date of the merger or acquisition. Under current law, this requirement only applies where the transaction involves a health care entity with at least $10 million in assets.

Changes under Indiana HB 1666

Transaction Reporting Requirements:

HB 1666 would expand the health care transaction reporting requirement to cover any merger or acquisition between an Indiana health care entity and another health care entity, removing the $10 million asset threshold. In addition, HB 1666 would require notice to be sent to the office of the Indiana AG and a “merger approval board,” which would approve or deny the proposed mergers and acquisitions. The board would consist of the Indiana AG, the Secretary of Health and Family, the Secretary of Business Affairs, and two members appointed by the Governor. The board would have ninety days after receiving notice to approve or deny the transaction, though they could extend their decision by ninety days for “good cause.” The following criteria must be met for a proposed transaction to be approved:

1. The transaction would not significantly reduce the availability or accessibility of health care services for the affected community.
2. The transaction is in the public interest.
3. The health care entity involved in the transaction exercised due diligence in: (1) deciding to go forward with the transaction, (2) identifying each person to engage in the transaction, and (3) negotiating the terms of the transaction.
4. The health care entity used adequate procedures in agreeing to the transaction, including using appropriate expert assistance.
5. Any conflict of interest that could impact competition in the relevant market was disclosed to each health care entity involved in the transaction, including any conflict of interest related to each entity’s directors, executives, experts, partnerships, and joint ventures.
6. Any management contract proposed under the transaction is for reasonably fair value.
7. In transactions between health care entities, the health care entity being acquired will receive full and fair market value.
8. The proposed transaction complies with applicable state or federal law.

HB 1666 would also allow the Indiana AG to bring a civil action for equitable relief to enforce the requirements and/or to impose a civil penalty of up to $15 million for violations.

Ownership Information Reporting Requirements:

HB 1666 would require certain health care entities to file annual reports to Indiana state agencies disclosing ownership information. Specifically, the bill would require:

1. Hospitals to report ownership information in their annual fiscal report to the Indiana Department of Health.
2. Physician groups with at least one physical location in Indiana and two or more licensed physicians to report ownership information to the Indiana Professional Licensing Agency.
3. Insurers, third party administrators, and pharmacy benefit managers doing business in Indiana to report ownership information to the Indiana Department of Insurance.
4. Other health care entities, defined as any businesses providing diagnostic, medical, surgical, dental treatment, or rehabilitative care, to report ownership information to the Indiana Department of Health.

The required ownership information would include the name, business address, and identification number of each person or entity that has: (1) at least a 5% ownership interest in the entity, (2) a controlling interest in the entity, or (3) an interest in the entity as a private equity partner. If the information is not reported on time, the proposed bill would allow for a civil penalty of $500 per day for physician group practices with less than five physicians and $1,000 per day for health care entities, physician group practices with five or more physicians, and insurers, third party administrators, and pharmacy benefit managers. Indiana law already allows for a civil penalty of up to $1,000 per day for hospitals that do not file their annual fiscal report on time, and the proposed bill would include ownership information in this report.

Taft will continue to watch HB 1666’s activity in the Indiana Statehouse. Taft’s Health Care attorneys are here to discuss any questions about the consequences of the proposed legislation for individuals and businesses.