[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1754 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 1754
To amend title XI of the Social Security Act to provide for the
disclosure and analysis of certain health-related ownership
information.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 23, 2023
Ms. Jayapal (for herself, Mr. Bowman, Mr. Doggett, Mr. Garcia of
Illinois, Mr. Grijalva, Ms. Scanlon, and Mr. Smith of Washington)
introduced the following bill; which was referred to the Committee on
Energy and Commerce, and in addition to the Committee on Ways and
Means, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title XI of the Social Security Act to provide for the
disclosure and analysis of certain health-related ownership
information.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Healthcare Ownership Transparency
Act''.
SEC. 2. DISCLOSURE AND ANALYSIS OF CERTAIN HEALTH-RELATED OWNERSHIP
INFORMATION.
(a) In General.--Part A of title XI of the Social Security Act (42
U.S.C. 1301 et seq.) is amended by adding at the end the following new
section:
``SEC. 1150C. DISCLOSURE AND ANALYSIS OF CERTAIN HEALTH-RELATED
OWNERSHIP INFORMATION.
``(a) Required Disclosure of Certain Health-related Private Equity
Ownership Information.--The Secretary shall issue rules to require a
covered firm to submit to the Secretary, through the Provider
Enrollment, Chain, and Ownership System as part of the enrollment and
revalidation of enrollment processes under title XVIII for providers of
services and suppliers--
``(1) for a covered firm with respect to which there is a
private equity fund that is a control person of the covered
fund, the information described in subsection (b); and
``(2) for a covered firm not described under paragraph (1),
the information described in subsection (c).
``(b) Information Submitted by Covered Firms Owned by Private
Equity.--For purposes of subsection (a) and with respect to a covered
firm 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:
``(1) The percentage of the equity of the private equity
fund contributed by--
``(A) the general partners of the fund; and
``(B) the limited partners of the fund.
``(2) The level of debt of the covered firm at the end of
the applicable year.
``(3) Information on the debt held by the private equity
fund, including--
``(A) the dollar amount of total debt;
``(B) the percentage of debt for which the creditor
is a financial institution in the United States;
``(C) the percentage of debt for which the creditor
is a financial institution outside of the United
States;
``(D) 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
``(E) 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.
``(4) The total amount of debt held by the covered firm
that is categorized as--
``(A) liabilities;
``(B) long-term liabilities; and
``(C) payment in kind or zero coupon debt.
``(5) The average debt-to-equity ratio of--
``(A) each covered firm with respect to the private
equity fund; and
``(B) the private equity fund.
``(6) The average debt-to-EBITDA (Earnings Before Interest,
Taxes, Depreciation, and Amortization) of each covered firm
with respect to the private equity fund.
``(7) 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.
``(8) The total gross asset value of each covered firm with
respect to the private equity fund.
``(9) The gross performance of the private equity fund
during the applicable year.
``(10) 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--
``(A) be categorized by the type of fee; and
``(B) include a description of the purpose of the
fees.
``(11) Any transaction, monitoring, management,
performance, or other fees collected by the private equity fund
from the covered firm.
``(12) In dollars, the total amount of regulatory assets
under management by the private equity fund.
``(13) In dollars, the total amount of net assets under
management by the private equity fund.
``(14) 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').
``(15) Any management services agreements between the
covered firm and the private equity fund, including a
disclosure of fees paid through management services agreements.
``(16) Any other services procured by the covered firm from
the private equity fund or any other company owned by the
private equity fund.
``(17) Dividends paid by the covered firm to the private
equity fund.
``(18) The names of--
``(A) the limited partners of the private equity
fund;
``(B) the board members of the private equity fund;
and
``(C) the leadership of the covered firm.
``(19) All political spending by the covered firm,
including contributions, lobbying spending, and contributions
to groups that do not share their donor list.
``(20) All political spending by the private equity fund,
an affiliate of the fund, or an investment professional at the
fund, with respect to--
``(A) health care related issues; or
``(B) members of congressional committees with
oversight of health care.
``(21) Information on the extent to which the covered firm
entered into any sale lease back transactions with the private
equity fund.
``(22) Every asset purchased by the covered firm during the
applicable year.
``(23) Information that is similar to the information of
the kind that would be required to be included in a
notification filed pursuant to the rules issued under
subsection 7A(d)(1) of the Clayton Act (15 U.S.C. 18a(d)(1)).
``(24) Data related to real estate, mortgage, and lease
payments.
``(25) 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.
``(26) 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.
``(27) For the private equity fund and each covered firm
with respect to the private equity fund, a list of--
``(A) all transactions with the 10 largest vendors
or service providers; and
``(B) any new vendors or service providers.
``(28) For the private equity fund and each covered firm
with respect to the private equity fund, the number of payments
to staffing firms.
``(c) Information Submitted by Covered Firms Not Owned by Private
Equity.--For purposes of subsection (a) and with respect to a covered
firm, the information described in this subsection is the following
information with respect to each year of the previous 10-year period:
``(1) The level of debt of the covered firm at the end of
the applicable year.
``(2) The total amount of debt held by the covered firm
that is categorized as--
``(A) liabilities;
``(B) long-term liabilities; and
``(C) payment in kind or zero coupon debt.
``(3) The average debt-to-equity ratio of the covered firm.
``(4) The average debt-to-EBITDA (Earnings Before Interest,
Taxes, Depreciation, and Amortization) of the covered firm.
``(5) Whether the covered firm experienced a default during
the applicable year.
``(6) The total gross asset value of the covered firm.
``(7) Dividends paid by the covered firm.
``(8) The names of the leadership of the covered firm.
``(9) All political spending by the covered firm, including
contributions, lobbying spending, and contributions to groups
that do not share their donor list.
``(10) Every asset purchased by the covered firm during the
applicable year.
``(11) Information that is similar to the information of
the kind that would be required to be included in a
notification filed pursuant to the rules issued under
subsection 7A(d)(1) of the Clayton Act (15 U.S.C. 18a(d)(1)).
``(12) Data related to real estate, mortgage, and lease
payments.
``(13) Interest expenses and payments made to comply with
tax receivable agreements.
``(14) Average interest rate paid on secured and unsecured
lines of credit.
``(15) A list of--
``(A) all transactions with the 10 largest vendors
or service providers; and
``(B) any new vendors or servicer providers.
``(16) The number of payments to staffing firms.
``(d) Requirement To Provide Information to a Covered Firm.--A
private equity fund that is a control person of a covered firm shall
provide the covered firm with any information required to complete a
disclosure under this section.
``(e) GAO Analysis.--
``(1) Analysis.--Not later than 12 months after the date of
implementation of this section, and every 3 years thereafter
during the 12-year period beginning on the date of the
enactment of this section, the Comptroller General of the
United States shall conduct a comparative analysis, using the
information submitted under this section, to determine to what
extent health care consolidation is taking place and how this
consolidation and private equity's involvement in health care
is contributing, among other factors, to the following
indicators:
``(A) Revenue and cost to charge ratio.
``(B) Payor mix and case mix index.
``(C) In-network versus out of network referrals.
``(D) Quality ratings for the health care
facilities.
``(E) Regulation compliance violations, including
dischargers for patients with Medicare or Medicaid
coverage and total discharges per year.
``(F) Staffing levels and ratios.
``(G) Employee wages.
``(H) Hospital capacity, including number of beds.
``(2) Report.--After each analysis required under paragraph
(1) is completed, the Comptroller General shall issue a report
on all findings and conclusions made in carrying out such
analysis to the Congress, the Secretary of Health and Human
Services, and the task force established under section 3 of the
Healthcare Ownership Transparency Act.
``(f) Audits.--The Secretary shall audit a random sample annually
of applications submitted through the Provider Enrollment, Chain, and
Ownership System as part of the enrollment and revalidation of
enrollment processes under title XVIII to verify compliance with the
requirements of this section and accuracy of information submitted
pursuant to this section.
``(g) Definitions.--In this section:
``(1) Affiliate.--The term `affiliate' means--
``(A) 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--
``(i) in a fiduciary or agency capacity
without sole discretionary power to vote such
securities; or
``(ii) solely to secure a debt, if such
entity has not in fact exercised such power to
vote;
``(B) 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--
``(i) in a fiduciary or agency capacity
without sole discretionary power to vote such
securities; or
``(ii) solely to secure a debt, if such
entity has not in fact exercised such power to
vote;
``(C) 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
``(D) an entity that operates the business or
substantially all of the property of another entity
under a lease or operating agreement.
``(2) Control person.--The term `control person'--
``(A) means a person that directly or indirectly
owns, controls, or holds--
``(i) the power to vote more than 20
percent of any class of voting securities of a
covered firm; or
``(ii) any lesser percentage of any class
of voting securities of a covered firm that is
sufficient to give the ability to direct the
actions of the covered firm; and
``(B) does not include a person that--
``(i) holds the voting interests of a
covered firm solely--
``(I) in a fiduciary or agency
capacity without sole discretionary
power to vote the securities; or
``(II) to secure a debt, if the
person has not exercised the power to
vote; or
``(ii)(I) is a limited partner with respect
to a person described in subparagraph (A) that
is a partnership; and
``(II) does not participate in the
direction of the management or policy of the
covered firm.
``(3) Corporation.--The term `corporation' means--
``(A) a joint-stock company;
``(B) 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;
``(C) a trust; and
``(D) an association having a power or privilege
that a private corporation, but not an individual or a
partnership, possesses.
``(4) Covered firm.--The term `covered firm' means a
corporation that is--
``(A) a provider of services or supplier that meets
all applicable requirements under title XVIII for
participating in the Medicare program under such title;
or
``(B) any other person or entity who may receive
reimbursements, payments, or other funds from the
Centers for Medicare & Medicaid Services.
``(5) Private equity fund.--The term `private equity fund'
means--
``(A)(i) a company or partnership 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;
``(ii) a venture capital fund, as defined under
section 275.203(l)-1of title 17, Code of Federal
Regulations; or
``(iii) a sovereign wealth fund; and
``(B) directly, or through an affiliate, acts as a
control person.''.
(b) Exclusion From Participation Under Medicare.--Section 1128(b)
of the Social Security Act (42 U.S.C. 1320a-7(b)) is amended by adding
at the end the following new paragraph:
``(18) Failure to disclose certain pecos information.--With
respect to exclusion pursuant to this subsection from
participation in the Medicare program under title XVIII, any
entity to which section 1150C applies that did not fully and
accurately make any disclosure required by such section.''.
SEC. 3. TASK FORCE TO ANALYZE AND PROVIDE RECOMMENDATIONS ON THE ROLE
OF PRIVATE EQUITY AND CONSOLIDATION IN HEALTH CARE.
(a) Establishment.--The Secretary of Health and Human Services
shall establish and operate a task force to address and limit the role
of private equity and consolidation in healthcare (the ``Task Force'').
(b) Composition.--
(1) Chair.--The Secretary of Health and Human Services
shall chair the Task Force.
(2) Members.--The Secretary shall appoint the members of
the Task Force from among the following:
(A) Academic experts and researchers with expertise
on--
(i) the role of private equity in
healthcare; and
(ii) the impact of mergers and acquisitions
in healthcare on costs and patients.
(B) Representatives from organizations focused on
consumer protection, antitrust, patient advocacy, and
worker advocacy.
(C) Hospital and health care staff.
(D) Patients.
(3) Advisory members.--In addition to the members described
under paragraph (2), the chairman of the Federal Trade
Commission and the Attorney General shall serve as advisory
members of the Task Force.
(4) Member appointment.--Not later than 60 days after the
receipt of the first report issued by the Comptroller General
of the United States under section 1150C of the Social Security
Act, the Secretary of Health and Human Services shall appoint
the members of the Task Force--
(A) in accordance with paragraph (2); and
(B) using a competitive application process.
(c) Recommendations.--The Task Force shall, based on the results of
such study and the report issued by the Comptroller General of the
United States under section 1150C of the Social Security Act 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.
(d) Report.--Not later than 6 months after the date of the first
report issued by the Comptroller General of the United States under
section 1150C of the Social Security Act, and every 6 months
thereafter, the Secretary of Health and Human Services shall submit to
Congress a report--
(1) on the recommendations developed subsection (c); and
(2) that includes regulatory and legislative
recommendations to address any adverse effects of health care
consolidation and private equity's involvement in health care.
(e) Moratorium.--
(1) In general.--The Secretary of Health and Human Services
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, regulation
compliance violations, or such other metrics as the Secretary
may determinate appropriate.
(2) Definitions.--In this subsection:
(A) Covered firm.--The term ``covered firm'' has
the meaning given that term under section 1150C(g) of
the Social Security Act.
(B) Private equity fund.--The term ``private equity
fund'' means--
(i) a company or partnership 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;
(ii) a venture capital fund, as defined
under section 275.203(l)-1of title 17, Code of
Federal Regulations; and
(iii) a sovereign wealth fund.
<all>