Senate Bill 2757

AN ACT TO CREATE THE HOSPITAL COOPERATION ACT OF 2021; TO PROVIDE THAT HOSPITALS MAY ENTER INTO COOPERATIVE AGREEMENTS FOR CERTAIN PURPOSES; TO REQUIRE PARTIES TO THOSE COOPERATIVE AGREEMENTS TO APPLY FOR A CERTIFICATE OF PUBLIC ADVANTAGE GOVERNING THE COOPERATIVE AGREEMENT; TO PROVIDE STANDARDS OF REVIEW FOR THE STATE DEPARTMENT OF HEALTH WITH REGARD TO THOSE APPLICATIONS AND ISSUANCE OF CERTIFICATES; TO REQUIRE THE DEPARTMENT TO MONITOR, REGULATE, AND ACTIVELY SUPERVISE THOSE AGREEMENTS; TO AUTHORIZE THE DEPARTMENT TO REVOKE A CERTIFICATE; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act shall be known and may be cited as the "Hospital Cooperation Act of 2021."

SECTION 2. The Legislature finds and declares that it is the policy of this state, in certain instances, to displace competition among hospitals with regulation to the extent set forth in this section and to actively supervise that regulation to the fullest extent required by law, in order to promote cooperation and coordination among hospitals in the provision of health services and to provide state action immunity from federal and State Antitrust Law to the fullest extent possible to those hospitals that are issued a certificate of public advantage under this section.

SECTION 3. For the purposes of this act, the following terms shall have the following meanings:

(a) "Act" means the Hospital Cooperation Act of 2021.

(b) "Affected person," with respect to any application for a certificate of public advantage, means:

(i) The applicant(s);

(ii) Any person residing within the geographic service area of an applicant;

(iii) Health care purchasers who reimburse health care facilities located in the geographic service area of an applicant;

(iv) Any other person furnishing goods or services to, or in competition with, an applicant; or

(v) Any other person who has notified the department in writing of his interest in applications for certificates of public advantage and has a direct economic interest in the decision.

Notwithstanding the foregoing, a person who is a resident of or has his principal place of business in another state who would otherwise be considered an "affected persons" is not included, unless that other state provides for similar involvement of persons from Mississippi in a similar process in that state.

(d) "Certificate of public advantage" means the formal written approval, including any conditions or modifications of a cooperative agreement, issued by the department.

(e) "Cooperative agreement" means an agreement among two (2) or more hospitals for the consolidation by merger, purchase or other combination of assets, or for the offering, provision, operation, planning, funding, pricing, contracting, utilization review or management of health services, or for the sharing, allocation, or referral of patients, personnel, instructional programs, support services and facilities or medical, diagnostic or laboratory facilities or procedures or other services traditionally offered by hospitals.

(f) "Department" means the State Department of Health created under Section 41-3-15.

(g) "Hospital" means:

(i) Any institution or place defined as a hospital in Section 41-9-3;

(ii) The owner or owners of a hospital;

(iii) Any community hospital defined in Section 41-13-10; or

(iv) The academic medical center defined in Section 37-115-50.

(h) "Person" means an individual, a trust or estate, partnership, corporation, the state or a political subdivision or instrumentality of the state.

(i) "State" means the State of Mississippi.

(j) "State Health Officer" means the State Health Officer elected by the State Board of Health under Section 41-3-5.l.

The use of a singular term in this section includes the plural of that term, and the use of a plural term in this section includes the singular of that term, unless the context clearly requires another connotation.

SECTION 4. (l) A hospital may negotiate and enter into a cooperative agreement with one or more hospitals. If the parties to a cooperative agreement file an application for a certificate of public advantage governing the agreement with the department, the conduct of the parties in negotiating and entering into a cooperative agreement is lawful conduct.

(2) Parties to a cooperative agreement may apply to the department for a certificate of public advantage governing that cooperative agreement. The application must include an executed written copy of the cooperative agreement and describe the nature and scope of the cooperation in the agreement. Within thirty (30) days of receipt of the application, the department may request additional information as may be necessary to complete the application. The applicant has thirty (30) days from the date of the request to submit the additional information. If the applicant fails to submit the requested information within the thirty-day period, or any extension of time granted by the department, the application is deemed withdrawn. The department may require a reasonable application fee, set by regulation, from the submitting parties sufficient to cover the cost of processing the application.

(3) The department shall review the application in accordance with the standards set forth in subsections (4) and (5) of this section. The department shall give notice of the application to members of the public who reside in the service areas of the applicant hospitals, which may be provided through newspapers of general circulation or public information channels. If requested by an affected person within thirty (30) days of the giving of the public notice, the department may hold a public hearing in accordance with the rules adopted by the board. Such public hearing must occur within sixty (60) days of the giving of the public notice. The department shall grant or deny the application within ninety (90) days of the filing of the original application. That decision, along with any conditions of approval, must be in writing and must set forth the basis for the decision. The department may establish conditions for approval that are reasonably necessary to ensure that the cooperative agreement and the activities engaged under it are consistent with the intent of this act and to ensure that the activity is actively supervised by the state. The department shall furnish a copy of the decision to the applicants and any affected persons who have asked in writing to be notified. If the department denies an application for a certificate of public advantage for an executed cooperative agreement, the cooperative agreement is void upon the decision of the department not to issue the certificate of public advantage. The parties to a void cooperative agreement may submit a new application for a certificate of public advantage based upon a cooperative agreement different from the original application.

(4) The department shall approve a proposed cooperative agreement and shall issue a certificate of public advantage for a cooperative agreement if it determines that the benefits likely to result from the proposed cooperative agreement outweigh the disadvantages likely to result from a reduction in competition from the proposed cooperative agreement.

(5) In evaluating the potential benefits of a cooperative agreement, the department shall consider whether one or more of the following benefits may result from the cooperative agreement:

(a) Enhancement of the quality of hospital and hospital-related care provided to Mississippi citizens;

(b) Preservation of hospital facilities and health care;

(d) Encouragement of cost-sharing among the hospitals involved;

(e) Improvements in the utilization of hospital resources and equipment;

(f) Avoidance or reduction of duplication of hospital resources or expenses, including administrative expenses;

(g) Demonstration of population health improvement in the region served according to criteria set forth in the cooperative agreement and approved by the department;

(h) The extent to which medically underserved populations have access to and are projected to utilize the proposed services; or

(i) Any other benefits that may be identified.

(6) A cooperative agreement for which a certificate of public advantage has been issued is a lawful agreement. The department shall actively supervise cooperative agreements approved under this act and may request information whenever necessary to ensure that the agreements remain in compliance with the conditions of approval. The department may charge an annual fee, set by regulation, to the holders of a certificate of public advantage to cover the cost of actively supervising these agreements. During the time the certificate is in effect, a report on the activities under the cooperative agreement must be filed with the department every two (2) years. The department shall review the report in order to determine that the cooperative agreement continues to comply with the terms of the certificate of public advantage.

(7) If the department has reason to believe that compliance with a cooperative agreement no longer meets the requirements of this chapter, the department shall initiate a proceeding to determine whether compliance with the cooperative agreement no longer meets the requirements of this chapter. In the course of such proceeding, the department is authorized to seek reasonable modifications to a cooperative agreement, with the consent of the parties to the agreement, in order to ensure that it continues to meet the requirements of this chapter. The department is authorized to revoke a cooperative agreement upon a finding that:

(a) The cooperative agreement or activities undertaken by it are not in substantial compliance with the terms of the application or the conditions of approval;

(b) The likely benefits resulting from the cooperative agreement no longer exist; or

(c) The department's approval was obtained as a result of intentional material misrepresentation to the department or as the result of coercion, threats or intimidation toward any party to the cooperative agreement.

The certificate of public advantage shall remain in full force and effect until such time as the certificate of public advantage holder has submitted, the department has approved, and the certificate holder has completed a plan of separation. The department's active supervision shall continue until such time as the department issues an official determination that the plan of separation has been completed.

(8) The department shall maintain on file all cooperative agreements for which certificates of public advantage remain in effect. A party to a cooperative agreement who terminates or withdraws from the agreement shall notify the department within fifteen (15) days of the termination or withdrawal. If all parties terminate their participation in the cooperative agreement, the department shall revoke the certificate of public advantage for the agreement.

(9) The parties to a cooperative agreement with respect to which a certificate of advantage is in effect must notify the department of any proposed amendment to the cooperative agreement, including an amendment to add an additional party but excluding an amendment to remove or to reflect the withdrawal of a party, before the amendment takes effect. The parties must apply to the department for a certificate of public advantage governing the amendment and the department shall consider and rule on the application in accordance with the procedures applicable to cooperative agreements generally.

(10) The board may promulgate rules and regulations in accordance with the Administrative Procedures Law as in effect from time to time to implement the provisions of this act, including, but not limited to, any fees and application costs associated with the active supervision of cooperative agreements approved under this act.

(11) A dispute among the parties to a cooperative agreement concerning its meaning or terms is governed by the principles of contract law or any other applicable law.

SECTION 5. Any applicant or holder of a certificate of public advantage aggrieved by a decision of the department under this act shall be entitled to judicial review thereof in the Chancery Court of the First Judicial District of Hinds County, Mississippi. In the review, the decision of the department shall be affirmed unless it is arbitrary, capricious, or it is not in compliance with this act.

SECTION 6. Nothing in this act exempts hospitals from compliance with the provisions of Section 41-7-171 et seq. concerning certificates of need.

SECTION 7. Nothing in this act exempts hospitals from compliance with the provisions of Section 41-13-15 concerning community hospitals.

SECTION 8. If any applicant for or holder of a certificate of public advantage believes materials required to be submitted to the department contain proprietary information, such information must be clearly identified. Any materials required to be submitted to the department that are clearly identified as containing propriety information shall be deemed trade secrets or confidential commercial or financial information and shall not be subject to disclosure, inspection, examination, copying or reproduction pursuant to the Mississippi Public Records Act of 1983, Sections 25-61-1 through 25-61-19. The applicants or certificate holders shall submit duplicate copies of any materials containing proprietary information, one with full information for the department's use and one (1) redacted copy available for release to the public.

SECTION 9. This act shall take effect and be in force from and after July 1, 2021.