Healthcare Ownership Transparency Act
Bill: H.R.6885 | Sponsor: Rep. Jayapal, Pramila (D-WA)
Policy area: Health

Summary:
Healthcare Ownership Transparency Act
This bill requires health care corporations that participate in Medicare to disclose private equity interests and related financial information.
Specifically, the bill requires corporations, as part of the Medicare enrollment and revalidation processes for providers and suppliers, to disclose information about debts, assets, financial transactions, and other information. Providers that are controlled by private equity funds (e.g., venture capital funds) must disclose similar information as well as specific information relating to the private equity fund, such as the percentage of equity contributed by the partners of the fund.
The Government Accountability Office must use this information to periodically evaluate the extent to which health care consolidation is taking place and the effects of private equity in health care on costs, staffing, and other factors.
The Department of Health and Human Services (HHS) must also establish a task force to address and limit the role of private equity and consolidation in health care. HHS may prohibit certain mergers or acquisitions until the task force has had sufficient time to assess whether there are abusive practices in specific health care sectors or by health care entities.

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.
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