I 118th CONGRESS 1st Session H. R. 1754 IN THE HOUSE OF REPRESENTATIVES March 23, 2023 Ms. Jayapal (for herself, Mr. Bowman , Mr. Doggett , Mr. García 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.

1. Short title This Act may be cited as the Healthcare Ownership Transparency Act . 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: 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. . 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.