I 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. GARCI´A of Illi- nois, Mr. GRIJALVA, Ms. SCANLON, and Mr. SMITH of Washington) intro- duced 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Healthcare Ownership 4 Transparency Act’’. 5 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 1754 IH SEC. 2. DISCLOSURE AND ANALYSIS OF CERTAIN HEALTH- 1 RELATED OWNERSHIP INFORMATION. 2 (a) IN GENERAL.—Part A of title XI of the Social 3 Security Act (42 U.S.C. 1301 et seq.) is amended by add- 4 ing at the end the following new section: 5 ‘‘SEC. 1150C. DISCLOSURE AND ANALYSIS OF CERTAIN 6 HEALTH-RELATED OWNERSHIP INFORMA- 7 TION. 8 ‘‘(a) REQUIRED DISCLOSURE OF CERTAIN HEALTH- 9 RELATED PRIVATE EQUITY OWNERSHIP INFORMATION.— 10 The Secretary shall issue rules to require a covered firm 11 to submit to the Secretary, through the Provider Enroll- 12 ment, Chain, and Ownership System as part of the enroll- 13 ment and revalidation of enrollment processes under title 14 XVIII for providers of services and suppliers— 15 ‘‘(1) for a covered firm with respect to which 16 there is a private equity fund that is a control per- 17 son of the covered fund, the information described in 18 subsection (b); and 19 ‘‘(2) for a covered firm not described under 20 paragraph (1), the information described in sub- 21 section (c). 22 ‘‘(b) INFORMATION SUBMITTED BY COVERED FIRMS 23 OWNED BY PRIVATE EQUITY.—For purposes of sub- 24 section (a) and with respect to a covered firm and each 25 private equity fund that is a control person of the covered 26 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 1754 IH firm, the information described in this subsection is the 1 following information with respect to each year of the pre- 2 vious 10-year period: 3 ‘‘(1) The percentage of the equity of the private 4 equity fund contributed by— 5 ‘‘(A) the general partners of the fund; and 6 ‘‘(B) the limited partners of the fund. 7 ‘‘(2) The level of debt of the covered firm at the 8 end of the applicable year. 9 ‘‘(3) Information on the debt held by the pri- 10 vate equity fund, including— 11 ‘‘(A) the dollar amount of total debt; 12 ‘‘(B) the percentage of debt for which the 13 creditor is a financial institution in the United 14 States; 15 ‘‘(C) the percentage of debt for which the 16 creditor is a financial institution outside of the 17 United States; 18 ‘‘(D) the percentage of debt for which the 19 creditor is an entity that is located in the 20 United States and is not a financial institution; 21 and 22 ‘‘(E) the percentage of debt for which the 23 creditor is an entity that is located outside of 24 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 1754 IH the United States and is not a financial institu- 1 tion. 2 ‘‘(4) The total amount of debt held by the cov- 3 ered firm that is categorized as— 4 ‘‘(A) liabilities; 5 ‘‘(B) long-term liabilities; and 6 ‘‘(C) payment in kind or zero coupon debt. 7 ‘‘(5) The average debt-to-equity ratio of— 8 ‘‘(A) each covered firm with respect to the 9 private equity fund; and 10 ‘‘(B) the private equity fund. 11 ‘‘(6) The average debt-to-EBITDA (Earnings 12 Before Interest, Taxes, Depreciation, and Amortiza- 13 tion) of each covered firm with respect to the private 14 equity fund. 15 ‘‘(7) The total number of covered firms with re- 16 spect to the private equity fund that experienced a 17 default during the applicable year, and the name of 18 any such covered firm. 19 ‘‘(8) The total gross asset value of each covered 20 firm with respect to the private equity fund. 21 ‘‘(9) The gross performance of the private eq- 22 uity fund during the applicable year. 23 ‘‘(10) The total dollar amount of aggregate fees 24 and expenses collected by the private equity fund, 25 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 1754 IH the manager of the fund, or related parties from 1 covered firms with respect to the private equity 2 fund, which shall— 3 ‘‘(A) be categorized by the type of fee; and 4 ‘‘(B) include a description of the purpose 5 of the fees. 6 ‘‘(11) Any transaction, monitoring, manage- 7 ment, performance, or other fees collected by the 8 private equity fund from the covered firm. 9 ‘‘(12) In dollars, the total amount of regulatory 10 assets under management by the private equity 11 fund. 12 ‘‘(13) In dollars, the total amount of net assets 13 under management by the private equity fund. 14 ‘‘(14) With respect to the applicable year, the 15 difference obtained by subtracting the financial 16 gains of the private equity fund by the fees that the 17 general partners of the fund charged to the limited 18 partners of the fund (commonly referred to as the 19 ‘performance net of fees’). 20 ‘‘(15) Any management services agreements be- 21 tween the covered firm and the private equity fund, 22 including a disclosure of fees paid through manage- 23 ment services agreements. 24 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 1754 IH ‘‘(16) Any other services procured by the cov- 1 ered firm from the private equity fund or any other 2 company owned by the private equity fund. 3 ‘‘(17) Dividends paid by the covered firm to the 4 private equity fund. 5 ‘‘(18) The names of— 6 ‘‘(A) the limited partners of the private eq- 7 uity fund; 8 ‘‘(B) the board members of the private eq- 9 uity fund; and 10 ‘‘(C) the leadership of the covered firm. 11 ‘‘(19) All political spending by the covered firm, 12 including contributions, lobbying spending, and con- 13 tributions to groups that do not share their donor 14 list. 15 ‘‘(20) All political spending by the private eq- 16 uity fund, an affiliate of the fund, or an investment 17 professional at the fund, with respect to— 18 ‘‘(A) health care related issues; or 19 ‘‘(B) members of congressional committees 20 with oversight of health care. 21 ‘‘(21) Information on the extent to which the 22 covered firm entered into any sale lease back trans- 23 actions with the private equity fund. 24 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 1754 IH ‘‘(22) Every asset purchased by the covered 1 firm during the applicable year. 2 ‘‘(23) Information that is similar to the infor- 3 mation of the kind that would be required to be in- 4 cluded in a notification filed pursuant to the rules 5 issued under subsection 7A(d)(1) of the Clayton Act 6 (15 U.S.C. 18a(d)(1)). 7 ‘‘(24) Data related to real estate, mortgage, 8 and lease payments. 9 ‘‘(25) Interest expenses and payments made by 10 the private equity fund and each covered firm with 11 respect to the private equity fund to comply with tax 12 receivable agreements. 13 ‘‘(26) Average interest rate paid on secured and 14 unsecured lines of credit by the private equity fund 15 and each covered firm with respect to the private eq- 16 uity fund. 17 ‘‘(27) For the private equity fund and each cov- 18 ered firm with respect to the private equity fund, a 19 list of— 20 ‘‘(A) all transactions with the 10 largest 21 vendors or service providers; and 22 ‘‘(B) any new vendors or service providers. 23 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 1754 IH ‘‘(28) For the private equity fund and each cov- 1 ered firm with respect to the private equity fund, the 2 number of payments to staffing firms. 3 ‘‘(c) INFORMATION SUBMITTED BY COVERED FIRMS 4 NOT OWNED BY PRIVATE EQUITY.—For purposes of sub- 5 section (a) and with respect to a covered firm, the infor- 6 mation described in this subsection is the following infor- 7 mation with respect to each year of the previous 10-year 8 period: 9 ‘‘(1) The level of debt of the covered firm at the 10 end of the applicable year. 11 ‘‘(2) The total amount of debt held by the cov- 12 ered firm that is categorized as— 13 ‘‘(A) liabilities; 14 ‘‘(B) long-term liabilities; and 15 ‘‘(C) payment in kind or zero coupon debt. 16 ‘‘(3) The average debt-to-equity ratio of the 17 covered firm. 18 ‘‘(4) The average debt-to-EBITDA (Earnings 19 Before Interest, Taxes, Depreciation, and Amortiza- 20 tion) of the covered firm. 21 ‘‘(5) Whether the covered firm experienced a 22 default during the applicable year. 23 ‘‘(6) The total gross asset value of the covered 24 firm. 25 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 1754 IH ‘‘(7) Dividends paid by the covered firm. 1 ‘‘(8) The names of the leadership of the covered 2 firm. 3 ‘‘(9) All political spending by the covered firm, 4 including contributions, lobbying spending, and con- 5 tributions to groups that do not share their donor 6 list. 7 ‘‘(10) Every asset purchased by the covered 8 firm during the applicable year. 9 ‘‘(11) Information that is similar to the infor- 10 mation of the kind that would be required to be in- 11 cluded in a notification filed pursuant to the rules 12 issued under subsection 7A(d)(1) of the Clayton Act 13 (15 U.S.C. 18a(d)(1)). 14 ‘‘(12) Data related to real estate, mortgage, 15 and lease payments. 16 ‘‘(13) Interest expenses and payments made to 17 comply with tax receivable agreements. 18 ‘‘(14) Average interest rate paid on secured and 19 unsecured lines of credit. 20 ‘‘(15) A list of— 21 ‘‘(A) all transactions with the 10 largest 22 vendors or service providers; and 23 ‘‘(B) any new vendors or servicer pro- 24 viders. 25 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 1754 IH ‘‘(16) The number of payments to staffing 1 firms. 2 ‘‘(d) REQUIREMENT TO PROVIDE INFORMATION TO 3 A COVERED FIRM.—A private equity fund that is a control 4 person of a covered firm shall provide the covered firm 5 with any information required to complete a disclosure 6 under this section. 7 ‘‘(e) GAO ANALYSIS.— 8 ‘‘(1) ANALYSIS.—Not later than 12 months 9 after the date of implementation of this section, and 10 every 3 years thereafter during the 12-year period 11 beginning on the date of the enactment of this sec- 12 tion, the Comptroller General of the United States 13 shall conduct a comparative analysis, using the in- 14 formation submitted under this section, to determine 15 to what extent health care consolidation is taking 16 place and how this consolidation and private equity’s 17 involvement in health care is contributing, among 18 other factors, to the following indicators: 19 ‘‘(A) Revenue and cost to charge ratio. 20 ‘‘(B) Payor mix and case mix index. 21 ‘‘(C) In-network versus out of network re- 22 ferrals. 23 ‘‘(D) Quality ratings for the health care fa- 24 cilities. 25 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 1754 IH ‘‘(E) Regulation compliance violations, in- 1 cluding dischargers for patients with Medicare 2 or Medicaid coverage and total discharges per 3 year. 4 ‘‘(F) Staffing levels and ratios. 5 ‘‘(G) Employee wages. 6 ‘‘(H) Hospital capacity, including number 7 of beds. 8 ‘‘(2) REPORT.—After each analysis required 9 under paragraph (1) is completed, the Comptroller 10 General shall issue a report on all findings and con- 11 clusions made in carrying out such analysis to the 12 Congress, the Secretary of Health and Human Serv- 13 ices, and the task force established under section 3 14 of the Healthcare Ownership Transparency Act. 15 ‘‘(f) AUDITS.—The Secretary shall audit a random 16 sample annually of applications submitted through the 17 Provider Enrollment, Chain, and Ownership System as 18 part of the enrollment and revalidation of enrollment proc- 19 esses under title XVIII to verify compliance with the re- 20 quirements of this section and accuracy of information 21 submitted pursuant to this section. 22 ‘‘(g) DEFINITIONS.—In this section: 23 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means— 24 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 1754 IH ‘‘(A) a person that directly or indirectly 1 owns, controls, or holds with power to vote, 20 2 percent or more of the outstanding voting secu- 3 rities of another entity, other than a person 4 that holds such securities— 5 ‘‘(i) in a fiduciary or agency capacity 6 without sole discretionary power to vote 7 such securities; or 8 ‘‘(ii) solely to secure a debt, if such 9 entity has not in fact exercised such power 10 to vote; 11 ‘‘(B) a corporation 20 percent or more of 12 whose outstanding voting securities are directly 13 or indirectly owned, controlled, or held with 14 power to vote, by another entity (referred to in 15 this subparagraph as a ‘covered entity’), or by 16 an entity that directly or indirectly owns, con- 17 trols, or holds with power to vote, 20 percent or 18 more of the outstanding voting securities of the 19 covered entity, other than an entity that holds 20 such securities— 21 ‘‘(i) in a fiduciary or agency capacity 22 without sole discretionary power to vote 23 such securities; or 24 VerDate Sep 11 2014 03:45 Apr 06, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H1754.IH H1754 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 1754 IH ‘‘(ii) solely to secure a debt, if such 1 ent [Text truncated for display. Full text available on Congress.gov.]