Rules and Regulations

Overview

Type of Filing: Adoption

Regulation Status: Active

Effective: 10/26/2022

Regulation Authority: R.I. Gen. Laws § 42-161-4

Purpose and Reason: These rules and regulations are promulgated to set forth the statewide policy for the use and operation of body-worn cameras. The policy is intended to govern Rhode Island law enforcement agencies using and operating body-worn cameras in connection with R.I. Gen. Laws Chapter 42-161, the Statewide Body-Worn Camera Program.

Rulemaking Documents

• Concise Explanatory Statement
• Notice of Proposed Rulemaking
• Proposed Rule
• Summary of Regulatory Analysis

Other Resources

• Recording of public meeting held on August 3, 2022, Rules and Regulations Establishing Statewide Policy for the Use and Operation of Body-Worn Cameras
• RI Secretary of State's Page on Rules and Regulations Establishing Statewide Policy for the Use and Operation of Body-Worn Cameras

Notice of Proposed Rulemaking

Title of Rule: Pre-Merger Notification for Medical-Practice Groups

Rule Identifier: 110-RICR-30-00-5

Rulemaking Action: Proposed Adoption

Rulemaking Authority:

R.I. Gen. Laws § 6-36-1 et seq.

R.I. Gen. Laws § 6-36-22

Summary of Rulemaking Action:

This Rule has been promulgated to set forth the notification requirements when there is a material change in the ownership or control of medical-practice groups in Rhode Island. To combat ever-increasing market concentration and rising costs in health care that do not result in increased quality of care, the Rule requires Rhode Island based medical-practice groups to notify the Rhode Island Attorney General’s Office of any merger, consolidation, or acquisition that would result in (1) ownership or control by a significant equity investor (defined to include private equity companies), (2) a group of eight (8) or more physicians, physician assistants, and/or nurse practitioners, or (3) any formation of a management services organization or similar entity created to administer contracts with health insurance carriers or third-party administrators on behalf of a medical-practice group. The increasing consolidation in the health services industry necessitates strengthened reporting requirements to ensure that the Attorney General’s Office, Rhode Island’s primary antitrust regulatory, is notified of potentially harmful transactions.

Additional Information and Public Comments:

All interested parties are invited to request additional information or submit written or oral comments concerning the proposed amendment, until a date to be determined, by contacting the appropriate party at the address listed below:

Farren Fuquea

Policy Analyst

150 S. Main Street

Providence, RI 02903 ffuquea@riag.ri.gov

In accordance with R.I. Gen. Laws § 42-35-2.8, an oral hearing will be granted if requested by twenty-five (25) persons, by a governmental agency or by an association having at least twenty-five (25) members. A request for an oral hearing must be made within ten (10) days of publication of this notice.

Regulatory Analysis Summary and Supporting Documentation:

To combat ever-increasing market concentration and rising costs in the healthcare market, the Rhode Island Attorney General’s Office (“RIAG”) is exercising its antitrust authority to regulate Rhode Island-based medical-services groups. Increased consolidation of healthcare providers “has driven American health care prices to new heights” without an attendant increase in quality of care.1 Accordingly, state Attorney General oversight of merger and acquisition activity in the health care services industry is essential to protect consumers and contain costs. The Rule ensures that the RIAG is made aware of non-hospital healthcare transactions and is thus able to effectively exercise its antitrust authority in the healthcare services industry.

Per-person spending on healthcare in Rhode Island is 2.45 times higher today than it was in 2000,2 and from 2016 to 2020 Rhode Island spent more on health care per capita than 70% of states.3 Market consolidation has been a primary driver of increased prices nationwide.4 Under R.I. Gen. Laws § 6-36-9, the RIAG is tasked with enforcing the state's antitrust laws, which serve to prohibit “unreasonable restraints of trade and monopolistic practices” in order to ensure that “the prices of goods and services … be fairly determined by free-market competition.”5 And under the Hospital Conversions Act, the Attorney General has the power to “adopt rules and regulations to accomplish the purpose” of the Hospital Conversions Act (“HCA”). The defined purposes of the HCA include “establish[ing] a review process and criteria for review of hospital conversion” and “assur[ing] the viability of a safe, accessible and affordable healthcare system.”6 The HCA requires parties to obtain RIAG approval prior to horizontal hospital conversion or consolidation.7 At the federal level, the Hart-Scott-Rodino Act (“HSR”) requires federal notification of deals that will surpass certain monetary thresholds.8 And yet, “the bulk of the growth of the largest [physician] groups” from 2007 to 2013 did not necessarily result from large or horizontal mergers, but from “hiring new physicians or acquiring very small groups.”9 These transactions are frequently below the HSR reporting threshold and go undetected, yet have been shown to lead to health care market consolidation, worse patient outcomes, and higher rates of mortality.10 And while the RIAG has the authority to block small-group consolidations that are “monopolistic” or “unreasonable restraints of trade,” there is no rule requiring notification to the RIAG or federal regulators of small, non-hospital transactions. It is near-impossible to investigate potentially anti-competitive combinations and behavior without the RIAG first knowing that a transaction will take place because plans for combination are generally closely held confidential commercial information. This Rule therefore serves to narrow the gap by ensuring that the RIAG has notice of potentially anticompetitive transactions with sufficient lead time to intervene before consolidation is consummated.

Concentration in the health care market is steadily increasing.11 Effective antitrust enforcement is a key means for restraining increases in market concentration.12 Because antitrust intervention depends upon RIAG notification, without the proposed rule, the health care services market will likely continue to consolidate in accordance with recent trends. Two sources of concentration in healthcare services are hospital-physician integration (when hospitals acquire physicians or physician groups), as well as acquisition of small group physician practices or individual physicians by larger physician groups. Evidence suggests that both types of concentration are occurring in Rhode Island. Health care services consolidation significantly harms consumer welfare. When physician groups are acquired by hospitals, their prices may increase with no corresponding increase in quality of care.13 Vertical integrations among physician groups and specialists similarly lead to higher costs and can result in “significantly” altered physician care practices.14

In addition to medical-practice group transactions involving hospitals and other medical groups, there have been more frequent reports and studies finding significant private equity consolidation among medical groups.15 Private equity companies and investors may structure their investments with respect to medical-practice groups by using management services organizations or similar affiliate entities that purportedly provide administrative/nonclinical services to the medical group, often in exchange for substantial fees.16 Through the use of these and other vehicles, private equity investors may be able to exert effective administrative control over multiple medical-group practices throughout a market. Researchers have previously found that increasing private equity consolidation among medical-group practices can result in significant increases in health care prices in certain markets,17 higher rates of practitioner turnover,18 or potential deteriorations in quality of care.19 Accordingly, to ensure appropriate monitoring of private equity-related transactions affecting Rhode Island based medical-practice groups, this Rule would require notification to the Office of the Attorney General of transactions involving significant equity investors.

The benefits of the Rule greatly outweigh the costs. By empowering the RIAG to investigate potentially anticompetitive transactions, the Rule will prevent excessive market consolidation, slow the growth of health care prices, and prevent degradation in quality of care. A pre-merger notification rule is essential for effectuating the Office’s antitrust powers and thus falls within the scope of the statute’s grant of regulatory authority.

Regulatory Analysis Summary and Supporting Documentation