Major Changes Proposed for Health Care Transactions in Indiana: From Attorney General Notice to Approval by State Merger Board

At a Glance

• If enacted, HB 1666 would extend the current law’s reporting obligations to all mergers and acquisitions between health care entities, regardless of the size of the parties, removing the requirement that the parties to the transaction together have at least $10 million in assets. 
• In addition to notifying the Indiana Attorney General, HB 1666 would prohibit an Indiana health care entity from engaging in a merger or acquisition with another health care entity unless it has received approval from a newly established “health care entity merger approval board.”
• HB 1666 also requires that health care entities including every physician’s and dentist’s office in Indiana report a long list of ownership and other information to specified Indiana agencies.

The Indiana General Assembly is at the halfway point of its 2025 legislative session. In the first half of the session, the Indiana House of Representatives passed House Bill 1666 (HB 1666), which would expand upon the current requirement, that parties to a proposed health care transaction must provide notice to the Indiana Attorney General, to also requiring that those parties seek and obtain approval by a newly proposed Indiana “Merger Approval Board.” This legislation also requires certain health care entities to submit annual reports to various Indiana agencies, disclosing a list of information about the entities including the makeup of the entities’ ownership. HB 1666 now advances to the Indiana Senate for further consideration.

Indiana’s Current Health Care Transactions Notice Law

Effective July 1, 2024, certain Indiana health care entities became required to notify the Indiana Attorney General at least 90 days before merging with or acquiring another health care entity if the health care entities together have at least $10 million in total assets (Indiana’s Existing Notice Law). The current law’s notice requirement is separate from any federal pre-merger filings required by the Federal Trade Commission or the U.S. Department of Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

In many ways, Indiana’s Existing Notice Law is already broader than similar laws in other states. For example:

• The law does not currently include “size of each party” or “size of the transaction” thresholds, as federal antitrust laws do. As a result, if a larger Indiana health care provider (with total assets in excess of $10 million) buys the inventory of a retiring or a deceased physician for $15,000, Indiana’s Existing Notice Law would seem to require that both parties to the transaction notify the Indiana Attorney General about the proposed transaction.
• The language of the current law suggests that the sale or transfer of any asset between health care entities would require that the parties provide a notice to the Indiana Attorney General. Of course, many Indiana health care entities engage in transactions every day for the sale, purchase and transfer of assets involved in the delivery of health care services, particularly within integrated health care delivery systems. We understand that the Office of the Indiana Attorney General has taken the position that the notice requirement does not apply to transactions in the ordinary course of a health care entity’s business operations, though this position is not reflected in the current law.
• The law does not have an exception for affiliated entities — as a result, if a hospital system proposed to merge two of its wholly owned subsidiaries to create administrative efficiencies, or if it proposed to transfer ownership of an asset from one of its subsidiaries to another subsidiary, Indiana’s Existing Notice Law would seem to require that both parties to the transaction notify the Indiana Attorney General. Federal antitrust law differs, and makes clear that federal agencies have no interest in regulating affiliated entities.
• Geographic location does not matter — if an Indiana health care provider were to acquire assets from a health care entity with business operations solely in Alaska, Indiana’s Existing Notice Law would seem to require that both parties to the transaction notify the Indiana Attorney General, whether or not they are competitors. 
• The notice requirement is triggered if the covered parties are engaged in a “merger” or an “acquisition.” Under corporate law generally, “merger” is a term of art (i.e., where two entities file articles of merger to become one merged entity). However, the current law’s definition of “merger” differs and means any change of ownership, including “an acquisition or transfer of assets.”

Expanded Health Care Transactions Requirements Under HB 1666

If enacted, HB 1666 would extend the current law’s reporting obligations to all mergers and acquisitions between health care entities, regardless of the size of the parties. Specifically, the proposed legislation would remove the requirement that the parties to the transaction together have at least $10 million in assets.

HB 1666 would not change the current requirement that covered health care entities must submit a notice to the Attorney General for the proposed merger or acquisition. In addition to this notice requirement, HB 1666 would prohibit an Indiana health care entity from engaging in a merger or acquisition with another health care entity unless it has received approval from a newly established “health care entity merger approval board” (Merger Approval Board), whose members would include the Indiana Attorney General (or the Attorney General’s designee), secretary of Health and Family (or another individual designated by the governor), secretary of Business Affairs (or another individual designated by the governor), and two members appointed by the governor after considering individuals recommended for appointment by the legislative council.

Note: Indiana’s Existing Notice Law states that information included in a notice to the Attorney General will be and remain confidential. HB 1666 does not, however, state that any information presented to or disclosed to the Merger Approval Board will be and remain confidential.

The Merger Approval Board would have 90 days to approve or deny a proposed health care transaction, with a possible 90-day extension for “good cause.” Interestingly, the bill currently states that the Attorney General (not the Merger Approval Board) is required to utilize the following approval criteria, among others, for its review:

• There will be no significant reduction in health care services for the community.
• The transaction serves the public interest.
• Due diligence was exercised by the entities involved, including (a) in deciding to engage in the merger or acquisition, (b) identifying each person to engage in the merger or acquisition, and (c) in negotiating the terms and conditions of the merger or acquisition.
• Procedures used by the health care entity agreeing to merge or to be acquired were adequate, including the use of appropriate expert assistance.
• Any conflict of interest that potentially impacts competition in the relevant markets was disclosed.
• Any management contract proposed is for reasonably fair value.
• The fair market value for the acquired entity.
• Compliance with state and federal laws.

Civil Actions & Enforcement

HB 1666 provides that the Indiana Attorney General is permitted to file a civil action for violations of the notice and approval requirements. The Attorney General is permitted to seek: (1) injunctive relief, including disgorgement of any gains derived from the violation, (2) civil penalties up to $15 million (which we believe would be the most severe financial penalty of any state in the U.S.), and (3) reasonable attorney’s fees, expenses related to litigation and expert fees.

Expanded Civil Investigative Demand Authority for the Attorney General

The Attorney General is also expressly permitted in this bill to investigate the market concentration of a health care entity at any time, even when a proposed transaction is not pending, under its existing Civil Investigative Demand (CID) statute, Ind. Code § 4-6-3.

Ownership Information Reporting Requirements

HB 1666 also requires that the following health care entities report a long list of ownership and other information to specified Indiana agencies:

• Physician groups with physical locations in Indiana and two or more licensed physicians to the Indiana Professional Licensing Agency.
• Insurers, third-party administrators and pharmacy benefit managers operating in Indiana to the Indiana Department of Insurance.
• Health care entities (other than hospitals) providing diagnostic, medical, surgical, dental treatment or rehabilitative care to the Indiana Department of Health (that is, among others, every physician and dentist office in the State of Indiana).

Annual reports must include the following information about each health care entity: (1) the entity’s name, business address and website address; and (2) any of the following identification numbers, as applicable, (a) national provider identifier (NPI), (b) taxpayer identification number (TIN), (c) employer identification number (EIN), (d) CMS certification number (CCN) and (e) National Association of Insurance Commissioners (NAIC) identification number.

Annual reports also must include the names and identifying information of persons or entities with: (1) at least a 5% ownership interest, (2) a controlling interest or (3) an interest as a private equity partner. The bill requires hospitals to include the same ownership information in the hospital’s existing annual fiscal report to the Indiana Department of Health. The Indiana Department of Health is required to post the reported ownership information for each of the above entities on its website.

Depending on the entity type, the bill authorizes penalties for late reporting that range from $100 to $1,000 per day. Indiana law currently imposes a $1,000 daily penalty for hospitals failing to submit their annual fiscal report on time, which would include ownership information that would need to be reported under HB 1666.

State of Play

HB 1666, authored by Rep. Julie McGuire (R-Indianapolis), was heard in the House Public Health Committee on January 21. The bill was supported in committee by the Attorney General’s Office, Gov. Mike Braun’s secretary of Health and Human Services, the Employer’s Forum of Indiana, and Hoosiers for Affordable Healthcare. It passed the full Indiana House, 70-25, on February 13, and now heads to the Indiana Senate for further consideration.