HB 5398, An Act Concerning The Review Of Health Care Entity Transactions, The Expansion Of Equitable Relief And Enforcement Tools Available Under The Connecticut Antitrust Act And The Inclusion Of Additional Information In Hospital Pricemaster Filings

TESTIMONY OF THE CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE PUBLIC HEALTH COMMITTEE

Wednesday, March 4, 2026

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony on HB 5398, An Act Concerning The Review Of Health Care Entity Transactions, The Expansion Of Equitable Relief And Enforcement Tools Available Under The Connecticut Antitrust Act And The Inclusion Of Additional Information In Hospital Pricemaster Filings.  CHA opposes the bill.

Connecticut hospitals make our state stronger by delivering nationally recognized, world-class care, supporting jobs and economic growth, and serving communities across Connecticut.  Every day, hospitals improve access, affordability, and health equity — providing care to all patients regardless of ability to pay.  At the same time, hospitals invest in their workforce and local communities, even as they navigate significant financial and federal challenges.

According to the bill’s proponents, HB 5398  has three purposes: to (1) strengthen the review of healthcare entity transactions, (2) expand upon the types of equitable relief and other enforcement tools that may be utilized for violations of the Connecticut Antitrust Act, and (3) require additional information in hospital pricemaster filings.

We are concerned that in carrying out these purposes, the bill:

  • Makes notice to the attorney general more burdensome by requiring extensive information to be filed even for minor transactions
  • Substantially expands the scope of review of transactions involving any “health care entity,” which is very broadly defined, and includes the Office of Health Strategy (OHS) in this process even where a certificate of need (CON) is not required and in a manner that appears to allow the attorney general to impose conditions in a highly discretionary manner
  • Expands the scope of relief available, including to private persons

Review of Health Care Entity Transactions 

For group practice transactions (two or more physicians), HB 5398 requires earlier notice (60 rather than 30 days) and mandated additional disclosures in the written notice package to the attorney general.  Additionally, the definition of “material change” is expanded to include another entity’s employment of most/all physicians in a department/division (rather than the entire practice), including through a transfer of ownership.  It is unclear how department/division would be defined.  For example, if one doctor is the only one in a particular area, would that constitute a “division” if that doctor leaves?  We believe additional clarity is required.   

For hospital system transactions, the bill requires earlier notice (60 rather than 30 days) and expands the scope of review to include any change to governance or control, including transfer of any entity with a direct or indirect stake of at least 20% in a healthcare facility.  Additionally, the attorney general can extend the review period until 30 days after a cost and market impact review (CMIR) is complete for those transactions involving a CMIR. 

HB 5398 also creates an expansive new category of review (also with 60 days notice) for material change transactions involving any health care entity valued at $10 million or more or including a private equity entity, with “material change” defined to include any merger, acquisition of at least 20% of assets or operations, change of control “in whole or substantial part” (without defining the threshold for “substantial” change), formation of a partnership/joint venture/ACO/parent organization/MSO to administer contractual relationships, or real estate sale/lease involving at least 20% of the entity’s assets.  We are concerned with the following:

  • “Health care entity” is broadly defined as “a health care provider, health care facility, as defined in section 19a-630, provider organization, group practice or pharmacy benefit manager, as defined in section 38a-479aaa,” and will become the basis for determining a “primary service area” for reporting purposes
  • “Private equity entity” is broadly defined to include any capital investment vehicle other than “a venture capital firm exclusively funding a start-up company or any other early-stage business”
  • Gives the attorney general authority to request further information as needed, and evaluate for compliance with antitrust laws
  • Gives the attorney general authority to share information with OHS, which can weigh in on the impact of the proposed transaction on “access, affordability and quality of health care in the parties’ primary service areas” — even where a CON would not be required
  • Gives the attorney general broad authority to offer parties conditions to “address any issues of concern” to allow the parties to proceed with the transaction, potentially allowing OHS to add conditions to transactions that would otherwise fall outside the scope of CON review
  • New enforcement mechanism: civil penalty of up to $1,000/day for failure to comply with this section or knowing submission of false information 

Equitable Relief and Other Enforcement Tools under CATA 

HB 5398 creates a new violation under Section 35-29(b) for any corporate acquisition with an effect that “may be to substantially lessen competition or tend to create a monopoly in any line of commerce.”  Alongside this provision, the bill provides both the attorney general and private litigants a concerning expansion of legal remedies that will permit courts to award backward-looking equitable remedies of restitution and disgorgement, in addition to forward-looking injunctive relief.  These remedies are available to both the attorney general and private litigants.  We are opposed to the expansion of these remedies, in particular authorizing disgorgement as a remedy for private litigants. Disgorgement is a uniquely public remedy only available to the government, not to private litigants.

Additional Information in Hospital Pricemaster Filings 

HB 5398 adds a requirement to include “the corresponding actual cost of each related good or service” when a hospital files “its current pricemaster which shall include each charge in its detailed schedule of charges.” 

Hospitals do not typically calculate cost information at the individual chargemaster (pricemaster in the bill) line-item level.  Instead, hospital cost accounting systems are designed to measure costs at broader levels, such as by department or service line, and through methodologies used for Medicare cost reporting, including cost-to-charge ratios.  While these approaches allow hospitals to understand overall financial performance and reimbursement adequacy, they do not generate a precise “actual cost” for each specific chargemaster code.

For example, the charge associated with a CT scan reflects not only the direct clinical inputs involved in performing the scan, but also equipment depreciation, staff salaries and benefits, information technology systems, utilities, facility overhead, compliance infrastructure, security, and other shared institutional costs. Determining an “actual cost” for a single chargemaster line item would require allocating many of these indirect and overhead expenses across thousands of services using judgment-based accounting methodologies.  Those allocations are inherently estimates rather than precise measurements.

Implementing such a requirement would impose a significant administrative burden.  Hospitals would likely need to reconfigure cost accounting systems, develop new finance modeling processes, engage external consultants, and continuously update calculations as costs fluctuate.  For these reasons, we oppose this provision.

Thank you for your consideration of our position.  For additional information, contact CHA Government Relations at (203) 294-7301.