NOTICE OF MATERIAL CHANGE FORM
Section 1 of P.A. 14-168, AN ACT CONCERNING JOINT VENTURES AND AFFILIATIONS OF GROUP MEDICAL PRACTICES (the “Act”), effective October 1, 2014, requires that business entities entering into any transaction that results in a material change to the business or corporate structure of any group practice shall provide the Attorney General with written notice of that material change. The attached form should be used by any entity providing the Attorney General with the information required by the statute.
GENERAL INSTRUCTIONS/FILING INFORMATION
1. WHO NEEDS TO FILE
Any party to a transaction that results in a “material change to the business or corporate structure of a group practice” shall submit written notice to the Attorney General of such material change. The notice must be filed at least thirty (30) days prior to the effective date of the transaction. (See Instruction No. 5 below for definitions of (a) “material change,” and (b) “group practice.”)
2. ELEMENTS OF THE NOTICE OF THE MATERIAL CHANGE
The required notice of material change contains a spreadsheet with the following elements: the Notice of Material Change (Tab A), which requires a narrative description of the nature of the proposed relationship among the parties to the proposed transaction; information concerning the parties to the transaction (Tab B); information concerning the group practice that is the subject of the proposed transaction and the identification of the physicians who will practice medicine with the resulting organization (Tab C); and information concerning the business entities that are to provide services following the effective date of the proposed transaction (Tab D). See AG Notice of Material Change Group Practice Form CGS 19a-486i (xlsx).
Filers are encouraged to voluntarily include with their submission a copy of the contract, memorandum of understanding, letter of intent or other document implementing the transaction.
3. SUBMISSION OF NOTICE - TIMING
At least thirty (30) days prior to the effective date of the transaction, the completed notice, including all of the information described in Instruction No. 2 above, should be submitted electronically to the Office of the Connecticut Attorney General at AG.PhysicianAcquisitions@ct.gov . Alternatively, your notice materials may be submitted in a hard-copy format or on a disc format (i.e., CD or DVD) or other electronic media and submitted by first class mail to Nicole Demers, Deputy Associate Attorney General / Chief of the Antitrust Section, Office of the Connecticut Attorney General, 165 Capitol Avenue Hartford, CT 06106.
4. CONFIDENTIALITY
The fact that you intend to enter into a transaction that results in a material change and the information provided in the Notice of Material Change submitted to the Attorney General, will be maintained in confidence by the Attorney General and treated in the same manner as provided in section 35-42 of the Connecticut General Statutes. Section 35-42, found in the Connecticut Antitrust Act, states that all documentary material or other information furnished to the Attorney General voluntarily or in response to compulsory process shall be held in the custody of the Attorney General and shall not be available to the public. Thus, the Notice of Material Change and the information submitted with the notice, is exempt from the Connecticut Freedom of Information Act and cannot be disclosed to the public.
5. DEFINITIONS (as found in P.A. 14-168, section 1(a))
For purposes of the required Notice:
(1) “Affiliation” means the formation of a relationship between two or more entities that permits the entities to negotiate jointly with third parties over rates for professional medical services;
(2) “Captive professional entity” means a professional corporation, limited liability company or other entity formed to render professional services in which a beneficial owner is a physician employed by or otherwise designated by a hospital or hospital system;
(3) “Hospital” has the same meaning as provided in section 19a-490 of the general statutes;
(4) “Hospital system” means: (A) A parent corporation of one or more hospitals and any entity affiliated with such parent corporation through ownership, governance or membership, or (B) a hospital and any entity affiliated with such hospital through ownership, governance or membership;
(5) “Health care provider” has the same meaning as provided in section 19a-17b of the general statutes;
(6) “Medical foundation” means a medical foundation formed under chapter 594b of the general statutes;
(7) “Physician” has the same meaning as provided in section 20-13a of the general statutes;
(8) “Person” has the same meaning as provided in section 35-25 of the general statutes;
(9) “Professional corporation” has the same meaning as provided in section 33-182a of the general statutes;
(10) “Group practice” means two or more physicians, legally organized in a partnership, professional corporation, limited liability company formed to render professional services, medical foundation, not-for-profit corporation, faculty practice plan or other similar entity (A) in which each physician who is a member of the group provides substantially the full range of services that the physician routinely provides, including, but not limited to, medical care, consultation, diagnosis or treatment, through the joint use of shared office space, facilities, equipment or personnel; (B) for which substantially all of the services of the physicians who are members of the group are provided through the group and are billed in the name of the group practice and amounts so received are treated as receipts of the group; or (C) in which the overhead expenses of, and the income from, the group are distributed in accordance with methods previously determined by members of the group. An entity that otherwise meets the definition of group practice under this section shall be considered a group practice although its shareholders, partners or owners of the group practice include single-physician professional corporations, limited liability companies formed to render professional services or other entities in which beneficial owners are individual physicians;
(11) “Primary service area” means the smallest number of zip codes from which the group practice draws at least seventy-five per cent of its patients. (See Instruction No. 6, additional Information below for further explanation.)
(12) “Material change to the business or corporate structure of a group practice” includes: (a) The merger, consolidation or other affiliation of a group practice with (A) another group practice that results in a group practice comprised of eight or more physicians, or (B) a hospital, hospital system, captive professional entity, medical foundation or other entity organized or controlled by such hospital or hospital system;
(b) the acquisition of all or substantially all of (A) the properties and assets of a group practice, or (B) the capital stock, membership interests or other equity interests of a group practice by (i) another group practice that results in a group practice comprised of eight or more physicians, or (ii) a hospital, hospital system, captive professional entity, medical foundation or other entity organized or controlled by such hospital or hospital system;
(c) the employment of all or substantially all of the physicians of a group practice by (A) another group practice that results in a group practice comprised of eight or more physicians, or (B) a hospital, hospital system, captive professional entity, medical foundation or other entity organized by, controlled by or otherwise affiliated with such hospital or hospital system; and
(d) the acquisition of one or more insolvent group practices by (A) another group practice that results in a group practice comprised of eight or more physicians, or (B) a hospital, hospital system, captive professional entity, medical foundation or other entity organized by, controlled by or otherwise affiliated with such hospital or hospital system.
6. ADDITIONAL INFORMATION TO HELP YOU CALCULATE A PRIMARY SERVICE AREA
Primary Service Areas (“PSAs”) are defined by a set of postal zip codes. The Act defines PSA to mean "the smallest number of zip codes from which the group practice draws at least seventy-five per cent of its patients." The "at least 75 percent" criterion means that zip codes are aggregated until the group practice accounts for 75 percent or more of patient volume. The relevant zip codes are considered in the aggregate, and are derived from where a provider's patients reside, rather than the location(s) where a provider practices or the location where a patient receives his/her treatment. A single or multi-specialty physician group practice will have one PSA for each location where it provides services. A hospital or hospital system will likely have multiple PSAs: a separate PSA for inpatient services, outpatient services, and physician services. Thus, it is expected that a hospital or hospital system's inpatient, outpatient, and physician service PSAs will not be the same. Submitting parties should use patient resident data from the most recent calendar year when calculating the PSA for each location where services will be provided.
As an example, to calculate "the smallest number of zip codes from which the group practice draws at least seventy-five per cent of its patients", consider a hypothetical cardiology practice located in Fairfield. Reviewing the addresses of patients for the most recent calendar year for which data are available, the cardiology practice's patients are drawn from the following zip codes: Fairfield/06824 (18%); Bridgeport/06606 (14%); Fairfield/06825 (12%); Trumbull/06611 (11%); Bridgeport/06604 (9%); Westport/06880 (7%); Bridgeport/06610 (6%); Norwalk/06854 (5%); Bridgeport/06605 (5%). The remaining 13% percent of the hypothetical practice's patients are drawn from a number of additional zip codes with none accounting for more than 4%. Using this example, the group practice would report its PSA as Fairfield/06824 (18%); Bridgeport/06606 (14%); Fairfield/06825 (12%); Trumbull/06611 (11%); Bridgeport/06604 (9%); Westport/06880 (7%); Bridgeport/06610 (6%).