The Colorado General Assembly is back in session and has introduced legislation (SB26-041) that, if enacted, would create new notification requirements and antitrust review processes for healthcare transactions. While Colorado already requires state-level notification of transactions that trigger federal notifications under the Hart-Scott-Rodino Act and notification of certain hospital transactions under the Hospital Transfer Act (“HTA”) of 2023, the proposed bill would create new notification requirements for a broader set of healthcare transactions, and would authorize the Colorado attorney general (“COAG”) to block or delay closing of transactions. The proposed bill also expands the scope of hospital transactions that must be reported under the HTA.
In addition to these new requirements, the draft legislation also proposes a state equivalent of the federal Physician Self-Referral (“Stark”) Law. This “mini-Stark” law would require certain providers to disclose any financial relationships in existence when providing a referral to a patient for designated health services (“DHS”), and it would prohibit billing for DHS if the disclosure is not provided unless an exception applies.
New Notification Requirement for “Material Change Transactions” Involving “Health Care Entities”
As drafted, the proposed bill would amend the Colorado Antitrust Act to require “healthcare entities” involved in “material change transactions” to notify COAG of the transaction 60 days prior to closing. COAG would then have expanded oversight authority and the ability to prohibit a transaction that it determines would lessen competition, tend to create a monopoly, or may harm consumer welfare. If enacted, Colorado would join a growing number of states expanding this type of Attorney General oversight of healthcare transactions.
The bill takes an expansive view of both “healthcare entities” and “material change transactions.” “Health care entities” include various types of hospitals, ambulatory surgical centers, behavioral health entities, pharmacy benefit managers, urgent cares, and more. Certain long-term care providers (including nursing, long-term, home, or hospice care facilities) and healthcare entities with fewer than seven providers are excluded from the definition.
Material change transactions (“MCTs”) are defined as an agreement, arrangement, or activity that results in (1) a change in ownership, management, operations, or control of a healthcare entity, (2) the consolidation of two or more entities including through a common parent organization, or (3) any relationship between two or more entities that permits the entities to negotiate jointly with insurers or third party administrators. The proposed bill enumerates a non-exhaustive list of transactions that would definitively be considered MCTs and transactions that would not (see table below).
| What IS definitely an MCT | What is definitely NOT an MCT |
| • A series of transactions in a 5-year period, involving an entity previously engaged in an MCT, acquiring one or more additional healthcare entities engaged in the same or substantially similar professional services of the entity’s previous MCT. • 40% or greater acquisition of voting securities or noncorporate interests – including assets, capital, stock, or membership interests of an entity or the parent of an entity. • An arrangement including the sale of voting securities or noncorporate interests that alters voting control or responsibility for the governing body of an entity or the parent of an entity. • An arrangement that allows an entity to exercise decision-making over another entity’s assets, liabilities, contracts, operations, or administration. • An exclusive employment contract involving the acquisition of 5 or more providers from same entity. | • A corporate reorganization • Relationships between entities under common ownership • What would otherwise be an MCT but: – The transaction is under $10 million, or – Each facility that is party to the transaction has less than $5 million in net patient service revenue. • A service or management contract to provide administrative services without operational control. • Clinically integrated networks • Clinical affiliations for clinical trial collaborations and graduate medical education • Nonexclusive contracts between an entity and provider for clinical services |
To comply with the new notification requirements, each entity involved in an MCT that meets certain financial thresholds would need to submit information to the COAG, including (1) the names and business addresses of all parties, (2) identification of each location where healthcare services are currently being provided by each party to the MCT, (3) the anticipated effective date of the MCT, and (4) a brief description of the nature and purpose of the MCT and any MCTs completed by either party in the five years leading up to the current MCT. In lieu of providing this information, a healthcare facility may submit a copy of its Colorado Department of Public Health and Environment Change of Ownership application, where applicable. A hospital involved in an MCT would also be considered to comply with the notification requirements if it already notified the COAG of the transaction due to the requirements of the HTA.
Penalties for noncompliance with the timely notice provisions could result in a $200 per day fine. The proposed bill will also authorize the COAG to prohibit a transaction between healthcare entities if it deems that such transaction would “substantially lessen competition or tend to create a monopoly or may harm consumer welfare,” and would prohibit the parties from closing until certain specified conditions are met.
Importantly, all filings made by a provider under the proposed bill are treated as investigative records or records regarding intelligence information. Under the Antitrust Act and CORA, the COAG has discretion to make any of these investigative or intelligence records public.
Updates to the Colorado Hospital Transfer Act
In addition to the new notice requirements under the Antitrust Act, the proposed bill also expands notice requirements under the HTA, which was enacted in 2023. Generally, the HTA provides COAG oversight for “covered transactions” involving hospitals. The proposed bill amends the definition of a “covered transaction” to include not just the sale, transfer, lease, exchange, or other disposition of 50% or more of hospital assets, but also a change in the management, control, or operations of a hospital, or a series of transactions over five years that results in a transfer of management, control, or operations of a hospital. The proposed bill also changes the notice requirement to COAG of a covered transaction from 60 days prior to closing or the effective date to 90 days prior to closing or the effective date.
Specifically, the HTA currently governs three types of transactions: (1) nonprofit to nonprofit transactions, (2) for-profit to-for-profit transactions, and (3) nonprofit to for-profit transactions. The proposed bill adds a fourth type of transaction subject to COAG review: for-profit to nonprofit transactions. The HTA, as it currently exists, has different reporting requirements and COAG review requirements based on the type of transaction, with the most stringent reporting and review requirements applying to nonprofit to nonprofit and nonprofit to for-profit transactions.
In addition to adding the new transaction type, the proposed bill expands the COAG review and assessment for nonprofit-to-nonprofit transactions and adds notice requirements for for-profit-to-for-profit transactions. Specifically, for covered transactions between two for-profit hospitals, the proposed bill would require each hospital to disclose the main terms of the transaction, as well as how hospital assets and healthcare services would be affected by the transaction.
Limitations on Physician Referrals (“Mini-Stark” Law)
The proposed bill would also add a new requirement related to provider disclosures of financial relationships in referrals for DHS. Providers such as physicians, dentists, podiatrists, optometrists, and chiropractors need to give patients a disclosure when referring them to an entity in which the provider has a financial interest, such as ownership or investment (including equity, debt, or other instruments). Providers must give patients “conspicuous notice” of the financial relationship and, upon request, offer alternative referral options where no such relationship exists. Additionally, entities providing DHS are prohibited from billing for services resulting from such referrals without also disclosing the financial relationship to the patient. As written, the disclosure requirement does not apply if the financial relationship meets a federal Stark Law exception or would not violate the federal Stark Law. However, if providers fail to provide a necessary disclosure, then the billing prohibition goes beyond the federal Stark prohibition, as the state prohibition would not be limited to billing government health care programs.
Failure to provide the required notice three or more times would result in a one-time $500 fine for the provider (not per missed disclosure).
Takeaways
If enacted, the proposed bill would subject a broader group of healthcare entities undergoing a transaction to increased oversight by the COAG, while also giving COAG the opportunity to block some transactions entirely. Because the list of transactions subject to the requirement is broad, the bill, if enacted, could result in large numbers of required filings and potential delays in closing while awaiting approval from the COAG.[1]
Additionally, the bill would add a “mini-Stark” law that would require certain providers to disclose any financial interests in entities to which they refer for DHS.
If you have questions regarding the proposed bill or assistance with compliance planning, transaction structuring, and regulatory risk assessment, Husch Blackwell’s healthcare attorneys offer comprehensive counsel and solution-driven services that address healthcare industry pressures. For more information, please contact Ragini Acharya, Claire Postman, or Liz Ignowski.
[1] Note that a similar bill, SB25-198, was introduced in the Senate in March 2025, but died in committee.