Affordability in Healthcare Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1175

Short Title: Affordability in Healthcare Act. (Public)
Sponsors: Representatives Cervania, Crawford, Ball, and Belk (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Rules, Calendar, and Operations of the House
May 4, 2026
*H1175-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO LOWER HEAL THCARE COSTS, INCREA SE COMPETITION IN TH E 2
HEALTH INSURANCE MAR KET, AND IMPROVE VAL UE AND TRANSPARENCY 3
BY LEVERAGING THE ST ATE'S PURCHASING POW ER; TO ESTABLISH A 4
LOW-COST, AFFORDABLE HEALTH PLAN OPTION ON THE AFFORDABLE CARE 5
ACT HEALTH INSURANCE MARKETPLACE; TO CRE ATE A HEALTHCARE 6
PURCHASING CONSORTIU M TO ALIGN PUBLIC PR OCUREMENT; TO 7
APPROPRIATE FUNDS FO R IMPLEMENTATION; TO CONTINUE AND EXPAND 8
HEALTHY OPPORTUNITIE S ACTIVITIES TO PROM OTE CHRONIC DISEASE 9
PREVENTION; TO ELIMINATE CERTIFICATE OF NEED REVIEW FOR INPATIENT 10
REHABILITATION SERVI CES, REHABILITATION FACILITIES, AND 11
REHABILITATION BEDS; TO PROVIDE GREATER PROTECTION FOR ESSENTIAL 12
RURAL HEALTH SERVICES; AND TO PRESERVE COMPETITION IN HEALTHCARE 13
BY REGULATING THE CONSOLIDATION AND CONVEYANCE OF HOSPITALS. 14
Whereas, the people of North Carolina are entitled to timely, affordable, and 15
high-quality healthcare as a matter of human dignity, public welfare, and fundamental fairness; 16
and 17
Whereas, healthcare is not a luxury but a necessity, and the inability to obtain needed 18
care or coverage endangers the lives, well-being, and economic security of individuals, families, 19
and communities across this State; and 20
Whereas, in 2026, the cost of healthcare in North Carolina r emains too high for too 21
many residents, employers, and taxpayers, driven in part by market consolidation, opaque 22
pricing, administrative burdens, avoidable chronic disease, barriers to meaningful competition, 23
and billing and facility practices that increas e costs without commensurate improvement in 24
patient outcomes or access to care; and 25
Whereas, excessive healthcare costs force North Carolinians to delay treatment, forgo 26
preventive care, accumulate medical debt, and remain uninsured or underinsured, thereb y 27
worsening illness, increasing long-term system costs, and deepening inequality; and 28
Whereas, high healthcare prices also impose substantial burdens on small businesses, 29
local governments, North Carolina State Health Plan for Teachers and State Employees, and 30
other public purchasers, diverting resources away from wages, education, infrastructure, and 31
other public needs; and 32
Whereas, many North Carolinians remain uninsured or lack access to coverage they 33
can reasonably afford, and the State has a compelling interest in expanding access to dependable, 34
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1175-First Edition
affordable health benefit plans so that residents may obtain needed care before medical 1
conditions become more severe and more costly; and 2
Whereas, chronic disease is a major driver of suffering, preventable death, and rising 3
medical expenditures, and public health initiatives that prevent, mitigate, and better manage 4
chronic illness are necessary both to improve quality of life and to reduce long -term healthcare 5
costs; and 6
Whereas, consumers and patients should be protected from healthcare practices that 7
increase prices, obscure the true cost of care, delay or complicate treatment, or impose charges 8
unrelated to improvements in quality, safety, or clinical outcomes; and 9
Whereas, it is in the interest of the State to lower healthcare costs by increasing 10
competition, leveraging public purchasing power, expanding access to affordable coverage, 11
encouraging public health strategies that reduce chronic disease, and protecting patients and 12
consumers from practices that inflate costs without improving care; Now, therefore, 13
The General Assembly of North Carolina enacts: 14
15
PART I. INCREASING C OMPETITION AND LOWER ING HEALTHCARE COSTS 16
THROUGH MARKETPLACE INNOVATION AND PURCHASING ALIGNMENT 17
SECTION 1.1.(a) The General Assembly finds that rising healthcare costs continue 18
to place significant financial strain on individuals, families, employers, and taxpayers across 19
North Carolina. It is in the public interest to promote affordability, expand consumer choice , 20
improve transparency, and strengthen health outcomes by increasing competition in the 21
individual health insurance market and leveraging the State's purchasing power more effectively. 22
The General Assembly further finds all of the following: 23
(1) In many re gions of North Carolina, limited competition in the individual 24
health insurance market contributes to higher premiums and fewer affordable 25
coverage options for consumers. Establishing a lower -cost, State-supported 26
health plan option offered on the Affordab le Care Act Health Insurance 27
Marketplace can increase competition, expand access to affordable coverage, 28
and improve price transparency for consumers and the State. 29
(2) North Carolina's public employers and public programs purchase health 30
coverage and heal th care services at scale, yet procurement and contracting 31
are fragmented across public entities, diluting negotiating leverage, increasing 32
administrative costs, and limiting the State's ability to align purchasing 33
strategies toward affordability and value. 34
(3) Coordinating public purchasers through a consortium can support aligned 35
procurement standards, common performance guarantees and data standards, 36
and shared analytics to improve competition, transparency, and affordability 37
while respecting voluntary p articipation by local governments and other 38
public entities. 39
(4) Investments in evidence-based interventions that address health-related social 40
needs can reduce avoidable healthcare utilization, improve health outcomes, 41
and support chronic disease preventi on when coordinated with Medicaid 42
managed care and other State initiatives to the extent permitted by federal law. 43
SECTION 1.1.(b) Chapter 58 of the General Statutes is amended by adding a new 44
Article to read: 45
"Article 94. 46
"Low-Cost Health Plan Option. 47
"§ 58-94-1. Definitions. 48
The following definitions apply in this Article: 49
(1) DHHS. – The Department of Health and Human Services. 50
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House Bill 1175-First Edition Page 3
(2) Exchange. – The health benefit exchange serving North Carolina pursuant to 1
42 U.S.C. § 18031 or any successor law. 2
(3) Reserved for future codification purposes. 3
(4) Low-Cost Health Plan Option. – A qualified health plan, or group of qualified 4
health plans, made available through a State -facilitated arrangement and 5
ordered on the Exchange in accordance with this Article for the purpose of 6
increasing competition, improving affordability, and expanding consumer 7
choice. 8
(5) Participating carrier. – An insurer licensed under this Chapter that contracts 9
with the State to offer the Low-Cost Health Plan Option. 10
(6) Reference-based rate. – A reimbursement rate benchmarked to Medicare or 11
another objective schedule adopted pursuant to this Article. 12
"§ 58-94-5. Establishment of Low-Cost Health Plan Option. 13
(a) DHHS shall, in consultation with the Department and the State Treasurer, establish 14
and administer the North Carolina Low-Cost Health Plan Option. 15
(b) The Low-Cost Health Plan Option shall be offered on the Exchange statewide. 16
(c) DHHS may procure one or more participating carriers or third-party administrators to 17
underwrite, administer, and operate the Low-Cost Health Plan Option , including provider 18
network contracting, claims administration, utilization management, and customer service. 19
(d) The Low-Cost Health Plan Option shall comply with applicable federal law for 20
qualified health plans. 21
"§ 58-94-10. Standards for affordability and value. 22
(a) Procurement Requirements. – DHHS shall set procurement requirements intended to 23
reduce premiums and out -of-pocket costs, including reasonable administrative expense limits, 24
quality metrics, and reporting requirements. 25
(b) Participating Carrier Requirements. – DHHS may require participating carriers to use 26
value-based payment, tiered networks, advanced primary care models, or other designs consistent 27
with affordability and quality. 28
(c) Reference-Based Rates. – To the extent permitted by federal law, the DHHS may set 29
reference-based rates for provider reimbursement under the Low-Cost Health Plan Option , 30
including rates expressed as a percentage of Medicare, with adjustments for rural access, critical 31
access hospitals, and other essential providers. 32
(d) Affordability Outcomes. – Beginning with the initial plan year and for each plan year 33
thereafter, DHHS shall ensure that the Low-Cost Health Plan Opt ion meets the following 34
affordability outcomes: 35
(1) Premium benchmark. – For each rating area in which the Low-Cost Health 36
Plan Option is offered, DHHS shall procure and administer at least one 37
standard-design silver Low-Cost Health Plan Option plan with a premium that 38
is no greater than ninety -five percent (95%) of the premium for the 39
lowest-premium available silver qualified health plan offered in the same 40
rating area, excluding the Low-Cost Health Plan Option, for the same age and 41
tobacco status, as determined using a methodology specified by DHHS. 42
(2) Administrative expense cap. – DHHS shall require participating carriers and 43
third-party administrators to meet a reasonable administrative expense limit 44
that shall not exceed twelve percent (12%) of premium, except that DHHS 45
may allow a higher limit for the first plan year of operation if the DHHS finds 46
that a temporary adjustment is necessary for implementation and consumer 47
protections and reports the finding to the Joint Legislative Oversight 48
Committee on Health and Human Services. 49
(3) Out-of-pocket affordability standard. – DHHS shall require standardized 50
benefit designs for at least one silver plan and shall set cost-sharing parameters 51
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intended to reduce ou t-of-pocket costs relative to comparable silver plans, 1
including lower deductibles or copayments for primary care, behavioral 2
health, and generic prescription drugs, consistent with federal law for 3
qualified health plans. 4
(4) Corrective action. – If DHHS determines that an affordability outcome 5
required by this subsection cannot be met in a rating area due to network 6
adequacy requirements, provider participation, federal restrictions, or other 7
constraints outside the reasonable control of DHHS, then DHHS shall do all 8
of the following: 9
a. Document the constraint and the steps taken to address it. 10
b. Implement procurement or design changes reasonably expected to 11
improve affordability in the subsequent plan year. 12
c. Report the determination and corrective action plan in the annual 13
report required by G.S. 58-94-25. 14
"§ 58-94-15. Provider participation and network adequacy. 15
(a) Network adequacy requirements for the Low-Cost Health Plan Option shall be 16
consistent with State and federal standards. 17
(b) DHHS may include provisions to encourage broad provider participation, including 18
prompt pay protections and standardized contracting terms. 19
(c) Nothing in this Article shall be construed to mandate a healthcare provider to contract 20
with a participating carrier. 21
"§ 58-94-20. Financing; no State guarantee. 22
(a) The Low-Cost Health Plan Option shall be financed primarily through premiums and 23
other revenues associated with plan operations. 24
(b) The State does not guarantee premiu ms, liabilities, or obligations of a participating 25
carrier. 26
(c) Appropriations may be requested for plan start-up costs, systems integration, actuarial 27
services, and procurement expenses. 28
"§ 58-94-25. Reporting. 29
DHHS shall report annually to the Joint Legislative Oversight Committee on Health and 30
Human Services and the Fiscal Research Division on enrollment, premiums, claims, 31
administrative costs, network adequacy, consumer satisfaction, quality outcomes, and any 32
recommended statutory changes." 33
SECTION 1.2.(a) The Low -Cost Health Plan Option shall be offered on the 34
Federally Facilitated Marketplace, or Exchange, beginning with the plan year 2028, unless the 35
Department of Health and Human Services certifies in writing to the Joint Legislative Oversight 36
Committee on Health and Human Services that an earlier plan year is feasible. 37
SECTION 1.2.(b) This Part is effective when it becomes law, and the Department 38
of Health and Human Services shall begin planning, procurement, and implementation of this 39
Part when this Part becomes effective. 40
41
PART II. POOLING PUB LIC PURCHASING POWER /PUBLIC HEALTH 42
PURCHASING CONSORTIUM 43
SECTION 2.1. Chapter 143 of the General Statutes is amended by adding a new 44
Article to read: 45
"Article 85. 46
"Public Health Purchasing Consortium. 47
"§ 143-820. Establishment. 48
(a) There is established the Public Health Purchasing Consortium, also known as the 49
Consortium, to coordinate, aggregate, and strategically align the healthcare purchasing power of 50
public entities in North Carolina. 51
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House Bill 1175-First Edition Page 5
(b) The Consortium shall be chaired by the State Treasurer or the Treasurer 's designee 1
and shall include, at a minimum, the following members: 2
(1) The Department of Health and Human Services. 3
(2) The Department of Insurance. 4
(3) The Office of State Human Resources. 5
(4) The University of North Carolina System. 6
(5) The North Carolina Community College System. 7
(6) A representative of another public entity designated by the chair. 8
(c) Local governments may elect to participate in the Consortium pursuant to 9
G.S. 143-823. 10
"§ 143-821. Powers and duties. 11
The Consortium shall do all of the following: 12
(1) Develop model procurement standards for carriers, Third -Party 13
Administrators, Pharmacy Benefit Managers, and other vendors. 14
(2) Pursue joint or aligned procurements where practicable, including common 15
performance guarantees and data standards. 16
(3) Establish common definitions and reporting for price, quality, and utilization 17
metrics. 18
(4) Coordinate strategies to improve competition, transparency, and affordability. 19
(5) Recommend statutory or budget changes to implement purchasing reforms. 20
(6) Support implementation of the Low-Cost Health Plan Option created under 21
Article 94 of Chapter 58 of the General Statutes. 22
"§ 143-822. Data sharing and analysis. 23
(a) The Consortium may establish a secure data sharing framework for claims, encounter, 24
and pharmacy data among participating public purchasers for purposes of analytics, fraud 25
detection, payment reform, and evaluation of procurement performance, subject to HIPAA and 26
State privacy laws. 27
(b) Data disclosed under this section shall be used only for public purchasing purposes 28
and shall not be publicly disclosed in a manner that reveals protected health information or 29
proprietary pricing terms, except as otherwise required by law. 30
"§ 143-823. Voluntary participation by local governments and other public entities. 31
(a) A county, municipality, or other political subdivision may elect to participate in 32
Consortium initiatives, including joint procurements and shared analytics, upon approv al by its 33
governing board and execution of a participation agreement. 34
(b) Participation agreements may address cost -sharing, governance, data use, vendor 35
selection, and opt-out procedures. 36
"§ 143-824. Reports. 37
The Consortium shall submit an annual report to the Joint Legislative Oversight Committee 38
on General Government and the Joint Legislative Oversight Committee on Health and Human 39
Services detailing activities, savings estimates, procurement outcomes, and recommendations." 40
41
PART III. IMPLEMENTA TION AND APPROPRIATION FOR T HE LOW -COST 42
HEALTH PLAN OPTION A ND THE PUBLIC HEALTH PURCHASING 43
CONSORTIUM 44
SECTION 3.1.(a) The Department of Health and Human Services, the Department 45
of Insurance, and the Department of State Treasurer shall enter into any interagency agreements 46
necessary to implement Parts I and II of this act. 47
SECTION 3.1.(b) The Department of Health and Human Services may issue 48
requests for information and requests for proposals and may take other actions necessary to 49
ensure the Low-Cost Health Plan Option under Part I of this act is operational by the date required 50
in this act. 51
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SECTION 3.2. Effective July 1, 2026, there is appropriated from the General Fund 1
to the Department of Health and Human Services the sum of twenty -five million dollars 2
($25,000,000) in recurring funds and the sum of ten million dollars ($10,000,000) in nonrecurring 3
funds for the 2026-2027 fiscal year to implement the Low-Cost Health Plan Option under Part I 4
of this act and the Public Health Purchasing Consortium under Part II of this act, including 5
Consortium analytics and procurement coordination, actuarial services, information technology, 6
contracting support, and outreach. 7
8
PART IV. HEALTHY OPPORTUNITIES CONTINUATION FOR CHRONIC DISEASE 9
PREVENTION 10
SECTION 4.1.(a) There is appropriated from the General Fund to the Department 11
of Health and Human Services, Division of Health Benefits (DHB), the sum of one hundred 12
seventy-five million dollars ($175,000,000) in recurring funds and associated receipts for the 13
2026-2027 fiscal year to continue and expand Healthy Opportunities Pilots activities to promote 14
chronic disease prevention, reduce avoidable healthcare utilization, and improve health outcomes 15
through evidence-informed interventions addressing health -related social needs, inc luding, as 16
applicable, nutrition supports, housing -related supports, transportation supports, interpersonal 17
safety supports, and other services authorized by DHHS consistent with federal requirements. 18
SECTION 4.1.(b) Funds appropriated by this section may be used for any of the 19
following purposes related to Healthy Opportunities Pilots: 20
(1) Payments to participating entities, network leads, human service 21
organizations, and other contractors or grantees to deliver covered 22
interventions. 23
(2) Administrative costs necessary to operate the program, including contracting, 24
compliance, data collection, evaluation, quality improvement, and program 25
integrity activities. 26
(3) Information technology, referral platforms, community resource connectivity, 27
and related infrastructure needed to support screening, referral, service 28
delivery, and reporting. 29
(4) Technical assistance, provider engagement, beneficiary outreach, and training 30
necessary for effective implementation. 31
SECTION 4.1.(c) DHB shall prioritize the use o f funds under this section for 32
interventions and program designs that are expected to reduce the incidence or severity of chronic 33
disease, including diabetes, cardiovascular disease, asthma, and other conditions identified by 34
DHB. DHB shall coordinate impl ementation with Medicaid managed care and other relevant 35
State initiatives to the extent permitted by federal law. 36
SECTION 4.1.(d) Funds appropriated by this section shall not be used to supplant 37
existing State funding for substantially similar purposes unless expressly authorized by an act of 38
the General Assembly. 39
SECTION 4.2. The Department of Health and Human Services, Division of Health 40
Benefits (DHB), shall submit a report by March 1, 2027, and annually thereafter while funds 41
remain available, to the Joint Legislative Oversight Committee on Medicaid, the Joint Legislative 42
Oversight Committee on Health and Human Services, and the Fiscal Research Division on all of 43
the following items related to the Healthy Opportunities Pilots: 44
(1) Annual expenditures by category and region. 45
(2) Number of beneficiaries served and services delivered within the previous 46
calendar year. 47
(3) Outcome measures, including utilization impacts where measurable. 48
(4) Recommendations for continuation, modification, or expansion of the Healthy 49
Opportunities Pilots. 50
SECTION 4.3. This Part is effective July 1, 2026. 51
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House Bill 1175-First Edition Page 7
1
PART V. GREATER TRAN SPARENCY IN HOSPITAL AND AMBULATORY 2
SURGICAL FACILITY HEALTHCARE COSTS 3
SECTION 5.1. Article 11B of Chapter 131E of the General Statutes reads as 4
rewritten: 5
"Article 11B. 6
"Transparency in Health Care Costs. 7
"Part 1. Health Care Cost Reduction and Transparency Act of 2013. 8
"§ 131E-214.11. Title. 9
This article Part shall be known as the Health Care Cost Reduction and Transparency Act of 10
2013. 11
… 12
"§ 131E -214.13. Disclosure of prices for most frequently reported DRGs, CPTs, and 13
HCPCSs. 14
(a) Definitions. – The following definitions apply in this Article:Part: 15
(1) Ambulatory surgical facility. – A facility licensed under Part 4 of Article 6 of 16
this Chapter. 17
(2) Commission. – The North Carolina Medical Care Commission. 18
(2a) CPT. – Current Procedural Terminology. 19
(2b) DRG. – Diagnostic Related Group. 20
(2c) HCPCS. – The Healthcare Common Procedure Coding System. 21
(3) Health insurer. – An entity that writes a health benefit plan and is one of the 22
following: 23
a. An insurance company under Article 3 of Chapter 58 of the General 24
Statutes. 25
b. A service corporation under Article 65 of Chapter 58 of the General 26
Statutes. 27
c. A health maintenance organization under Article 67 of Chapter 58 of 28
the General Statutes. 29
d. A third -party administrator of one or more group health plans, as 30
defined in section 607(1) of the Employee Retirement Income Security 31
Act of 1974 (29 U.S.C. § 1167(1)). 32
(4) Hospital. – A medical care facility licensed under Article 5 of this Chapter or 33
under Article 2 of Chapter 122C of the General Statutes. 34
(5) Public or private third party. – Includes the State, the federal government, 35
employers, health insurers, third -party administrators, and managed care 36
organizations. 37
(6) Statewide data processor. – As defined in G.S. 131E-214.1. 38
(b) Beginning with the reporting period ending September 30, 2015, and annually 39
thereafter, Quarterly Report on Most Frequently Reported DRGs for Inpatients. – On a quarterly 40
basis, each hospital shall provide to the Department of Health and Human Services statewide 41
data processor, utilizing electronic health records software, the following information about the 42
100 most frequently reported admissions by DRG for inpatients as establis hed by the 43
Department: 44
(1) The amount that will be charged to a patient for each DRG if all charges are 45
paid in full without a public or private third party paying for any portion of 46
the charges. In calculating this amount, each hospital shall include charges for 47
each billable item and service associated with the DRG regardless of whether 48
the health service is performed by a physician or nonphysician practitioner 49
employed by the hospital. 50
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(2) The average negotiated settlement on the amount that will be charged to a 1
patient required to be provided in subdivision (1) of this subsection. 2
(3) The amount of Medicaid reimbursement for each DRG, including claims and 3
pro rata supplemental payments. 4
(4) The amount of Medicare reimbursement for each DRG. 5
(5) For each of the five largest health insurers providing payment to the hospital 6
on behalf of insureds and teachers and State employees, the range and the 7
average of the amount of payment made for each DRG. Prior to providing this 8
information to the Department statewide data processor , each hospital shall 9
redact the names of the health insurers and any other information that would 10
otherwise identify the health insurers. 11
A hospital shall not be required to report the information required by this subsection for any 12
of the 100 most frequently reported admissions where the reporting of that information 13
reasonably could lead to the identification of the person or persons admitted to the hospital in 14
violation of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) or 15
other federal law. 16
(c) The Commission shall adopt rules on or before March 1, 2016, to ensure that 17
subsection (b) of this section is properly implemented and that hospitals report this information 18
to the Department in a uniform manner. The rules shall include all of the following: 19
(1) The method by which the Department shall determine the 100 most frequently 20
reported DRGs for inpatients for which hospitals must provide the data set out 21
in subsection (b) of this section. 22
(2) Specific categories by which hospitals shall be grouped for the purpose of 23
disclosing this information to the public on the Department's Internet Web 24
site. 25
(d) Beginning with the reporting period ending September 30, 2015, and annually 26
thereafter, Quarterly Report on Total Costs for the Most Common Surgical and Imaging 27
Procedures. – On a quarterly basis , each hospital and ambulatory surgical facility shall provide 28
to the Department, statewide data processor, utilizing electronic health records software, 29
information on the total costs for the 20 most common surgical procedures and the 20 most 30
common imaging procedures, by volume, performed in hospital outpatient settings or in 31
ambulatory surgical facilities, al ong with the related CPT and HCPCS codes. In providing 32
information on total costs, each hospital and ambulatory surgical facility shall include the costs 33
for each billable item and service associated with the procedure regardless of whether the health 34
service is performed by a physician or nonphysician practitioner employed by the hospital or 35
ambulatory surgical facility. Hospitals and ambulatory surgical facilities shall report this 36
information in the same manner as required by subdivisions (b)(1) thro ugh (5) of this section, 37
provided that hospitals and ambulatory surgical facilities shall not be required to report the 38
information required by this subsection where the reporting of that information reasonably could 39
lead to the identification of the perso n or persons admitted to the hospital in violation of the 40
federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) or other federal 41
law. 42
(e) The Commission shall adopt rules on or before March 1, 2016, to ensure that 43
subsection (d) of this section is properly implemented and that hospitals and ambulatory surgical 44
facilities report this information to the Department in a uniform manner. The rules shall include 45
the method by which the Department shall determine the 20 most common surgical procedures 46
and the 20 most common imaging procedures for which the hospitals and ambulatory surgical 47
facilities must provide the data set out in subsection (d) of this section. 48
(e1) The Commission shall adopt rules to establish and define no fewer than 10 quality 49
measures for licensed hospitals and licensed ambulatory surgical facilities. 50
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(f) Upon request of a patient for a particular DRG, imaging procedure, or surgery 1
procedure reported in this section, a hospital or ambulatory surgical facility shall pro vide the 2
information required by subsection (b) or subsection (d) of this section to the patient in writing, 3
either electronically or by mail, within three business days after receiving the request. 4
(f1) Commission Rules. – The Commission shall adopt rules to accomplish all of the 5
following: 6
(1) To ensure that subsection (b) of this section is properly implemented and that 7
hospitals report this information to the statewide data processor in a uniform 8
manner. The rules shall include the method by which the statewide data 9
processor shall determine the 100 most frequently reported DRGs for 10
inpatients for which hospitals must provide the data set out in subsection (b) 11
of this section and the specific categories by which hospitals shall be grouped 12
for the purpose of disclosing this information to the public on the Department's 13
website. 14
(2) To ensure that subsection (d) of this section is properly implemented and that 15
hospitals and ambulatory surgical facilities report this information to the 16
statewide data processor in a uniform manner. The rules shall include the 17
method by which the statewide data processor shall determine the 20 most 18
common surgical procedures and the 20 most common imaging procedures 19
for which the hospitals and ambulatory s urgical facilities must provide the 20
data set out in subsection (d) of this section. 21
(3) To establish and define no fewer than 10 quality measures for licensed 22
hospitals and licensed ambulatory surgical facilities. 23
(4) To establish procedures for the statewide data processor to receive the data 24
required by subsections (b) and (d) of this section and submit that data to the 25
Department for publication on the Department's website. 26
(g) G.S. 150B-21.3 does not apply to rules adopted under subsections (c) a nd (e) 27
subdivision (f1)(1) or subdivision (f1)(2) of this section. A rule adopted under subsections (c) 28
and (e) subdivision (f1)(1) or subdivision (f1)(2) of this section becomes effective on the last day 29
of the month following the month in which the rule is approved by the Rules Review 30
Commission. 31
… 32
"§ 131E-214.18. Penalty for noncompliance. 33
The Department may impose a civil penalty on any hospital or ambulatory surgical facility 34
that fails to comply with the requirements of this Part. For each day of violation, the amount of 35
the civil penalty shall not be (i) less than one hundredth of one percent (.01%) of the annual salary 36
of the chief executive officer of the noncompliant hospital or ambulatory surgical facility or (ii) 37
greater than two thousand dollars ($2,000). This civil penalty shall be in addition to any fine or 38
civil penalty that the Centers for Medicare and Medicaid Services or other federal agency may 39
choose to impose on the facility. The Department shall remit the clear proceeds of civil penalties 40
assessed pursuant to this section to the Civil Penalty and Forfeiture Fund in accordance with 41
G.S. 115C-457.2." 42
SECTION 5.2. G.S. 131E-214.4(a) reads as rewritten: 43
"(a) A statewide data processor shall perform the following duties: 44
… 45
(8) Receive data required to be submitted by hospitals under G.S. 131E-214.13(b) 46
and by hospitals and ambulatory surgical facilities under G.S. 131E-214.13(d) 47
and submit that data to the Department of Health and Human Services 48
(Department) for publication on the Department's website." 49
SECTION 5.3. This Part becomes effective on the later of January 1, 2027, or the 50
date the rules adopted by the North Carolina Medical Care Commission under 51
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G.S. 131E-214.13(f1)(2) take effect, and G.S. 131E-214.18, as enacted by this Part, applies to 1
acts occurring on or after that date. The Commission shall notify the Revisor of Statutes when 2
the rules required under G.S. 131E-214.13(f1)(1) and (f1)(2) take effect. 3
4
PART VI. GREATER TRA NSPARENCY IN HEALTH CARE PROVIDER BILLIN G 5
PRACTICES 6
SECTION 6.1. Article 11B of Chapter 131E of the General Statutes, as amended by 7
Part V of this act, is amended by adding a new Part to read: 8
"Part 2. Transparency in Provider Billing Practices. 9
"§ 131E-214.25. Definitions. 10
The following definitions apply in this Part: 11
(1) Health benefit plan. – As defined in G.S. 58-3-167, or under the laws of 12
another state or the federal government. 13
(2) Health care provider. – As defined in G.S. 90-410. 14
(3) Insurer. – As defined in G.S. 58-3-167. 15
"§ 131E-214.30. Fair notice requirements; health service facilities. 16
(a) Services Provided at a Participating Health Service Facility. – At the time a health 17
service facility participating in an insurer 's provider network (i) treats an insured individual for 18
anything other than screening and stabilization in accordance with G.S. 58-3-190, (ii) admits an 19
insured individual to receive emergency services, (iii) schedules a procedure for nonemergency 20
services for an insured individual, or (iv) seeks prior authorization from an insurer for the 21
provision of nonemergency services to an insured individual, the health service facility shall 22
provide the insured individual with a written disclosure containing all of the following 23
information: 24
(1) Services may be provided at the health service facility for which the insured 25
individual may receive a separate bill. 26
(2) Certain health care providers may be called upon to render care to the insured 27
individual during the course of treatment and those providers may not have 28
contracts with the insured's insurer and are considered to be nonparticipating 29
providers in the insurer 's provider network . Any nonparticipating providers 30
shall be identified in the written disclosure using the individual provider 's 31
name and practice name, as used on the applicable health service facility's or 32
provider's credentials or name badge. 33
(3) Text, using a bold or other distinguishable font, that states that certain 34
consumer protections a vailable to the insured individual when services are 35
rendered by a health service facility or provider participating in the insurer 's 36
provider network may not be applicable when services are rendered by a 37
nonparticipating provider. 38
(b) Emergency Services Provided at Nonp articipating Health Service Facilities. – As 39
soon as practicable after a health service facility begins the provision of emergency services to 40
an insured individual, if the facility does not have a contract with the applicable insurer, then the 41
health service facility shall provide the insured individual with a written disclosure containing 42
all of the following: 43
(1) A statement that the health service facility does not have a provider network 44
contract with the applicable insurer and is considered to be a nonparticipating 45
provider. 46
(2) Text, using a bold or other distinguishable font, that states that certain 47
consumer protections available to the insured individual when services are 48
rendered by a health service facility or health care provider participating in 49
the insurer's health care provider network may not be applicable when services 50
are rendered by a nonparticipating health service facility. 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 11
"§ 131E-214.31. Fair notice requirements. 1
At the time a health care provider not participating in an insurer's provider network (i) treats 2
an insured individual for anything other than screening and stabilization in accordance with 3
G.S. 58-3-190, (ii) schedules a n appointment or procedure for nonemergency services for an 4
insured individual, or (i ii) seeks prior authorization from an insurer for the provision of 5
nonemergency services to an insured individual, the provider shall provide the insured individual 6
with a written disclosure containing all of the following information: 7
(1) A statement that the provider is not in the insurer's health care provider 8
network applicable to the individual. 9
(2) Text, using a bold or other distinguishable font, that states that certain 10
consumer protections available to the insured individual when services are 11
rendered by a health care provider participating in the insurer 's health care 12
provider network may not be applicable when services are rendered by a 13
nonparticipating provider. 14
"§ 131E-214.35. Penalties. 15
The repeated failure to comply with this Article shall indicate a general business practice that 16
is deemed an unfair and deceptive trade practice and is actionable under Chapter 75 of the 17
General Statutes. Nothing in this Article forecloses other remedies available under law or equity." 18
SECTION 6.2.(a) G.S. 58-3-200(a)(1) and G.S. 58-3-200(a)(2) are repealed. 19
SECTION 6.2.(b) G.S. 58-3-200(a), as amended by subsection (a) of this section, 20
reads as rewritten: 21
"(a) Definitions. – As used The following definitions apply in this section: 22
… 23
(3) Clinical laboratory. – An entity in which services are performed to provide 24
information or materials for use in the diagnosis, prevention, or treatment of 25
disease or assessment of a medical or physical condition. 26
(4) Health care provider. – As defined in G.S. 90-410." 27
SECTION 6.2.(c) G.S. 58-3-200(d) reads as rewritten: 28
"(d) Services Outside Provider Networks. – No insurer shall penalize an insured or subject 29
an insured to the out-of-network benefit levels offered under the insured's approved health benefit 30
plan, including an insured receiving an extended or standing referral under G.S. 58-3-223, unless 31
contracting health care providers able to meet health needs of the insured are reasonably available 32
to the insured without unreasonable delay. Upon notice or request from the insured, the insurer 33
shall determine whether a provider able to meet the needs of the insured is available to the insured 34
without unreasonable delay by reference to the insured's location and the specific medical needs 35
of the insured." 36
SECTION 6.3. This Part becomes effective October 1, 2026, and applies to 37
healthcare services provided on or after that date and to contracts issued, renewed, or amended 38
on or after that date. 39
40
PART VII. GREATER FA IRNESS IN BILLING AN D COLLECTIONS PRACTI CES 41
FOR HOSPITALS AND AMBULATORY SURGICAL FACILITIES 42
SECTION 7.1.(a) Chapter 131E of the General Statutes is amended by adding a new 43
Article 11C to be entitled "Fair Billing and Collec tions Practices for Hospitals and Ambulatory 44
Surgical Facilities." 45
SECTION 7.1.(b) G.S. 131E-91 is recodified as G.S. 131E-214.50 under Article 46
11C of Chapter 131E of the General Statutes, as created by subsection (a) of this section. 47
SECTION 7.1.(c) G.S. 131E-214.50(d) reads as rewritten: 48
"(d) Hospitals and ambulatory surgical facilities shall abide by the following reasonable 49
collections practices: 50
… 51
General Assembly Of North Carolina Session 2025
Page 12 House Bill 1175-First Edition
(1a) A hospital or ambulatory surgical facility shall not refer a patient's unpaid bill 1
to a collections agency, entit y, or other assignee unless it has first presented 2
an itemized list of charges to the patient detailing, in language comprehensible 3
to an ordinary layperson, the specific nature of the charges or expenses 4
incurred by the patient. 5
…." 6
SECTION 7.2. Article 11C of Chapter 131E of the General Statutes, as created by 7
Section 7.1(a) of this act, is amended by adding a new section to read: 8
"§ 131E-214.52. Patient's right to a good-faith estimate. 9
(a) Definitions. – The following definitions apply in this section: 10
(1) CMS. – The federal Centers for Medicare and Medicaid Services. 11
(2) Facility. – A hospital or ambulatory surgical facility licensed under this 12
Chapter. 13
(3) Items and services. – All items and services, including individual items and 14
services and service packages, that could be provided by a facility to a patient 15
in connection with an inpatient admission or an outpatient visit for which the 16
facility has established a standard charge. Examples include, but are not 17
limited to, all of the following: 18
a. Supplies and procedures. 19
b. Room and board. 20
c. Fees for use of the facility or other items. 21
d. Professional charges for s ervices of physicians and nonphysician 22
practitioners who are employed by the facility. 23
e. Professional charges for services of physicians and nonphysician 24
practitioners who are not employed by the facility. 25
f. Any other items or services for which a facility has established a 26
standard charge. 27
(4) Service package. – An aggregation of individual items and services into a 28
single service with a single charge. 29
(5) Shoppable service. – A non-urgent service that can be scheduled by a patient 30
in advance. The term includes all CMS -specified shoppable services plus as 31
many additional facility -selected shoppable services as are necessary for a 32
combined total of at least 300 shoppable services. 33
(b) Good-Faith Estimate. – Upon request of any patient for a good -faith estimate for a 34
shoppable service, the facility shall provide to the patient, in writing, at least three business days 35
prior to the date the patient schedules the shoppable service, an itemized list of expected charges, 36
in language comprehensible to an ordinary layperson, that the patient will be obligated to pay for 37
all items and services related to the shoppable service. The good-faith estimate shall include the 38
Diagnostic Related Group (DRG ), Current Procedural Terminology (CPT), or Healthcare 39
Common Procedure Coding System (HCPCS) code for each expected charge. 40
(c) In any case in which a patient has requested a good-faith estimate from a facility for 41
a shoppable service, the patient's final bill for that shoppable service shall not exceed more than 42
five percent (5%) of the good-faith estimate provided to the patient pursuant to this section. 43
(d) The Department shall adopt rules to implement this section." 44
SECTION 7.3. This Part becomes effective on the later of January 1, 2027, or the 45
date the rules adopted by the Department under G.S. 131E-214.52 take effect and applies to acts 46
occurring on or after that date. The Department shall notify the Revisor of Statutes when the rules 47
required under G.S. 131E-214.52 take effect. 48
49
PART VIII. GREATER P ROTECTION FOR HEALTH CARE CONSUMERS FROM 50
FACILITY FEES 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 13
SECTION 8.1.(a) Article 11C of Chapter 131E of the General Statutes, as created 1
by Section 7.1(a) of this act, is amended by adding a new section to read: 2
"§ 131E-214.54. Facility fees. 3
(a) Definitions. – The following definitions apply in this section: 4
(1) Ambulatory surgical facility. – As defined in G.S. 131E-176. 5
(2) Campus. – Any of the following: 6
a. The main building of a hospital. 7
b. The physical area immediately adjacent to a hospital's main building. 8
c. Other structures not contiguous to the main building of a hospital that 9
are within 250 yards of the main building. 10
d. Any other area that has been determined to be part of a hospital 's 11
campus by the Centers for Medicare and Medicaid Services. 12
(3) Facility fee. – Any fee charged or billed by a health care provider for 13
outpatient services provided in a hospital-based facility that is (i) intended to 14
compensate the health care provider for the operational expenses of the health 15
care provider, (ii) separate and distinct from a professional fee , and (iii) 16
charged regardless of the modality through which the health care services 17
were provided. 18
(4) Health care provider. – As defined in G.S. 90-410. 19
(5) Health systems. – A parent corporation of one or more hospitals and any entity 20
affiliated with that parent corporation through ownership, governance, 21
membership, or other means, or a hospital and any entity affiliated with that 22
hospital through ownership, governance, membership, or other means. 23
(6) Hospital. – Any hospital as defined in G.S. 131E-76 and any facility licensed 24
under Chapter 122C of the General Statutes. 25
(7) Hospital-based facility. – A facility that is owned or operated, in whole or in 26
part, by a hospital and at which hospital or professional medical services are 27
provided. 28
(8) Professional fee. – Any fee charged or billed by a provider for hospital or 29
professional medical services provided in a hospital-based facility. 30
(9) Remote location of a hospital. – A hospital -based facility that is created , 31
acquired, or purchased by a hospital or health system for the purpose of 32
furnishing inpatient services under the name, ownership, and financial and 33
administrative control of the hospital. 34
(b) Limits on Facility Fees. – The following limitations are applicable to facility fees: 35
(1) No health care provider shall charge, bill, or collect a faci lity fee unless the 36
services are provided on a hospital 's main campus, at a remote location of a 37
hospital, at a facility that includes a n emergency department , or at an 38
ambulatory surgical facility. 39
(2) Regardless of where the services are provided, no health care provider shall 40
charge, bill, or collect a facility fee for outpatient evaluation and management 41
services, or any other outpatient, diagnostic, or imaging services identified by 42
the Department. 43
(c) Identification of Services. – The Department shall annually identify services subject 44
to the limitations on facility fees provided in subdivision (2) of subsection (b) of this section that 45
may reliably be provided safely and effectively in non-hospital settings. 46
(d) Reporting Requirements. – Each hospital and health system shall submit a report to 47
the Department annually on July 1 . The repor t shall be published on the Department 's website 48
and shall contain the following: 49
General Assembly Of North Carolina Session 2025
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(1) The name and full address of each facility owned or operated by the hospital 1
or health system that provides services for which a facility fee is charged or 2
billed. 3
(2) The number of patient visits at each such hospital -based facility for which a 4
facility fee was charged or billed. 5
(3) The number, total amount, and range of allowable facility fees paid at each 6
facility by Medicare, Medicaid, and private insurance. 7
(4) For each hospital -based facility and for the hospital or health system as a 8
whole, the total amount billed , and the total revenue received from facility 9
fees. 10
(5) The top 10 procedures or services, identified by Current Procedural 11
Terminology (CPT) category I codes, provided by the hospital or health 12
system that generated the greatest amount of facility fee gro ss revenue; the 13
number of each of these 10 procedures or services provided; the gross and net 14
revenue totals for each such procedure or service; and the total net amount of 15
revenue received by the hospital or health system derived from facility fees 16
for each procedure or service. 17
(6) Any other information the Department may require. 18
(e) Enforcement. – This section shall be enforced as follows: 19
(1) Any violation of this section constitutes an unfair or deceptive trade practice 20
in violation of G.S. 75-1.1 and is subject to all of the enforcement and penalty 21
provisions of an unfair or deceptive trade practice under Article 1 of Chapter 22
75 of the General Statutes. 23
(2) In addition to the remedies described in subdivision (1) of this subsection, any 24
health care provider who violates any provision of this section shall be subject 25
to an administrative penalty of not more than one thousand dollars ($1,000) 26
per occurrence." 27
SECTION 8.1.(b) No later than January 1, 2027, the Department of Health and 28
Human Services shall adopt rules necessary to implement G.S. 131E-214.54, as enacted by 29
subsection (a) of this section. 30
SECTION 8.2. G.S. 131E-214.54, as enacted by Section 8.1(a) of this Part, becomes 31
effective on the later of January 1, 2027, or the date the rules adopted by the Department of 32
Health and Human Services pursuant to Section 8.1(b) of this Part become effective, and applies 33
to healthcare services provided on or after that date. The Department shall notify the Revisor of 34
Statutes when the rules required under Section 8.1(b) of this Part become effective. 35
36
PART IX. STATE AUDITOR REVIEW OF HEALTH SERVICE FACILITY PRICES 37
SECTION 9.1. G.S. 147-64.6(c) reads as rewritten: 38
"(c) Responsibilities. – The Auditor is responsible for the following acts and activities: 39
… 40
(25) The Auditor shall periodically examine (i) health service facilities, as defined 41
in G.S. 131E-176, that are recipients of State funds and (ii) facilities licensed 42
under Chapter 122C of the General Statutes that are recipients of State funds 43
and report findings to the Joint Legislative Oversight Committee on Health 44
and Human Services on April 1, 2027, and periodically thereafter. The report 45
must include at least the following: 46
a. The prices that the health service facility charges patients whose 47
insurance is out-of-network or who are uninsured. 48
b. To what extent the health service facility is transparent about the prices 49
described in sub-subdivision a. of this subdivision." 50
51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 15
PART X. ENHANCEMENTS TO EMPLOYEE SAFETY BY ALLOWING FOR THE 1
REMOVAL OF CERTAIN E MPLOYEE DETAILS FROM HEALTH INSURANCE 2
APPEALS AND GRIEVANCE REVIEWS 3
SECTION 10.1.(a) G.S. 58-50-61(k) reads as rewritten: 4
"(k) Nonexpedited Appeals. – Within three business days after receiving a request for a 5
standard, nonexpedited appeal, the insurer or its URO shall provide the covered person with the 6
name, address, and telephone number of the coordinator and information on how and where to 7
submit written material. material for the appeal , including contact information for the insurer . 8
For standard, nonexpedited appeals, the insurer or its URO shall give written notification of the 9
decision, in clear terms, to the covered person and the covered person's provider within 30 days 10
after the insurer receives the request for an appeal. If the decision is not in favor of the covered 11
person, the written decision shall contain:contain all of the following information: 12
(1) The professional qualifications and licensure of the person or persons 13
reviewing the appeal. 14
(2) A statement of the reviewers' understanding of the reason for the covered 15
person's basis of the appeal. 16
(3) The reviewers' insurer's or URO 's decision in clear terms and the medical 17
rationale in sufficient detail for the covered person to respond further to the 18
insurer's position. 19
…." 20
SECTION 10.1.(b) G.S. 58-50-62(e) reads as rewritten: 21
"(e) First-Level Grievance Review. – A covered person or a covered person's provider 22
acting on the covered person's behalf may submit a grievance. All of the following shall apply to 23
a first-level grievance review: 24
(1) The insurer does not have is not required to allow a covered person to attend 25
the first -level grievance review. A covered person may submit written 26
material. Except as provided in subdivision (3) of this subsection, within three 27
business days after receiving a grievance, the insurer shall provide the covered 28
person with the name, address, and telephone number of the coordinator and 29
information on where and how to submit written material.material for the 30
first-level grievance review, including contact information for the insurer. 31
(2) An insurer shall issue a written decision, in clear terms, to the covered person 32
and, if applicable, to the covered person's provider, within 30 days after 33
receiving a grievance. The person or persons reviewing the grievance shall not 34
be the same person or persons who initially handled the matter that is the 35
subject of the grievance and, if the issue is a clinical one, at least one of whom 36
shall be a medical doctor with appropriate expertise to evaluate the matter. 37
Except as provided in subdivision (3) of this subsection, if the decision is not 38
in favor of the covere d person, the written decision issued in a first -level 39
grievance review shall contain:contain all of the following information: 40
a. The professional qualifications and licensure of the person or persons 41
reviewing the grievance. 42
b. A statement of the reviewers' understanding basis of the grievance. 43
c. The reviewers' insurer's decision in clear terms and the contractual 44
basis or medical rationale in sufficient detail for the covered person to 45
respond further to the insurer's position. 46
…." 47
SECTION 10.1.(c) G.S. 58-50-62(f) reads as rewritten: 48
"(f) Second-Level Grievance Review. – An insurer shall establish a second -level 49
grievance review process for covered persons who are dissatisfied with the first -level grievance 50
review decision or a utilization review appeal decision. A covered person or the covered person's 51
General Assembly Of North Carolina Session 2025
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provider acting on the covered person's behalf may submit a second -level grievance. All of the 1
following shall apply to a second-level grievance review: 2
(1) An insurer shall, within 10 business days after receiving a request for a 3
second-level grievance review, make known to provide the covered 4
person:person all of the following information: 5
a. The name, address, and telephone number of a person designated to 6
coordinate the grievance review for the i nsurer.Information on how 7
and where to submit written material for the second -level grievance 8
review, including contact information for the insurer. 9
…." 10
SECTION 10.2. This Part is effective when it becomes law. 11
12
PART XI-A. ELIMINATION OF CERTIFICATE OF NEED REVIEW FOR INPATIENT 13
REHABILITATION SERVI CES, REHABILITATION FACILITIES, AND 14
REHABILITATION BEDS 15
SECTION 11A.1. G.S. 131E-176 reads as rewritten: 16
"§ 131E-176. Definitions. 17
The following definitions apply in this Article: 18
… 19
(9a) Health service. – An organized, interrelated activity that is medical, 20
diagnostic, therapeutic, rehabilitative, or a combination thereof of these and 21
that is integral to the prevention of disease or the clinical management of an 22
individual who is sick or injured or who has a disability. "Health service" does 23
not include administrative and other activities that are not integral to clinical 24
management. 25
(9b) Health service facility. – A hospital; long -term care hospital; rehabilitation 26
facility; nursing home facility; adult care h ome; kidney disease treatment 27
center, including freestanding hemodialysis units; intermediate care facility 28
for individuals with intellectual disabilities; home health agency office; 29
diagnostic center; hospice office, hospice inpatient facility, hospice residential 30
care facility; and ambulatory surgical facility. 31
(9c) Health service facility bed. – A bed licensed for use in a health service facility 32
in the categories of (i) acute care beds; (iii) rehabilitation beds; (iv) (ii) nursing 33
home beds; (v) (iii) intermediate care beds for individuals with intellectual 34
disabilities; (vii) (iv) hospice inpatient facility beds; (viii) (v) hospice 35
residential care facility beds; (ix) (vi) adult care home beds; and (x) (vii) 36
long-term care hospital beds. 37
… 38
(13) Hospital. – A public or private institution which that is primarily engaged in 39
providing to inpatients, by or under supervision of physicians, diagnostic 40
services and therapeutic services for medical diagnosis, treatment, and care of 41
injured, disabled, or sick persons, or rehabilitation services for the 42
rehabilitation of injured, disabled, or sick persons. The term includes all 43
facilities licensed pursuant to G.S. 131E-77, except rehabilitation facilities 44
and long-term care hospitals. 45
… 46
(17a) Nursing care. – Any of the following: 47
a. Skilled nursing care and related services for residents who require 48
medical or nursing care. 49
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 17
b. Rehabilitation services services, other than those provided at an 1
inpatient rehabilitation facility, for the rehabilitation of individuals 2
who are injured or sick or who have disabilities. 3
c. Health-related care and services provided on a regular basis to 4
individuals who because of their mental or physical condition require 5
care and services above the level of room and board, which can be 6
made available to them only through institutional facilities. 7
These are services which are not primarily for the care and treatment of 8
mental diseases. 9
… 10
(22) Rehabilitation facility. – A public or private inpatient facility which is 11
operated for the primary purpose of assisting in the rehabilitation of 12
individuals with disabilities through an integrated program of medical and 13
other services which are provided under competent, professional 14
supervision.A facility that has been classified and designated as an i npatient 15
rehabilitation facility by the Centers for Medicare and Medicaid Services 16
pursuant to Part 412 of Subchapter B of Chapter IV of Title 42 of the Code of 17
Federal Regulations. 18
…." 19
20
PART XI-B. ESSENTIAL RURAL HEALTH SERVICES PROTECTION 21
SECTION 11B.1. Chapter 131E of the General Statutes is amended by adding a new 22
Article to read: 23
"Article 9B. 24
"Essential Rural Health Services Protection Act. 25
"§ 131E-193.1. Title. 26
This Article shall be known and may be cited as the "Essential Rural Health Services 27
Protection Act." 28
"§ 131E-193.3. Definitions. 29
The following definitions apply in this Article: 30
(1) Department. – The Department of Health and Human Services. 31
(2) Essential rural health services. – Any of the following services when provided 32
in a rural county or when reasonably necessary to maintain access for residents 33
of a rural county: 34
a. Emergency services. 35
b. Obstetrical services, including labor and delivery. 36
c. Inpatient services. 37
d. Surgical services necessary for emergency st abilization or urgent 38
intervention. 39
e. Behavioral health services, including inpatient psychiatric services. 40
f. Dialysis services. 41
g. Diagnostic imaging or laboratory services necessary for emergency 42
diagnosis or treatment. 43
h. Primary care services, if the Department determines that loss or 44
material reduction of the service would likely leave a rural county 45
without reasonable local access. 46
i. Any other service designated by the Department by rule s adopted 47
pursuant to this Article as essential to preserving access to care in rural 48
counties. 49
General Assembly Of North Carolina Session 2025
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(3) Essential rural provider. – A hospital, facility, practice, clinic, or other 1
provider located in a rural county, or regularly serving residents of a rural 2
county, that provides one or more essential rural health services. 3
(4) Material change. – Any of the following: 4
a. The closure of an essential rural health service. 5
b. A reduction in the hours, staffing, call coverage, bed capacity, 6
operating capacity, or service capability of an essential rural health 7
service that is reasonably likely to materially reduce access for 8
residents of a rural county. 9
c. The relocation of an essential rural health service in a manner 10
reasonably likely to materially reduce access for residents of a rural 11
county. 12
d. A change in ownership, control, governance, management, operations, 13
or contracting that is reasonably likely to materially reduce access to 14
an essential rural health service for residents of a rural county. 15
e. The opening or expansion of a service, facility, practice, or line of 16
business that is reasonably likely to materially impair (i) the ability of 17
an essential rural provider to maintain one or more essential rural 18
health services in a rural county or (ii) the fi nancial viability of an 19
essential rural provider. 20
(5) Person. – An individual, corporation, limited liability company, partnership, 21
hospital authority, unit of local government, or any other legal entity. 22
(6) Rural county. – A county with a population density of 250 or fewer persons 23
per square mile, using the most rece nt data published by the Office of State 24
Budget and Management. 25
"§ 131E -193.5. Notice required for material changes affecting essential rural health 26
services. 27
(a) A person shall not implement a material change affecting essential rural health 28
services unless the person provides written notice to the Department at least 120 days before the 29
proposed effective date of the material change. 30
(b) Notice under this section shall also be provided to any known essential rural provider 31
reasonably likely to be mate rially affected by the proposed change. The notice shall include all 32
of the following: 33
(1) A description of the proposed material change. 34
(2) The proposed effective date. 35
(3) The service area affected by the proposed material change. 36
(4) The essential rural health services affected. 37
(5) The reason for the proposed material change. 38
(6) The projected effect of the proposed material change on service availability, 39
staffing, hours, bed capacity, call coverage, patient travel time, payor mix, and 40
service to Medi caid recipients, uninsured persons, and underserved 41
populations. 42
(7) Any management, services, affiliation, referral, transfer, payor , contracting, 43
or other operational arrangement reasonably likely to affect access to care in 44
a rural county. 45
(8) Any other information required by the Department to evaluate the proposed 46
material change under this Article. 47
"§ 131E-193.7. Review process. 48
(a) Upon receipt of a notice that is determined by the Department to meet the 49
requirements of G.S. 131E-193.5, the Department shall evaluate whether the proposed material 50
change is reasonably likely to do one or more of the following: 51
General Assembly Of North Carolina Session 2025
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(1) Materially reduce access to an essential rural health service for residents of a 1
rural county. 2
(2) Result in the closure, conversion, relocation, or reduction of hours or capacity 3
of an essential rural health service. 4
(3) Reduce the availability of emergency services, obstetrical services, behavioral 5
health services, primary care, inpatient services, or other essential rural health 6
services in a rural county. 7
(4) Change staffing, call coverage, on -call specialty availability, or service 8
capability in a manner that materially impairs timely access to clinically 9
appropriate care. 10
(5) Materially impair the financial viability of a n essenti al rural provider in a 11
manner likely to jeopardize continued access to one or more essential rural 12
health services. In evaluating whether this condition has been satisfied, the 13
Department may consider whether the change is reasonably likely to remove 14
or divert profitable or commercially sustainable service lines, patient volume, 15
or payor mix necessary to support essential rural health services. 16
(6) Increase patient travel times or care delays beyond levels reasonably 17
consistent with maintaining meaningful rural access. 18
(7) Create or worsen discriminatory admission, transfer, referral, staffing, or 19
contracting practices that shift disproportionate burdens to essential r ural 20
providers. 21
(b) In conducting its review under this section, both of the following apply: 22
(1) The Department shall consider the totality of the circumstances, including 23
current service availability, travel times, payor mix, levels of uncompensated 24
care, workforce availability, service interdependence, community health 25
needs, and whether a r easonable substitute for the affected service exists 26
within the affected service area. 27
(2) The Department shall determine if public input as specified by 28
G.S. 131E-193.13 is necessary to complete its evaluation of the proposed 29
material change. Upon a determination that public input is necessary, the 30
Department shall conduct it within the time period specified by 31
G.S. 131E-193.11. 32
"§ 131E-193.9. Rural financial viability review. 33
(a) The Department shall adopt rules establishing one or more financial viability 34
thresholds for essential rural providers. 35
(b) If an essential rural provider falls below any of the thresholds established by the rules 36
adopted under subsection (a) of this section, the Department shall initiate a rural financial 37
viability review. The rural financial viability review shall include an assessment of w hether 38
recent or proposed market entry, service expansion, referral patterns, contracting arrangements, 39
payor shifts, or other conduct is reasonably likely to contribute to the essential rural provider 's 40
financial distress in a manner that jeopardizes continued access to essential rural health services. 41
(c) If the Department finds that continued access to essential rural health services is 42
reasonably likely to be materially i mpaired as a result of an essential rural provider's financial 43
viability status , the Department may impose reporting requireme nts on the essential rural 44
provider, impose a mitigation plan as provided by G.S. 131E-193.11, or take other enforcement 45
action authorized by this Article. 46
"§ 131E-193.11. Determinations; mitigation plans; extensions of time. 47
(a) Within 60 days after determining that a notice meets the requirements of 48
G.S. 131E-193.5, the Department shall do one of the following: 49
(1) Issue a written notice that no further action is required by the Department. 50
General Assembly Of North Carolina Session 2025
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(2) Approve the proposed material change subject to a mitigation plan that 1
satisfies the criteria specified in subsection (b) of this section. 2
(3) Issue a written determination prohibiting the proposed material change if the 3
Department finds that , even with a mitigation plan, (i) essential rural health 4
services would not be adequately protected in the affected service area or (ii) 5
the proposed material change is reasonably likely to materially destabilize the 6
financial viability of an essential rural provider. 7
(b) A mitigation plan may include one or more of the following: 8
(1) A requirement to maintain specified service lin es, service levels, staffing 9
levels, call coverage, or operating hours for a defined period. 10
(2) A requirement to phase in the proposed material change over time. 11
(3) A requirement to maintain Medicaid participation. 12
(4) A requirement to maintain a financi al assistance policy for uninsured and 13
underinsured patients. 14
(5) Transfer, referral, and admission protections, including nondiscriminatory 15
clinical criteria. 16
(6) Reporting and monitoring requirements. 17
(7) Community engagement, patient notice, or coordination requirements. 18
(8) Other conditions reasonably necessary to prevent material impairment of 19
access to essential rural health services. 20
(c) The Department may extend the period of time for making a determination under 21
subsection (a) of this section by not more than 30 additional days with written notice to the person 22
that submitted notice under G.S. 131E-193.5 on the grounds that public input as specified by 23
G.S. 131E-193.13 is necessary or that additional information is reasonably necessary to complete 24
the review, or both. 25
(d) A person shall not implement a material change while a review is pending under this 26
Article. 27
"§ 131E-193.13. Public input. 28
For any proposed material change that (i) involves a hospital or a hospital authority or (ii) is 29
reasonably likely to materially affect essential rural health services in a rural county, the 30
Department shall provide an opportunity for public comment and may conduct one or more 31
public hearings or public meetings in the affected service area. The Department shall adopt rules 32
establishing procedures for public comment periods, public hearings, and public meetings under 33
this section. 34
"§ 131E-193.15. Prohibited conduct. 35
No person subject to this Article shall do any of the following: 36
(1) Engage in any pattern or practice of admission, transfer, referral, staffing, 37
contracting, or operational behavior that has the purpose or effect of materially 38
undermining an essential rural provider's ability to maintain essential rural 39
health services. 40
(2) Selectively retain lower-acuity or better -insured patients, or shift 41
disproportionate numbers of higher -acuity, uninsured, underinsured, or 42
Medicaid patients, in a manner reasonably likely to materia lly destabilize 43
access to essential rural health services in a rural county. 44
(3) Knowingly fail to provide the notice required under G.S. 131E-193.5. 45
(4) Knowingly submit materially false information to the Department. 46
"§ 131E-193.17. Reporting requirements. 47
(a) Any person subject to a mitigation plan under this Article shall file annual reports 48
with the Department for the period specified by the Department, not to exceed five years, 49
regarding compliance with the mitigation plan and the continuin g availability of affected 50
essential rural health services. 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 21
(b) The Department shall report annually by November 1 to the Joint Legislative 1
Oversight Committee on Health and Human Services and the Fiscal Research Division regarding 2
all notices received und er this Article, determinations made, mitigation plans required, 3
enforcement actions taken, and observed effects on rural access to essential health services. 4
"§ 131E-193.19. Enforcement. 5
(a) The Department may assess a civil penalty not to exceed ten thousand dollars 6
($10,000) per day for each violation of this Article, each violation of an order issued by the 7
Department under this Article , and each violation of a mitigation plan implemented b y the 8
Department under this Article. The clear proceeds of civil money penalties imposed pursuant to 9
this section shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with 10
G.S. 115C-457.2. 11
(b) The Department may seek injunctive relief in Wake County Superior Court or in the 12
superior court of any county affected by the violation to enforce this Article, to prevent 13
implementation of a prohibited material change, or to enforce any mitigation plan or order issued 14
under this Article. 15
(c) The remedies provided in this Article are cumulative and do not limit any other 16
remedy available under law. 17
"§ 131E-193.21. Rules. 18
In addition to the rules expressly authorized by this Article, t he Department may adopt any 19
other rules that are necessary to implement this Article." 20
SECTION 11B.2.(a) The first report under G.S. 131E-193.17 is due by November 21
1, 2027. 22
SECTION 11B.2.(b) This Part becomes effective January 1, 2027, and applies to 23
material changes affecting essential rural health services propos ed, announced, or implemented 24
on or after that date. As used in this section, the term "material change" has the same meaning as 25
in G.S. 131E-193.3, as enacted by Section 11B.1 of this Part. 26
27
PART XII. UPDATED HE ALTH INSURER PRIOR A UTHORIZATION 28
REQUIREMENTS 29
SECTION 12.1.(a) G.S. 58-50-61 reads as rewritten: 30
"§ 58-50-61. Utilization review. 31
(a) Definitions. – As used The following definitions apply in this section, in 32
G.S. 58-50-62, and in Part 4 of this Article, the term:Article: 33
… 34
(2a) "Course of treatment" means a prescribed order or ordered treatment protocol 35
for a specific covered person with a specific condition that is outlined and 36
decided upon ahead of time with the covered person and health care provider 37
and approved by the insurer or utiliz ation review organization when 38
prospective review is applicable. 39
… 40
(8) "Health care provider" means any person who is licensed, registered, or 41
certified under Chapter 90 of the General Statutes or the laws of another state 42
to provide health care services i n the ordinary care of business or practice or 43
a profession or in an approved education or training program; a health care 44
facility as defined in G.S. 131E-176(9b) or the laws of another state to operate 45
as a health care facility; or a pharmacy .has the sam e meaning as in 46
G.S. 90-410. 47
… 48
(14a) "Prior auth orization" means the process by which insurers and UROs 49
determine coverage on the basis of medical necessity and/or covered benefits 50
prior to the rendering of those services. 51
General Assembly Of North Carolina Session 2025
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… 1
(16a) "Urgent health care service" means a health care service, including mental and 2
behavioral health care services and dental care services, with respect to which 3
the application of the time periods for making an urgent care determination 4
that, in the opinion of a health care provider with knowledge of the covered 5
person's medical condition, meets either of the following criteria: 6
a. Could seriously jeopardize the life or health of the covered person or 7
the ability of the covered person to regain maximum function. 8
b. Would subject the covered person to severe pain that cannot be 9
adequately managed without the care or treatment that is the subject 10
of the utilization review. 11
… 12
(c) Scope and Content of Program. – Every insurer shall prepare and maintain a 13
utilization revi ew program document that describes all delegated and nondelegated review 14
functions for covered services including:including all of the following: 15
(1) Procedures to evaluate the clinical necessity, appropriateness, efficacy, or 16
efficiency of health care services. 17
… 18
(d) Program Operations. Clinical Review Criteria, Generally. – In every utilization 19
review program, an insurer or URO shall use documented clinical review criteria that are based 20
on sound clinical evidence and that are periodically evaluated to as sure ongoing efficacy. An 21
insurer may develop its own clinical review criteria or purchase or license clinical review criteria. 22
(d1) Clinical Review Criteria, Substance Use Treatment. – Criteria for determining when 23
a patient needs to be placed in a substance abuse treatment program shall be either (i) the 24
diagnostic criteria contained in the most recent revision of the American Society of Addiction 25
Medicine Patient Placement Criteria for the Treatment of Substance -Related Disorders or (ii) 26
criteria adopted by the insurer or its URO. The Department, in consultation with the Department 27
of Health and Human Services, may require proof of compliance with this subsection by a plan 28
an insurer or its URO. 29
(d2) Administration of Program. – All of the following shall apply in the administration of 30
a utilization review program under this section: 31
(1) Qualified health care professionals shall administer the utilization review 32
program and oversee review decisions for h ealth care services under the 33
direction of a medical doctor. A medical doctor licensed to practice medicine 34
in this State shall evaluate the clinical appropriateness of noncertifications. 35
noncertifications under this subdivision. 36
(2) Compensation to persons involved in utilization review shall not contain any 37
direct or indirect incentives for them to make any particular review decisions. 38
(3) Compensation to utilization reviewers shall not be directly or indirectly based 39
on the number or type of noncertifications they render. 40
(4) In issuing a utilization review decision, an insurer or its URO shall: obtain all 41
information required to make the decision, including pertinent clinical 42
information; employ a process to ensure that utilization reviewers apply 43
clinical review criteria consistently; and issue the decision in a timely manner 44
pursuant to this section. 45
… 46
(f) Time Lines for Prospective and Concurrent Reviews. Utilization Reviews Based 47
Upon Type of Health Care Service. – As used in this subsection, the term "necessary information" 48
includes the results of any patient examination, clinical evaluation, or second opinion that may 49
be required. Prospective and concurrent determinations shall be communicated to The time line 50
for completion of a prospective or concurrent utilization review is as follows: 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 23
(1) Non-urgent health care services. – If an insurer requires a prior authorization 1
review of a health care service, then the insurer or its URO shall both (i) render 2
a prior authorization review determination or noncertification and (ii) notify 3
the covered person and the covered person's provider within three business 4
days after the insurer obtains all necessary information about the admission, 5
procedure, or health care service. to make the prior authorization review 6
determination or noncertification. 7
(2) Urgent health care services. – An insurer or its URO shall both (i) render a 8
utilization review determination or noncertification concerning urgent health 9
care services and (ii) notify the covered person and the covered person 's 10
provider of that utilization review determination or noncertification not later 11
than 24 hours after receiving all necessary information needed to complete the 12
review of the requested services. If the covered person 's provider and the 13
insurer, or the insurer's URO, do not both have access to the electronic health 14
records of the co vered person, then this subdivision shall not apply and the 15
utilization review will be subject to the time line under subdivision (1) of this 16
subsection. 17
(f1) Prior Authorization Determination Notifications. – If an insurer or its URO certifies 18
a health care service, the insurer shall notify notification shall be sent to the covered person's 19
provider. For If an insurer or its URO issues a noncertification, the insurer shall notify the covered 20
person's provider and send then written or electronic confirmation of the noncertification that is 21
in compliance with subsection (h) of this section shall be sent to the covered person's provider 22
and the covered person. In 23
(f2) Concurrent Review Liability. – For concurrent reviews, the insurer shall remain liable 24
for health care services until the covered person has been notified of the noncertification. 25
… 26
(i) Requests for Informal Reconsideration. – An insurer may establish procedures for 27
informal reconsideration of noncertifications and, if established, the procedures shall be in 28
writing. After a written notice of noncertification has been issued in accordance with subsection 29
(h) of this section, then the reconsideration shall be conducted between the covered person's 30
provider and a medical doctor licensed to practice medicine in this State designated by the 31
insurer. An insurer shall not require a covered person to participate in an informal reconsideration 32
before the covered person may appeal a noncertification under subsection (j) of this section. If, 33
after informal reconsideration, the insurer upholds the noncertification decision, then the insurer 34
shall issue a new notice in accordance with subsection (h) of this section. If the insurer is unable 35
to render an informal reconsideration decision within 10 business days after the date of receipt 36
of the request for an informal reconsideration, it the insurer shall treat the request for informal 37
reconsideration as a request for an appeal; provided that appeal and the requirements of 38
subsection (k) of this section for acknowledging the request shall apply beginning on the day the 39
insurer determines an informal reconsideration decision cannot be made before the tenth business 40
day after receipt of the request for an informal reconsideration. 41
(j) Appeals of Noncertifications. – Every insurer shall have written procedures for 42
appeals of noncertifications by covered person s or their providers acting on their behalves, 43
including expedited review to address a situation where the time frames for the standard review 44
procedures set forth in this section would reasonably appear to seriously jeopardize the life or 45
health of a covered person or jeopardize the covered person's ability to regain maximum function. 46
Each appeal shall be evaluated by a medical doctor licensed to practice medicine in this State 47
who was not involved in the noncertification. meet the requirements of subsectio n (j1) of this 48
section. 49
(j1) Requirements Applicable to Appeals Reviews. – All of the following requirement s 50
apply to an appeals review: 51
General Assembly Of North Carolina Session 2025
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(1) Except as otherwise provided, all appeals shall be reviewed by a licensed 1
physician who meets all of the following criteria: 2
a. Possesses a current and valid non -restricted license to practice 3
medicine in any United States jurisdiction. 4
b. Has practiced for a period of at least three consecutive years in the 5
same or similar specialty as a licensed physician who typically 6
manages the medical condition or disease for which prior 7
authorization review is required or whose training and exp erience 8
meets all of the following criteria: 9
1. Includes treatment of the same condition as the condition of 10
the covered person. 11
2. Includes treatment of complications that may result from the 12
service or procedure that is the subject of the appeal. 13
3. Is sufficient for the licensed physician to determine if t he 14
service or procedure is medically necessary or clinically 15
appropriate. 16
c. Had no direct involvement in making the prior adverse determination 17
or noncertification that is the subject of the appeal. 18
d. Has no financial interest, or other conflict of interest, in the outcome 19
of the appeal. 20
(2) Appeals initiated by a licensed mental health professional for a service 21
provided by a licensed mental health professional may be reviewed by a 22
licensed mental health professional rather than a licensed physician. The 23
requirements of subdivision (1) of this subsection shall apply to the reviewing 24
licensed mental health professional in the same manner that they apply to a 25
licensed physician. 26
(3) The licensed physician or licensed mental health professional shall consider 27
all known clinical aspects of the health care service under review, includi ng 28
all pertinent medical records and any medical literature that have been 29
provided by the covered person's provider or by a health care facility. 30
… 31
(l) Expedited Appeals. – An expedited appeal of a noncertification may be requested by 32
a covered person or his or her the provider acting on the covered person's behalf only when a 33
nonexpedited appeal would reasonably appear to seriously jeopardize the life or health of a 34
covered person or jeopardize the covered person's ability to regain maximum function. All of the 35
following apply to expedited appeals: 36
(1) The insurer may require documentation of the medical justification for the 37
expedited appeal.The 38
(2) For expedited appeals related to health care services , the review shall be 39
provided by the insurer shall, in consultation with a medical doctor licensed 40
to practice medicine in this State, provide expedited review, and the State. 41
(3) The insurer or its URO shall communicate its the expedited appeal decision 42
in writing to the covered person and his or her the covered person's provider 43
as soon as possible, but not later than four days after receiving the information 44
justifying expedited review. The written decision shall contain the provisions 45
specified in subsection (k) of this section. 46
(4) If the expedited review is a concurrent review determination, then the insurer 47
shall remain liable for the coverage of the applicable health care services until 48
the covered person has been notified of the determination. 49
(5) An insurer is not required to provide an expedited r eview for retrospective 50
noncertifications. 51
General Assembly Of North Carolina Session 2025
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(m) Disclosure of Utilization Review Requirements. – All of the following apply to an 1
insurer's responsibility to disclose any utilization review procedures: 2
(1) Coverage and member handbook. – In the certificate of coverage and member 3
handbook provided to covered persons, an insurer shall include a clear and 4
comprehensive description of its utilization review procedures, including the 5
procedures for appealing noncertifications and a statement of the rights and 6
responsibilities of covered persons, including the voluntary nature of the 7
appeal process, with respect to those procedures. An insurer shall also include 8
in the certificate of coverage and the member handbook information about the 9
availability of assistance from the Department's Health Insurance Smart NC, 10
including the telephone number and address of the Program. program. 11
(2) Prospective materials. – An insurer shall include a summary of its utilization 12
review procedures in materials intended for prospective covered persons. 13
(3) Membership cards. – An insurer shall print on its membership cards a toll-free 14
telephone number to call for utilization review purposes. 15
(4) Website. – An insurer shall make any current prior authorization requirements 16
and restrictions readily accessible on its website. 17
(m1) Changes to Prior Authorization. – If an insurer intends either to implement a new 18
prior authorization review requirement or restriction or to amend an existing requirement or 19
restriction, then the new or amended requirement shall not be in effect unless and until the 20
insurer's website has been updated to reflect the new or amended requirement or restriction. A 21
claim shall not be denied for failure to obtain a prior authorization if the prio r authorization 22
requirement or amended requirement was not in effect on the date of service of the claim. 23
… 24
(n1) Prior Authorization Determination Validity. – All of the following apply to the length 25
of time an approved prior authorization shall remain valid under certain circumstances: 26
(1) If a covered person enrolls in a new health benefit plan offered by the same 27
insurer under which the prior authorization was approved, then the previously 28
approved prior authorization remains valid for the initial 90 days of coverage 29
under the new health benefit plan. This section does not require coverage of a 30
service if it is not a covered service under the new health benefit plan. 31
(2) If a health care service , other than for in -patient care, requires prior 32
authorization and is for the treatment of a covered person's chronic condition, 33
then the prior authorization shall remain valid for no less than six months from 34
the date the health care provider receives notification of the prior authorization 35
approval. 36
(o) Violation. – A In accordance with this Chapter, a violation of this section subjects an 37
insurer and an agent of the insurer to G.S. 58-2-70. 38
(p) Federal Rule Alignment. – No later than January 1, 2028, an insurer offering a health 39
benefit plan or a utilization review agent acting on behalf of an insurer offering a health benefit 40
plan shall implement and maintain a prior authorization application programming interface 41
meeting the requirements under 45 C.F.R. § 156.223(b) as it existed on January 1, 2025. 42
(q) Reserved for future codification purposes. 43
(r) Reserved for future codification purposes. 44
(s) Artificial Intelligence. – An artificial intelligence-based algorithm shall not be used 45
as the sole basis to deny a utilization review determination." 46
SECTION 12.1.(b) In accordance with G.S. 135-48.24(b) and G.S. 135-48.30(a)(7), 47
which require the State Treasurer to implement procedures that are substantially similar to the 48
provisions of G.S. 58-50-61 for the North Carolina State Health Plan for Teachers and S tate 49
Employees (State Health Plan), the State Treasurer and the Executive Administrator of the State 50
Health Plan shall review all practices of the State Health Plan and all contracts with, and practices 51
General Assembly Of North Carolina Session 2025
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of, any third party conducting any utilization review on behalf of the State Health Plan to ensure 1
compliance with subsection (a) of this section no later than the start of the next plan year. 2
SECTION 12.1.(c) G.S. 58-50-75(b) reads as rewritten: 3
"(b) This Part applies to all insurers that offer a health be nefit plan and that provide or 4
perform utilization review pursuant to G.S. 58-50-61, the State Health Plan for Teachers and 5
State Employees, G.S. 58-50-61 and any optional plans or programs operating under Part 2 of 6
Article 3A of Chapter 135 of the General Statutes. With respect to second-level grievance review 7
decisions, this Part applies only to second -level grievance review decisions involving 8
noncertification decisions." 9
SECTION 12.1.(d) G.S. 90-21.52(c)(1) reads as rewritten: 10
"(1) The liability of the managed care entity is based on an administrative decision 11
to approve or disapprove payment or reimbursement for, or denial, reduction, 12
or termination of coverage, for a health care service and the physician 13
organizations, health care providers, or entiti es wholly owned by physicians 14
or health care providers or any combination thereof, which have made the 15
decision at issue, have agreed explicitly, in a written addendum or agreement 16
separate from the managed care organization's standard professional service 17
agreement, to assume responsibility for making noncertification decisions 18
decisions, as defined under G.S. 58-50-61(13) G.S. 58-50-61, with respect to 19
certain insureds or enrollees; and" 20
SECTION 12.1.(e) Subsection (a) of this section becomes effective October 1, 2026, 21
and applies to insurance contracts, including contracts with utilization review organizations, 22
issued, renewed, or amended on or after that date. The remainder of this section is effective when 23
it becomes law. 24
25
PART XIII. PRESERVAT ION OF COMPETITION I N HEALTHCARE BY 26
REGULATING THE CONSOLIDATION AND CONVEYANCE OF HOSPITALS 27
SECTION 13.1.(a) Chapter 131E of the General Statutes is amended by adding a 28
new Article to read: 29
"Article 11D. 30
"Preserving Competition in Healthcare Act. 31
"§ 131E-214.60. Definitions. 32
The following definitions apply in this Article: 33
(1) Acquiring entity. – The person or entity that gains ownership or control of a 34
hospital entity as a result of a transaction subject to review under this Article. 35
(2) Attorney General. – The Attorney General or any employee of the Department 36
of Justice designated by the Attorney General. 37
(3) Hospital entity. – Any corporation or governmental entity licensed as a 38
hospital under Article 5 of this Chapter, including any entity affiliated with 39
such corporation or governmental entity through ownership, governance, or 40
membership, such as a holding company or subsidiary. 41
(4) Person. – Any individual, partnership, trust, estate, corporation, association, 42
joint venture, joint stock company, or other organization. 43
(5) State Auditor. – The State Auditor or any employee of the Office of the State 44
Auditor designated by the State Auditor. 45
(6) State Treasurer. – The State Treasurer or any employee of the Office of the 46
State Treasurer designated by the State Treasurer. 47
(7) Transaction. – Includes all of the following, if the value of the assets, control, 48
or governance interest equals or exceeds five million dollars ($5,000,000): 49
a. The sale, transfer, lease, exchange, optioning, conveyance , or other 50
disposition of no less than fifty percent (50%) of the assets or 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 27
operations of any hospital entity to an y person or entity other than 1
another hospital entit y that controls, is controlled by , or is under 2
common control with such hospital entity. 3
b. The transfer of control or governance of a hospital entity to a person 4
or entity other than another hospital entity that controls, is controlled 5
by, or is under common control with such hospital entity. 6
c. Any binding legal obligation between two or more persons that results 7
in a transfer of control, responsibility, or governance of no less than 8
fifty percent (50%) of a hospital entity's assets to an acquiring entity. 9
d. Any transaction regardless of exact form that, if structured as a 10
purchase, merger, or joint venture, would be subject to review under 11
this Article. 12
e. Any transaction described in sub -subdivisions a. through d. of this 13
subdivision that is entered into by a hospital entity or by any person or 14
entity that controls, is controlled by, or is under common control with 15
such hospital entity. 16
f. All sales, transfers, conveyances, or other dispositions of no less than 17
fifty percent (50%) of a hospital entity's assets made in the course of a 18
bankruptcy proceeding. 19
"§ 131E-214.61. Actions and decisions by the State Auditor, Attorney General, and State 20
Treasurer. 21
Whenever an action or decision is required by the State Auditor, the Attorney General, and 22
the State Treasure r under this Article, they shall act or decide together and the opinion of the 23
majority shall prevail. 24
"§ 131E-214.62. Applicability; waived transactions. 25
This Article does not apply to a hospital entity if (i) the transaction is in the usual and regular 26
course of its activities and (ii) the State Auditor, Attorney General, and State Treasurer have 27
provided to the hospital entity a written waiver of this Article with respect to the transaction. A 28
determination by the State Auditor, Attorney General, and State Treasurer that a transaction 29
merits review under this Article shall be the final decision of the State and shall not be set aside 30
on judicial review unless found to be arbitrary and capricious. 31
"§ 131E-214.64. Written notice and certification requirements for proposed transactions; 32
rules. 33
(a) Prior to entering into any transaction subject to review under this Article, a hospital 34
entity shall provide the State Auditor, Attorney General, and State Treasurer with written notice 35
of the proposed transaction. The hospital entity shall simultaneously provide the State Auditor, 36
Attorney General, and State Treasurer with written certification that a copy of this Article in its 37
entirety has been provided to each member of the governing board or board of trustees of the 38
hospital entity. 39
(b) A hospital entity and an acquiring entity may provide the State Auditor, Attorney 40
General, and State Treasurer with a single written notice of a proposed transaction that meets the 41
requirements of this section; provided, however, that the State Auditor, Attorney General, and 42
State Treasurer may require additional information that the State Auditor, Attorney General, and 43
State Treasurer determines is necessary for a complete review of the proposed transaction from 44
any party. 45
(c) The written notice required under this section shall not be come effective until the 46
State Auditor, Attorney General, and State Treasurer have acknowledged receipt of a compl ete 47
notice in accordance with subsection (a) of G.S. 131E-214.66. 48
(d) The State Auditor, Attorney General, and State Treasurer shall adopt rules specifying 49
the required contents of the written notice required by this section and the manner in which the 50
written notice shall be provided to the State Auditor, Attorney General, and State Treasurer in 51
General Assembly Of North Carolina Session 2025
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order to be deemed complete and effective. The rules shall allow for the State Auditor, Attorney 1
General, and State Treasurer , in their discretion, to require additional information about a 2
proposed transaction that is not expressly required in the rules adopted pursuant to this section. 3
"§ 131E-214.66. Time line and process for decision to object or take no action. 4
(a) When the parties to the proposed transaction have provided the State Auditor, 5
Attorney General, and State Treasurer with all the information expressly required by the rules 6
adopted under G.S. 131E-214.64(d), the State Auditor, Attorney General, and State Treasurer 7
shall provide to the hospital entity and acquiring entity written acknowledgement of havi ng 8
received a complete notice that meets the requirements of G.S. 131E-214.64. Written 9
acknowledgement by the State Auditor, Attorney General, and State Treasurer pursuant to this 10
subsection shall constitute the beginning of a 90-day review period. The State Auditor, Attorney 11
General, and State Treasurer shall not unreasonably withhold a determination that the parties 12
have provided a complete notice that meets the requirements of G.S. 131E-214.64. 13
(b) If the State Auditor, Attorney General, and State Treasurer have provided to the 14
hospital entity and acquiring entity written acknowledgement of having received a complete 15
notice that meets the requirements of G.S. 131E-214.64, as required by subsection (a) of this 16
section, a request by the State Auditor, Attorney General, and State Treasurer for additional 17
information not expressly required by the rules adopted und er G.S. 131E-214.64(d) does not 18
delay the commencement of the 60-day review period under subsection (c) of this section. 19
(c) The State Auditor, Attorney General, and State Treasurer have a period of 60 days, 20
commencing on the date they provide written acknowledgement to the hospital entity and 21
acquiring entity of having received a complete notice that meets the requirement s of 22
G.S. 131E-214.64, to review the proposed transaction and notify the hospital entity, in writing, 23
of their decision to either object to the proposed transaction or to take no action regarding the 24
proposed transaction. 25
(d) Upon notice, in writing, to all parties to the transaction, t he State Auditor, Attorney 26
General, and State Treasurer may extend their 60-day review period for up to an additional 30 27
days if the extension is necessary to obtain additional information from one or more of the parties 28
to the transaction or to complete any component of the review process specified in 29
G.S. 131E-214.30 through G.S. 131E-214.76. 30
(e) During the review period, the parties to the proposed transaction are prohibited from 31
consummating the transaction. 32
"§ 131E-214.68. Published written notice of proposed transaction; failure to give notice. 33
(a) Within 10 days after providing the State Auditor, Attorney General, and State 34
Treasurer with written notice of a proposed transaction pursuant to subsection (a) of 35
G.S. 131E-214.64, without regard to whether or not the State Auditor, Attorney General, and 36
State Treasurer have acknowledged receipt of a complete notice, the hospital entity shall give 37
written notice of the proposed transaction by publication in one or more newspapers of general 38
circulation in every county in which (i) there exists a hospital entity whose control or governance 39
would be altered by the proposed transaction or (ii) there resides a substantial number of patients 40
of a hospital entity whose control or governance would be altered by the proposed transaction. 41
The published written notice shall contain the following: 42
(1) A brief restatement of the nature of the transaction, as specified in the written 43
notice provided to the State Auditor, Attorney General, and State Treasurer 44
under G.S. 131E-214.64, which shall include the following: 45
a. The name of the hospital entity. 46
b. The name of the acquiring entity. 47
c. The names of any other parties to the proposed transaction. 48
d. The nature of the proposed transaction. 49
e. The anticipated consideration that will be paid by the acquiring entity. 50
(2) The following statements: 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 29
a. "This notice is provided pursuant to G.S. 131E-214.64." 1
b. "Any interested party wishing to provide written comment s may 2
submit the written comment s directly to the Office of the Attorney 3
General, 114 W. Edenton Street, Raleigh, NC 27603." 4
(3) The time, date, and location of any public hearing required under 5
G.S. 131E-214.30, or the information necessary to access a public hearing 6
using teleconferencing or video-conferencing technology, as permitted under 7
subsection (c) of G.S. 131E-214.30. A public hearing shall not be conducted 8
earlier than 14 days after the publication of a notice pursuant to this section. 9
(4) In the event the hospital entity is a nonprofit or publicly owned entity, a link 10
to a webpage that allows any member of the public to view a detailed summary 11
of the proposed transaction and copies of all transaction al and collateral 12
agreements not otherwise exempt from public disclosure under Chapter 132 13
of the General Statutes or G.S. 131E-97.3. 14
(b) A failure by the hospit al entity giving notice under G.S. 131E-214.64 to provide a 15
published written notice as required by subsection (a) of this section shall be a sufficient ground 16
for the State Auditor, Attorney General, and State Treasurer to object to the proposed transaction. 17
(c) This section does not apply to a sale, transfer, conveyance, o r other disposition of a 18
substantial portion of a hospital entity's assets made in the course of a bankruptcy proceeding. 19
"§ 131E-214.70. Public hearing requirements; responsibility for public hearing costs; 20
exemptions and waivers. 21
(a) Within 30 days after providing the State Auditor, Attorney General, and State 22
Treasurer with the written notice required under subsection (a) of G.S. 131E-214.64, without 23
regard to whether or not the State Auditor, Attorney General, and State Treasurer have 24
acknowledged receipt of a complete notice, the hospital entity and the acquiring entity shall 25
conduct one or more public hearings at a convenient time and in a convenient location in a county 26
in which there exists a hospital entity whose control or governance would be altered by the 27
proposed transaction. The public hearing required by this section shall not be conducted earlier 28
than 14 days after publication of the written notice required under G.S. 131E-214.68. 29
(b) At least seven days prior to the date of any public hearing, the hospital entity and the 30
acquiring entity shall give written notice to the State Auditor, Attorney General, and State 31
Treasurer of the time, date, and location of the public hearing. In addition, the hospital entity and 32
the acquiring entity shall give written notice to the governing bodies of both the county and the 33
municipality in which the hospital entity that is the subject of the proposed transaction is located, 34
as applicable. 35
(c) With written notice to, and approval by, the State Auditor, Attorney General, and 36
State Treasurer, the hospital entity and the acquiring entity may conduct a public hearing required 37
by this section via online tele conferencing and video -conferencing technology ; provided, 38
however, that doing so does not meaningfully limit the opportunity for public input concerning 39
the proposed transaction. 40
(d) At a hearing required by this section, the hospital entity and the acquiring entity shall 41
provide the following information: 42
(1) The extent to which the proposed transaction is expected to impact the cost , 43
availability, accessibility, and quality of healthcare services. 44
(2) The process involved in reaching a fair sales price for the hospital entity, 45
including whether any director, officer, agent, or employee of the hospital 46
entity will benefit directly or indirectly from the proposed transaction. 47
(e) At a hearing required by this section, the hospital entity and the acquiring entity may 48
make such presentation s as they deem appropriate and shall provide a meaningful opportunity 49
for public input. The hospital entity and the acquiring entity shall also communicate to attendees 50
how interested parties may provide written comments about the proposed transaction, which shall 51
General Assembly Of North Carolina Session 2025
Page 30 House Bill 1175-First Edition
be identical to the statement required by sub -subdivision (2)b. of subsection (a) of 1
G.S. 131E-214.68. 2
(f) In any transaction in which the hospital entity is a nonprofit or publicly owned entity, 3
the hospital entity and the acquiring entity shall provide information regarding the extent to which 4
the proposed transaction is expected to impact the nonprofit or community benefit activities of 5
the hospital entity, including a description of the resources that will be committed to the nonprofit 6
or community benefit activities after the consummation of the transaction. 7
(g) In addition to any hearing required under this section, the State Auditor, Attorney 8
General, and State Treasurer may conduct a public hearing regarding a proposed transaction. At 9
least seven days prior to the public hearing, t he State Auditor, Attorney General, and State 10
Treasurer shall notify the hospital entity and the acquiring entity of the time, date, and location 11
of any hearing to be conducted by the State Auditor, Attorney General, and State Treasurer or of 12
the information necessary to access a public hearing to be conducted by the State Auditor, 13
Attorney General, and State Treasurer via teleconferencing or video-conferencing technology. 14
At least 14 days prior to the public hearing, t he State Auditor, Attorney General, and State 15
Treasurer shall also give written notice of the hearing by publication in one or more newspapers 16
of general circulation in any county in w hich there exists a hospital entity whose control or 17
governance would be altered by the proposed transaction. At a hearing conducted by the State 18
Auditor, Attorney General, and State Treasurer, the State Auditor, Attorney General, and State 19
Treasurer shall provide a meaningful opportunity for public input that includes opportunities for 20
questions and answers and comments. 21
(h) The parties to the proposed transaction shall pay for all costs associated with the 22
public hearing conducted in accordance with subsection (a) of this section. 23
(i) The provisions of this section do not apply to the sale, transfer, conveyance, or other 24
disposition of a substantial portion of a hospital entity's assets made in the course of a bankruptcy 25
proceeding. 26
"§ 131E-214.72. Required considerations by the State Auditor, Attorney General, and State 27
Treasurer. 28
(a) The State Auditor, Attorney General, and State Treasurer shall consider all of the 29
following criteria in making a decision about any transaction subject to the provisi ons of this 30
Article: 31
(1) Whether the fair market value of any asset to be transferred from the hospital 32
entity to the acquiring entity has been manipulated by the actions of the parties 33
in a manner that causes the fair market value of the asset to decrease. 34
(2) Whether healthcare providers will be offered the opportunity to invest or own 35
an interest in the acquiring entity or a related party, and whether procedures 36
or safeguards are in place to avoid healthcare providers' conflicts of interest 37
with respect to patient referrals. 38
(3) Whether the terms of any management or services contract negotiated in 39
conjunction with the proposed transaction are reasonable. 40
(4) Whether the proposed transaction may have a significant effect on the cost, 41
availability, accessibility, or quality of healthcare services for any affected 42
community. In making this determination, the State Auditor, Attorney 43
General, and State Treasurer shall consider all of the following: 44
a. Whether sufficient safeguards are included to ensure that the affected 45
community will have continued access to affordable healthcare 46
services. 47
b. Whether the proposed transaction creates or has the likelihood of 48
creating an adverse effect on the cost, availability, accessibility, or 49
quality of healthcare services within the affected community. 50
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 31
c. Whether the acquiring entit y has made a commitment to provide (i) 1
free care to individuals whose income is three hundred percent (300%) 2
or less of the federal poverty guidelines , (ii) free or discou nted 3
healthcare to other individuals who are disadvantaged, uninsured, or 4
underinsured, and (iii) other benefits to the affected community to 5
promote improved healthcare. In determining whether the level of 6
commitment by the acquiring entity will have a s ignificant effect on 7
the availability, accessibility, or quality of healthcare services for any 8
affected community if the proposed transaction is approved, the State 9
Auditor, Attorney General, and State Treasurer shall consider the 10
number of programs and activities and the amount of funding 11
dedicated by the acquiring entity, as compared to the hospital entity or 12
their affiliated foundations, to: 13
1. The de livery of healthcare services to individuals who are 14
uninsured or underinsured. 15
2. The delivery of other services or benefits to the affected 16
community to promote improved healthcare. 17
3. Medical education and teaching programs. 18
4. Medical research programs. 19
d. Whether the proposed transaction would result in the revocation of 20
hospital privileges for any healthcare provider. 21
e. Whether sufficient safeguards are included to maintain appropriate 22
capacity for health science research and healthcare provider education. 23
f. Whether the proposed transaction serves the public interest by 24
promoting the availability and accessibility of safe, essential , and 25
quality healthcare services and treatment. 26
(5) Whether the proposed transaction complies with all applicable State and 27
federal laws and regulations, including antitrust laws. 28
(6) Whether the proposed transaction will significantly harm competition in any 29
part of this State among healthcare providers. 30
(7) Whether the State Auditor, Attorney General, and State Treasurer have 31
received all the information required by the rules adopted under 32
G.S. 131E-214.64(d) and timely responses to any additional requests for 33
information necessary to adequately evaluate the proposed transaction; 34
provided, however, that this subdivision shall not be a ground for disapproving 35
the proposed transaction, unless the State Auditor, Attorney General, and State 36
Treasurer ha ve notified the hospital entity and the acquiring entity of any 37
inadequacy of information or data and has provided each with a reasonable 38
opportunity to remedy the inadequacy. 39
(8) Any objection to the transaction raised in comments submitted to the Attorney 40
General. 41
(b) In addition to the considerations specified in subsection (a) of this section, t he State 42
Auditor, Attorney General, and State Treasurer shall also consider all of the following criteria in 43
making a decision about any proposed transaction subject to the provisions of this Article that 44
would alter the control or governance of a tax-exempt or publicly owned hospital entity: 45
(1) Whether the hospital entity would receive fair market value for its charitable 46
assets or social welfare assets . For the purpose of this subdivision, "social 47
welfare assets" means the average yearly monetary value of the benefits the 48
hospital entity provided to the community during the preceding five calendar 49
years. 50
General Assembly Of North Carolina Session 2025
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(2) Whether the proceeds of the proposed transaction would be used in a manner 1
consistent with the trust under which the assets are held by the hospital entity. 2
(3) Whether the proceeds of the proposed transaction would be used by a county 3
or municipality for general or special revenue obligations not expressly 4
provided for when the hospital was established. 5
(4) Whether any proceeds of the proposed transaction would be controlled as 6
funds independently of the acquiring entity or related entities; provided, 7
however, that the proceeds of a proposed transaction may not be returned to 8
any county or municipal government except to the extent necessary to pay 9
lawful obligations to such county or municipal government. 10
(5) Whether the proposed transaction would result in a breach of fiduciary duty, 11
as determined by the Attorney General, including conflicts of interest related 12
to payments or benefits to officers, directors, board members, executives , or 13
experts employed or retained by the parties. 14
(6) Whether the governing body of the hospital entity exercised due diligence in 15
deciding to dispose of the hospital entity 's assets, selecting the acquiring 16
entity, and negotiating the terms and conditions of the disposition. 17
(7) Whether the proposed transaction would result in private inurement to any 18
person. 19
(8) Whether any foundation established to hold the proceeds of the proposed 20
transaction would be broadly based in the community and be representative 21
of the affected community, taking into consideration the structure and 22
governance of the foundation. 23
(c) For any proposed transaction subject to the provisions of this Article that involves a 24
hospital owned by a municipality, as defined in G.S. 131E-6, or a hospital authority, as defined 25
in G.S. 131E-16, the State Auditor, Attorney General, and State Treasurer shall also consider 26
whether the transaction complies with the provisions of Article 2 of this Chapter governing the 27
sale or conveyance of any rights of ownership the municipality or hospital authority has in a 28
hospital entity. 29
"§ 131E-214.74. Reserved for future codification purposes. 30
"§ 131E-214.76. Contract authority for reviewing proposed transactions; assistance from 31
the Department of Health and Human Services; fees to recover costs incurred in 32
conducting reviews. 33
(a) Within the time periods prescribed by G.S. 131E-214.66, the State Auditor, Attorney 34
General, or State Treasurer may do any of the following to assist in the review of a proposed 35
transaction covered by this Article: 36
(1) Contract with, consult, and receive advice from any agency of the State or the 37
United States on such terms and conditions as the State Auditor, Attorney 38
General, and State Treasurer deem appropriate. 39
(2) At the sole discretion of the State Auditor, Attorney General , and State 40
Treasurer, contract with experts or consultants the State Auditor, Attorney 41
General, and State Treasurer deem appropriate to assist them in reviewing the 42
proposed transaction. 43
Notwithstanding the provisions of this subsection, t he State Auditor, Attorney General, and 44
State Treasurer shall not incur contract costs that exceed an amount that is reasonable and 45
necessary for a review of the proposed transaction. 46
(b) In exercising the authority to enter into contracts pursuant to this section, the State 47
Auditor, Attorney General, and State Treasurer are exempt from Article 3 of Chapter 143 of the 48
General Statutes. 49
(c) The State Auditor, Attorney General, and State Treasurer ma y request from the 50
Department of Health and Human Services a report on the anticipated effects of any proposed 51
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 33
transaction on access to, or the pricing of, healthcare services in any part of the State. If the State 1
Auditor, Attorney General, and State Treasurer did not unreasonably delay in requesting such a 2
report, the review period prescribed by G.S. 131E-214.66 may be extended an additional 30 days 3
to allow for the completion of such a report; provided, however, that the total review period for 4
the State Auditor, Attorney General, and State Treasurer may not exceed 180 days from the date 5
they notify the parties to the transaction that they have submitted a complete notice pursuant to 6
subsection (a) of G.S. 131E-214.66. 7
(d) The State Auditor, Attorney General, and State Treasurer may impose upon the 8
acquiring entity a fee of up t o fifty thousand dollars ($50,000) to cover one or more of the 9
following: 10
(1) The cost of all contracts entered into by the State Auditor, Attorney General, 11
and State Treasurer pursuant to subsection (a) of this section. 12
(2) Actual costs incurred by the State Auditor, Attorney General, and State 13
Treasurer in reviewing any proposed transaction under this Article, including 14
(i) costs incurred by the State Auditor, Attorney General, and State Treasurer 15
for conducting a public hearing pursuant to subsections (f) and (g) of 16
G.S. 131E-214.70 and (ii) attorneys' fees at the maximum billing rate used by 17
the Attorney General to bill State agencies for legal services. 18
(3) Actual costs incurred by the Department of Health and Human Services for 19
preparing a report for the State Auditor, Attorney General, and State Treasurer 20
pursuant to subsection ( c) of this section . Upon receipt of this fee from the 21
acquiring entity, the State Auditor, Attorney General, and State Treasurer shall 22
reimburse the Department of Health and Human Services for the actual cost 23
of preparing the report. Reimbursement of these costs shall receive priority 24
over any reimbursement of costs that will ultimately inure to the State Auditor, 25
Attorney General, and State Treasurer. 26
(e) The acquiring entity may object to paying any fee imposed under this section. If the 27
acquiring entity objects, it may seek an order from a court of competent jur isdiction to limit the 28
acquiring entity's liability for the fee. In determining whether to issue an order, the court shall 29
consider the reasonableness of any contract the State Auditor, Attorney General, and State 30
Treasurer entered into with any expert and the cost of contracting with the expert relative to the 31
value of the proposed transaction. If the court declines to enter the acquiring entity 's proposed 32
order, the acquiring entity shall reimburse the State Auditor, Attorney General, and State 33
Treasurer for costs associated with the litigation and such reimbursement shall not count against 34
the maximum allowed fee of fifty thousand dollars ($50,000) specified in subsection (d) of this 35
section. 36
(f) The failure of an acquiring entity to pay to the State Auditor, Attorney General, and 37
State Treasurer any fee authorized by this section by the applicable deadline specified in this 38
subsection shall be sufficient ground s for the State Auditor, Attorney General, and State 39
Treasurer to object to the proposed transaction: 40
(1) Absent an objection by the acquiring entity within seven days after the State 41
Auditor, Attorney General, and State Treasurer impose the fee, the fee is 42
payable to the State Auditor, Attorney General, or State Treasurer within 30 43
days after the date the State Auditor, Attorney General, or State Treasurer 44
imposes the fee. 45
(2) Upon an objection by the acquiring entity within seven days after the State 46
Auditor, Attorney General, and State Treasurer impose the fee, the fee is 47
payable to the State Auditor, Attorney General, and State Treasurer within 30 48
days after the date the court issues an order determining that the acquiring 49
entity is liable for the fee. 50
"§ 131E-214.78. Objection to proposed transaction. 51
General Assembly Of North Carolina Session 2025
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(a) The State Auditor, Attorney General, and State Treasurer may object to any 1
transaction covered by this Article by providing written notice to the parties within the time frame 2
prescribed by G.S. 131E-214.66. 3
(b) If the State Auditor, Attorney General, and State Treasurer object to the transaction, 4
the State Auditor, Attorney General, and State Treasurer shall file an action in either (i) the 5
superior court of any county in which there exists a hospital entity whose control or governance 6
would be altered by the proposed transaction or (ii) the superior court of the county in which the 7
acquiring entity's principal place of business is located, if located within the State. The State 8
Auditor, Attorney General, State Treasurer and the parties to a transaction may mutually agree , 9
in writing, to extend the time period in which the State Auditor, Attorney General, and State 10
Treasurer may file such an action. If the time period for the State Auditor, Attorney General, and 11
State Treasurer to file an action objecting to the transaction is extended by mutual agreement 12
under this subsection, the parties to the transaction are prohibited from consummating the 13
transaction during that time. 14
(c) If the hospital entity is a nonprofit or publicly owned entity: 15
(1) The State Auditor, Attorney General, and State Treasurer shall file an action 16
in the name of the State seeking injunctive relief to restrain the parties from 17
taking further action to consummate the transaction or to compel the parties 18
to modify the transaction . The court may issue an order granting such 19
injunctive relief. 20
(2) The State Auditor, Attorney General, and State Treasurer may apply to the 21
court for temporary or preliminary injunctive relief pending a final 22
determination of the case. 23
(3) The State Auditor, Attorney General, and State Treasurer shall name as 24
defendants the hospital entity, the governing body of the hospital entity, and 25
the acquiring entity. Additionally, if the State Auditor, Attorney General, and 26
State Treasurer allege a breach of fiduciary duty by an individual director or 27
officer of the hospital entity, the State Auditor, Attorney General, and State 28
Treasurer may name such director or officer as a defendant. 29
(4) In any action brought pursuant to this subsection, the State Auditor, Attorney 30
General, and State Treasurer bear the burden of establishing by clear and 31
convincing evidence one of the following: 32
a. A breach of fiduciary duty occurred in the negotiation of the 33
transaction and consummation of the transaction wou ld result in a 34
breach of fiduciary duty. 35
b. The assets of the hospital entity dedicated to charitable purposes prior 36
to the trans action would not continue to be dedicated to the same or 37
equivalent charitable purposes following consummation of the 38
transaction. 39
c. Consummation of the transaction would have significant and 40
deleterious effects on the cost, availability, accessibility, and quality 41
of healthcare in the State or any portion of the State, and the negative 42
consequences of the transaction would outweigh any potential 43
benefits. In assessing the disadvantages attributable to a re duction in 44
competition likely to result from consummation of the transaction, the 45
court may rely upon determinations by federal court s and North 46
Carolina courts concerning unreasonable restraint of trade and 47
antitrust violations. 48
(5) In determining whether the State Auditor, Attorney General, and State 49
Treasurer ha ve met the burden of proof under subdivision (4) of this 50
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 35
subsection, the court should consider evidence of any of the applicable criteria 1
listed in G.S. 131E-214.72. 2
(6) The court may issue a decision approving the transaction, approving the 3
transaction subject to modification, or disapproving the transaction. Any party 4
may appeal a decision of the court approving the transaction subject to 5
modification, except the State Auditor, Attorney General, and State Treasurer 6
shall not appeal a decision of the court approving the transaction subject to the 7
same modifications initially sought by the State Auditor, Attorney General, 8
and State Treasurer. 9
(d) If the hospital entity is a for-profit entity: 10
(1) The State Auditor, Attorney General, and State Treasurer shall file an action 11
in the name of the State seeking injunctive relief to restrain the parties from 12
taking further action to consummate the transaction . The court may issue an 13
order granting such injunctive relief. 14
(2) The State Auditor, Attorney General, and State Treasurer may apply to the 15
court for temporary or preliminary injunctive relief pending final disposition 16
of the case. 17
(3) The State Auditor, Attorney General, and State Treasurer shall name as 18
defendants the hospital entity and the acquiring entity. 19
(4) In any action brought pursuant to this subsection, the State Auditor, Attorney 20
General, and State Treasurer shall have the burden of establishing by clear and 21
convincing evidence that co nsummation of the transaction would have 22
significant and deleterious effects on cost, availability, accessibility, and 23
quality of healthcare in the State or any portion of the State and that the 24
negative consequences of such a transaction outweigh any potential benefits. 25
In assessing disadvantages attributable to a reduction in competition likely to 26
result from consummation of the transaction, the court may rely upon 27
determinations by federal courts and North Carolina courts concerning 28
unreasonable restraint of trade and antitrust violations. 29
(5) In determining whether the State Auditor, Attorney General, and State 30
Treasurer ha ve met the burden of proof under subdivision (4) of this 31
subsection, the court should consider evidence of any of the applicable criteria 32
listed in G.S. 131E-214.72. 33
(6) The court may issue a final determination approving the transaction, 34
approving the transaction subject to modification, or disapproving the 35
transaction. Any party may appeal a decision of the court approving the 36
transaction subject to modification, except the State Auditor, Attorney 37
General, and State Treasurer shall not appeal a decision of the court approving 38
the transaction subject to the same modification the State Auditor, Attorney 39
General, and State Treasurer initially sought. 40
(e) Any party to a transaction that is subject to review under th is Article may decline to 41
enter into a transaction that has been modified by order of the court upon a final determination. 42
However, if the parties agree to enter into a transaction that has been modified by order of the 43
court upon a final determination , then the modified transaction shall not be subject to renewed 44
objection from the State Auditor, Attorney General, and State Treasurer. 45
"§ 131E-214.80. Post-transaction reporting; authorization to file further action. 46
(a) Following a decision by the State Auditor, Attorney General, and State Treasurer not 47
to object to a transaction subject to review under this Article, or following a final de cision in a 48
judicial proceeding brought pursuant to G.S. 131E-214.78, the acquiring entity shall submit to 49
the State Auditor, Attorney General, and State Treasurer an annual report on the acquiring entity's 50
compliance with the terms of the purchase agreement for the transaction, including any 51
General Assembly Of North Carolina Session 2025
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representations made to, or modifications made by, the State Auditor, Attorney General, and 1
State Treasurer . The State Auditor, Attorney General, and State Treasurer shall adopt rules 2
specifying the required contents of the annual report required by this subsection. 3
(b) If the hospital entity that is a party to the transaction is a nonprofit or publicly owned 4
entity, the acquiring entity or any foundation or charitable trust established pursuant to the 5
transaction shall, in addition to submitting the annual report required by subsection (a) of this 6
section, report annually to the State Auditor, Attorney General, and State Treasurer on its 7
charitable activities and the disposition of its charitable assets in the manner and form prescribed 8
by the State Auditor, Attorney General, and State Treasurer. 9
(c) If the State Auditor, Attorney General, and State Treasurer deem it reasonable and 10
necessary to do so based on the acquiring entity 's failure to comply with the terms of the 11
agreement approved by the State Auditor, Attorney General, and State Treasurer or by a court 12
pursuant to G.S. 131E-214.68, including any modifications to the agreement made by the State 13
Auditor, Attorney General, and State Treasurer, then the State Auditor, Attorney General, and 14
State Treasurer may file an action for relief to restor e the benefits of healthcare provider 15
competition in any part of the State, subject to all of the following: 16
(1) If the transaction was approved only after a final judicial determination 17
pursuant to G.S. 131E-214.78, the State Auditor, Attorney General, and State 18
Treasurer shall file the action in the same court that made the final judicial 19
determination. If the transaction was approved by the State Auditor, Attorney 20
General, and State Treasurer without a final judicial de termination pursuant 21
to G.S. 131E-214.78, the State Auditor, Attorney General, and State Treasurer 22
may file an action in either (i) the superior court of any county in which there 23
exists a hospital entity whose control or governance would be altered by the 24
proposed transaction or (ii) the superior court of the county in which the 25
acquiring entity's principal place of business is located, if located within the 26
State. 27
(2) The State Auditor, Attorney General, and State Treasurer may seek any relief 28
necessary to remedy a violation of the agreement. 29
(3) The State Auditor, Attorney General, and State Treasurer have the burden of 30
demonstrating by clear and convincing evidence that the benefits of the relief 31
sought to restore the benefits of healthcare provider competition in any part of 32
the State clearly outweigh the costs of doing so, including the transactional 33
costs associated with doing so and any likelihood that the resulting market 34
would not provide the benefits of healthcare provider competition in any part 35
of the State. 36
(4) No such action may be brought more than five years after the consummation 37
of a transaction. 38
(d) After consummation of a transaction, an acquiring entity shall not change the financial 39
assistance policy regarding patients who are uninsured or underinsured that were in effect for the 40
hospital entity immediately preceding consummation of the transaction without first providing 41
120 days' notice, in writing, to the Attorney General; its hospital staff, including physicians in a 42
contractual relationship with the acquiring entity; and patients who have previously benefited 43
from the hospital entity 's financial assistance policy . This subsection does not prohibit an 44
acquiring entity from increasing the applicable income limits used to determine patient eligibility 45
for financial assistance at any time following consummation of the transaction , and it does not 46
require an acquiring entity to provide prior notice to the State Auditor, Attorney General, and 47
State Treasurer about the increased income limits . In order to meet the notice requirements of 48
this subsection with respect to patients who have previously benefited from the hospital entity 's 49
financial assistance policy, the acquiring entity shall do all of the following: 50
General Assembly Of North Carolina Session 2025
House Bill 1175-First Edition Page 37
(1) Provide written notice to both the patient's last known mailing address and to 1
the email address on file for the patient that includes at least all of the 2
following: 3
a. A description of how the acquiring entity 's new financial ass istance 4
policy will differ from the hospital entity's financial assistance policy. 5
b. A description of the process for obtaining financial assistance under 6
the acquiring entity's new financial assistance policy, including a list 7
of (i) all forms a patient would be required to complete in order to be 8
eligible for financial assistance and (ii) all documents a patient would 9
be required to produce as part of the acquiring entity 's new financial 10
assistance policy. 11
c. A link to a webpage that allows members of the public to view the new 12
financial assistance policy and any forms a patient would be required 13
to complete in order to be eligible for financial assistance. 14
d. A toll-free telephone number for patients to call to ask questions about 15
the acquiring entity's new financial assistance policy. 16
(2) Educate all physicians affiliated with the acquiring entity, including 17
physicians in a contractual relationship with the acquiring entity, on the new 18
financial assistance policy. Physicians shall verbally inform patients about the 19
new financial assistance policy at appointments occurring during the 120-day 20
notice period required by this subsection. 21
"§ 131E-214.82. Violations; penalties; preservation of statutory and common law authority 22
of the State Auditor, Attorney General, and State Treasurer. 23
(a) Any transactions entered into in violation of this Article shall be null and void. 24
(b) Each member of the governing boards and each chief financial officer of the parties 25
to a transaction entered into in violation of this Article are subject to a civil penalty of up to fifty 26
thousand dollars ($50,000) each per transaction , unless the violation was made in wanton 27
disregard of the law, in which case the civil penalty may be up to one million dollars ($1,000,000) 28
each per transaction. The State Auditor, Attorney General, and State Treasurer shall institute 29
proceedings to impose a civil penalty authorized by this section in a court of competent 30
jurisdiction in Wake County, and the court shall determine the amount of the civil penalty to be 31
imposed under this section. The clear proceeds of civil penalties provided for in this subsection 32
shall be remitted to the Civil Penalty and Forfeiture Fund in accordance with G.S. 115C-457.2. 33
(c) The Department of Health and Hum an Services shall not issue a new or renewal 34
license to operate a hospital under Article 5 of this Chapter, or any applicable rules, on behalf of 35
any hospital that is a party to a transaction entered into in violation of the notice, public hearing, 36
and review requirements of this Article. 37
(d) Nothing in this Article shall be construed to limit the statutory or common law 38
authority of the State Auditor, Attorney General, or State Tre asurer to protect charitable trusts 39
and assets located in this State. The penalties and remedies set forth in this Article are in addition 40
to, and not a replacement for, any other civil or criminal action s the State Auditor, Attorney 41
General, or State Treasurer is authorized by statute or common law to file, including actions 42
seeking rescission of a transaction, injunctive relief, or any combination of these , and other 43
remedies available under statute or common law." 44
SECTION 13.1.(b) This Part becomes effective December 1, 2026, and applies to 45
activities occurring on or after that date. 46
47
PART XIV. EFFECTIVE DATE 48
SECTION 14.1. Except as otherwise provided, this act is effective when it becomes 49
law. 50