Four Democratic Bills Target Private Equity in Health Care. Two Name Behavioral Health

WASHINGTON – Congressional Democrats have filed four proposals this year aimed at private equity in health care, each built around a different main tool: disclosure and licensing, Medicare payment, criminal liability and clawbacks, and control of medical practices. A February bill would send executives and investors to prison if their actions contribute to a collapse that kills or injures a patient, and a March bill would cut off Medicare to PE-owned hospitals and nursing homes. A July bill would make corporate owners open their books and put private equity firms under an HHS license, and the newest, filed September 16, would ban investor control of medical practices nationwide.

All four were still in committee as of October 6, and none has moved since referral; Medscape rated the newest one’s chances slim while Republicans control Congress. For ABA companies, the fine print matters more than the odds. Two of the four reach behavioral health by name: the Health Over Wealth Act lists “a mental or behavioral health care provider” among covered entities, and the Corporate Crimes Against Health Care Act lists “a behavioral health treatment facility” among the entities that would have to report ownership and finances to HHS. The September bill is modeled on an Oregon law and covers physicians and other advanced practice providers who can diagnose and treat patients, such as nurse practitioners and physician assistants; it does not mention behavior analysts.

The deadlines that bind ABA owners are in the states. A 2022 Illinois law requires ABA businesses, with limited exceptions, to be owned by people licensed under the state’s Behavior Analyst Licensing Act, and state regulators say unlicensed owners must divest by January 15, 2027. On October 1, two Minnesota senators told the education news site The 74 they plan a bill requiring autism centers to disclose their owners and giving the state, in The 74’s words, “the power to weed out those whose profit-driven business models have compromised children’s care.”

Private Equity’s Footprint in ABA

The sponsors’ examples are hospitals and nursing homes: Steward in Massachusetts, Prospect’s Crozer system in Pennsylvania, and the Genesis nursing home chain. The autism sector’s pull on private equity shows up in Medicaid billing instead. The 74 analyzed six years of Medicaid provider payment data, 2019 through 2024, released by HHS in February. By its count, yearly Medicaid payments for the most common ABA billing codes rose roughly 381%, from $400 million in 2019 to nearly $2 billion in 2024, and totaled nearly $7 billion over the six years. Of the 50 largest billers in its data, The 74 classified 23 as currently or formerly PE-owned, including 11 of the top 15.

“Private equity was attracted to ABA because the industry as a whole had set up a very tidy financial arrangement for itself.” – Ari Ne’eman, Assistant Professor of Health Policy and Management, Harvard T.H. Chan School of Public Health, to The 74 (2026)

A JAMA Pediatrics research letter published online January 5 by Brown University’s Daniel Arnold, Yashaswini Singh, and colleagues counted 574 autism therapy sites acquired by private equity across 42 states as of the end of 2024, through 147 acquisitions since 2015.

Making Owners Disclose

The Health Over Wealth Act, which Rep. Pramila Jayapal and Sen. Edward Markey reintroduced July 23 as H.R. 9910 and S. 5112, is the broadest of the four. For-profit owners of health care entities would file detailed reports with HHS, on a schedule HHS sets, for publication: debt, dividends and fees paid to investors, political spending, and staffing, and, for PE-controlled firms, what they charge patients and health plans and which facilities they closed. The bill would create an HHS license for private equity firms that invest in or buy health care entities, and HHS could revoke it, forcing divestment, for price gouging, understaffing, or blocking access. For PE-controlled owners, HHS would also have to set up financial safeguards, which could include an escrow covering at least five years of operating and capital costs or a required minimum capital investment, and it could freeze private equity acquisitions outright while a new task force studies the industry.

The bill defines a health care entity to include “a physician practice” and “a mental or behavioral health care provider” alongside hospitals and nursing homes, a category that would appear to take in ABA companies. It is one of two bills that name behavioral health; Warren’s bill does so through its reporting section.

“It’s not enough to have a P.O. box in New Jersey.” – Scott Dibble, State Senator, Minnesota Senate, to The 74 (2026)

The states have moved faster. Vermont’s law, signed June 15, requires health care facilities and management services organizations to tell the Green Mountain Care Board, the state’s health care regulator, by March 1, 2027, whether a private equity group or hedge fund held a stake in them as of June 1, 2026. Those that did must file ownership details, an organizational chart, and financial statements; the ownership information becomes public, the financial statements do not. Nursing homes, staffing companies, federally qualified health centers, and telehealth-only providers are exempt.

Illinois’s HB 5000, signed August 7 and effective January 1, 2027, adds a definition of “private equity company” to the state’s transaction-notice law and makes clear that a deal is covered even when the buyers are parent companies or investment funds rather than the facilities themselves. Covered deals already require 30 days’ notice to the attorney general, who can hold up closing with an information request, and the law drops a sunset that would have ended the program in 2027. It applies to health care facilities and to provider organizations of 20 or more providers.

Maine went further in April: starting January 1, 2027, a private equity company, hedge fund, or PE-owned management company must give the state at least 180 days’ notice before taking majority ownership or operational control of a health care entity, and the state can approve, condition, or block the deal. Nursing facilities, dental-only providers, and independent practices of six or fewer clinicians are exempt from the law.

The Minnesota proposal would apply the same idea to autism centers specifically, along with a requirement that a set share of Medicaid payments go to direct care, according to The 74. “This kind of aggressive super-sized profit motive is totally inappropriate in these settings because it incentivizes behaviors that don’t support the public’s interest and good use of public dollars,” Sen. Scott Dibble (DFL-Minneapolis) told The 74.

Cutting Off Medicare

Sen. Chris Murphy and Rep. Mary Gay Scanlon took the bluntest route. Their Take Back Our Hospitals Act, S. 4085 and H.R. 7920, introduced March 12, would cut off Medicare payment to any hospital or skilled nursing facility owned or controlled by a private equity fund, a PE-owned corporation, or a real estate investment trust, with control defined to include a 10% voting stake or a management contract. Facilities already under such ownership would have three years from enactment before the payment bar applied. Scanlon points to Crozer Health in Delaware County, Pennsylvania. Prospect Medical Holdings bought the system in 2016, sold hospital real estate to a real estate investment trust, filed for bankruptcy in January 2025, and by May 2025 had closed four hospitals there in three years, according to Gov. Josh Shapiro’s office.

Connecticut, where Prospect also ran hospitals before its 2025 bankruptcy, took a different route in May. Under the law Gov. Ned Lamont signed May 27, every hospital must attest each year, starting February 15, 2027, that no private equity entity controls its main campus or can set policies that interfere with clinicians’ judgment, and from July 1, 2027, no hospital may sell and lease back its main campus.

One industry group argues the bans misread the failures. Regan Parker, who heads the Association for Responsible Healthcare Investment, a private equity trade group, wrote in an April op-ed that cutting off capital to struggling facilities would speed closures rather than prevent them, and that private equity owns only a small share of nursing homes.

The payment bar applies to hospitals and skilled nursing facilities; standalone ABA practices are not among them.

Prison Terms and Clawbacks

Sen. Elizabeth Warren’s Corporate Crimes Against Health Care Act, S. 3829, reintroduced February 11 with a House companion from Rep. Maggie Goodlander the next day, would create a federal crime. Directors, officers, major investors, and others who control a health care company could face one to six years in prison if their actions contributed to a collapse, defined as a closure, a bankruptcy, a 90-day loan default, or 90 days of unpaid rent or wages, that results in a patient’s death or injury. Federal and state attorneys general could claw back some or all of the pay, bonuses, fees, dividends, and other compensation that executives and investors took from the company in the 10 years before or after such a collapse, unless they can prove they could not have prevented it, and the bill adds civil penalties of up to five times the clawback.

Hospitals, physician practices, behavioral health treatment facilities, hospices, home health agencies, and other listed providers would report their ownership, deals, debt, and investor payouts to HHS each year, for publication, with fines of up to $5 million per missing or false report. Any provider that sells assets to a real estate investment trust after enactment, or pledges them as collateral for a REIT loan, would be excluded from Medicare, Medicaid, and other federal health programs; existing collateral arrangements are grandfathered. The REIT provision has a state cousin in Massachusetts, where a law signed in January 2025 after Steward’s collapse denies an acute-care hospital license to any hospital whose main campus is leased from a health care REIT, with existing leases grandfathered.

“We’ve seen enough to know that looting hospitals and nursing homes is basically a feature of private equity’s playbook,” Warren said when she filed the bill, citing the Genesis nursing home chain’s bankruptcy.

Who Controls the Clinic

Warren introduced the Senate version of the Stop Corporate Takeovers of Physicians Act, S. 5419, on September 16 with Sens. Ron Wyden and Jeff Merkley; Rep. Val Hoyle filed the House bill, H.R. 10444, with Reps. Alexandria Ocasio-Cortez and Suhas Subramanyam. It would require a medical practice to be majority-owned and governed by licensed clinicians who practice in the state and are substantially engaged in delivering care. Hospitals, hospital-affiliated clinics, and nonprofit and public providers are exempt from the ownership rule, though not from the rest of the bill. It targets the “friendly physician” model, in which a licensed clinician owns the practice on paper while an investor-owned management services organization runs it: the management company could no longer control hiring and firing, schedules, pay, billing, or payer contracts. Noncompete, nondisclosure, and nondisparagement agreements would be void, except a noncompete for a clinician who owns at least 25% of the practice. The FTC and state attorneys general would enforce it; anyone injured could sue, and a court could award a winning plaintiff triple damages. The rules would take effect one year after enactment, with no grandfathering of existing arrangements.

The model is Oregon’s 2025 law, whose limits on management companies began applying to newly formed practices and ownership transfers on January 1, 2026, and reach pre-existing arrangements in 2029. The federal bill would leave stronger state laws in place. “It is a federal override,” John Saran, a Holland & Knight partner in Chicago, told Medscape. “These legislators think the Oregon model is what is needed right now.”

The bill’s licensee definition names physicians and gives nurse practitioners and physician assistants as examples of other advanced practice providers who can diagnose and treat patients under state law. Behavior analysts are not mentioned. Illinois wrote that rule for ABA on its own. Section 150 of the state’s Behavior Analyst Licensing Act, passed in 2022, requires an ABA business to be organized as a professional corporation or professional LLC owned by holders of the required Illinois professional licenses, with a carve-out for physician practices; state regulators say unlicensed owners must divest by January 15, 2027, two years after licensing began. A follow-on law Gov. JB Pritzker signed July 24 kept that rule, exempted public and charter schools and 501(c)(3) nonprofits, made an owner or officer who makes clinical decisions without being licensed or exempt under the act a violator, subject to penalties of up to $10,000 per offense, and let behavior analysts share a professional entity with occupational, physical, and speech therapists. Two bills to repeal the ownership rule were sent back to committee at the March 27 deadline without a vote.

The American Investment Council, the private equity industry’s trade group, objected to the federal bill in a statement to Medscape. Its president, Will Dunham, said that “restricting investment in healthcare limits access to care” and that private equity “gives doctors operational support, including managing burdensome paperwork, so they can spend their time focused on caring for patients, particularly in underserved areas.”

What Comes After November

Holland & Knight wrote in an August client alert that Democratic control of either chamber after November’s midterms would put Democrats in charge of committee subpoenas and investigations. The scrutiny has already crossed party lines: Sens. Chuck Grassley and Sheldon Whitehouse released a bipartisan Senate Budget Committee staff report, “Profits Over Patients,” in January 2025. Medscape judged the corporate-practice bill’s chances slim while Republicans hold Congress, and Holland & Knight’s Jordan Brossi said it would likely face legal challenges if passed, noting that corporate practice rules have “largely been creatures of state law.” Saran expects the states to keep going. “I would not be surprised if come 2027, we see a handful of states try to propose and pass Oregon-esque laws,” he told Medscape.

The dates that bind are state ones, and they start January 1, 2027, when Illinois’s expanded transaction-notice law and Maine’s deal-review law take effect; Illinois’s ABA ownership deadline follows on January 15, and Vermont’s first ownership reports are due March 1.

AT A GLANCE

SOURCES & REFERENCES