Senate committee hears split testimony on bill to bar insurers from owning health providers

A Senate commission held a public hearing on March 13, 2024, to examine Proyecto del Senado 1270, a bill that would prohibit health insurers and their affiliates from holding economic interests in providers and would declare health care and health insurance matters of high public interest.

Chair José Chaco Vargas Vidort opened the session by describing the bill’s aims and displaying organigrams from major insurers — including First Medical, Triple‑S, MMM, MCS, Menonita and Auxilio Mutual — arguing those structures create incentives that can channel patients into insurer‑owned clinics.

Roxana Rosario Serrano, executive director of the Administración de Seguros de Salud (ASES), read ASES’s written analysis. ASES noted that about 46 percent of Puerto Rico’s population gets coverage through the government plan and that the agency must meet federal network adequacy standards to certify access. Rosario Serrano said those rules and the practical shortage of specialists on the island have led ASES to grant limited exceptions permitting insurer‑affiliated facilities to participate in provider networks when necessary to maintain access. “Una aprobación de excepción para que el hospital pueda operar como parte del programa,” she said, describing the contractual and federal constraints that shape ASES’s decisions. ASES warned that the bill’s blanket penalty provisions — including automatic cancellation of government contracts — could jeopardize beneficiaries’ access and the territory’s federal certifications.

Representatives of the Office of the Commissioner of Insurance and of the Department of Justice’s Office of Monopolistic Affairs urged precise drafting. Brenda Pérez Fernández, speaking for the Commissioner of Insurance, noted that Puerto Rico’s insurance code (chapter 19 and related provisions) already contemplates holding structures and authorizations for organizations of services of health and recommended harmonizing definitions in the bill with existing statutes and licensing processes. Guarionex Díaz, secretary‑auxiliary of the Office of Monopolistic Affairs, said the bill’s goals are understandable but that the draft lacks an empirical basis, clear investigatory and adjudicative procedures and the jurisdictional clarity needed to implement the proposed penalties; he recommended changes to the monopolies statute to avoid predictable legal challenges.

Industry witnesses opposed the bill as drafted. Iraelia Pernas of the Asociación de Compañías de Seguros (ACODESE) said Puerto Rico’s reimbursement levels, demographic profile and reliance on federal funds constrain options for re‑structuring networks and that an abrupt ban could reduce service availability in some regions. ACODESE cited actuarial and audited insurer filings showing high medical‑loss ratios and argued that regulatory or contractual fixes might address the complaint without causing service disruption.

Hospital leaders and providers gave contrasting testimony. Pedro González of the Asociación de Hospitales urged a detailed fiscal and operational impact study before adopting a prohibition that could affect licensure and contracts. The Colegio de Médicos Cirujanos, represented by Dr. Carlos Díaz Vélez, endorsed separation of insurer and provider roles, arguing that integration creates conflicts of interest that can reduce quality and push independent physicians out of practice. José Sánchez, for clinical laboratories, likewise supported the bill and asked lawmakers to investigate waivers and exceptions ASES has granted.

Lawmakers pressed witnesses on two recurring points: (1) the precise scope and definitions of “economic interest” and “related entity”; and (2) how many and which exceptions ASES has granted to permit affiliates into provider networks. Chair Vargas Vidort asked ASES to file formal documentation, including a list of exceptions granted in the past five years, within five business days — a request ASES agreed to provide.

No formal vote or motion was taken. DOJ counsel suggested amending the Ley de Monopolios (Law 77) to remove or clarify exceptions that limit the Office of Monopolistic Affairs’ jurisdiction over insurance‑related conduct; several senators signaled interest in pursuing statutory fixes rather than rejecting the bill outright. The hearing recessed with committee members saying they would continue reviewing written submissions and consider revisions to PS 1270.

Why it matters: The bill seeks to address alleged market concentration and conflicts of interest that providers and physicians say harm patient access and quality; agencies and insurers counter that abrupt, broad prohibitions without transitional mechanisms could disrupt care and conflict with federal funding and licensing frameworks. The committee’s next steps—receipt of ASES’s exception list and possible statutory amendments to monopoly and insurance law—will shape whether the proposal moves forward and how it is rewritten if it does.

What’s next: The commission requested ASES’s documented exceptions within five business days and indicated it will evaluate DOJ’s recommendation to amend the monopolies statute to clarify investigatory jurisdiction before advancing or redrafting the measure.