In a prior blog post, we summarized proposed legislation that would have conferred upon the New York State Department of Health (DOH) the authority to review and approve "material transactions" involving a "health care entity" (HCE). Titled "Review and Oversight of Material Transactions," the original version of Article 45-A of the Public Health Law defined a "material transaction" to include not only a merger, acquisition or affiliation with an HCE, but also "an affiliation or contract formed between an HCE and another person" and the formation of a management services organization (MSO) "for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers."
In the version of new Article 45-A, now titled "Disclosure of Material Transactions," which was signed into law by Gov. Kathy Hochul on May 3, 2023, several important changes were made – most notably the exclusion of any DOH right to actually approve a transaction, as well as the exclusion of a "de minimis transaction" from the definition of a "material transaction," which is a transaction or a series of related transactions that "result in a health care entity increasing its total gross in-state revenues by less than $25 million."
Summarized below are the key differences between the proposed law and the final law.
The law will become effective 90 days after it is signed into law. Although the approval process has been stripped away, physicians and management services organizations that have long enjoyed entering into business relationships without regulatory oversight will now need to disclose their transactions to the state, which will be open to public comment.
Holland & Knight healthcare attorneys will continue to monitor the pending regulations and provide updates when available.