Required Reporting of Material Transactions

Overview

On May 3, 2023, Governor Kathy Hochul signed into law Article 45-A of the Public Health Law (PHL). This law, which took effect on August 1, 2023, requires health care entities in New York State to provide notice to the New York State Department of Health of material transactions at least 30 days prior to the closing of the transaction.

The following entities are considered a health care entity under Article 45-A of the PHL and are subject to the reporting requirements:

• A physician practice or group
• A management services organization (MSO) or similar entity that provides all or substantially all administrative or management services under contract with at least one physician practice
• A provider-sponsored organization
• A health insurance plan
• Any other kind of health care facility, organization, or plan that provides health care services in New York

Article 45-A does not apply to insurers or pharmacy benefit managers already subject to regulation by the New York State Department of Financial Services.

A material transaction includes any of the following that occur during a single transaction or in a series of related transactions within a rolling 12-month period that result(s) in a health care entity increasing its total gross in-state revenues by $25 million or more:

• A merger of one or more health care entities.
• An acquisition of one or more health care entities, including the assignment, sale, or other conveyance of assets, voting securities, membership or partnership interests or the transfer of control, such as contracting for services commonly provided through a management or administrative services agreement between a practice and an MSO.
• An affiliation agreement or contract formed between a health-care entity and another person.
• The formation of a partnership, joint venture, accountable care organization, parent organization, or MSO for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health-care providers.

The following transactions are not considered material and are exempt from Article 45-A's notice requirement:

• Clinical affiliation of health care entities formed for the purpose of collaborating on clinical trials or graduate medical education programs
• Any transactions already subject to the Department of Health's Certificate of Need process or an insurance-entity approval process under the New York State Public Health Law or Insurance Laws
• De minimis transactions, which for this purpose constitutes a transaction or series of transactions that result in a health care entity increasing its total gross in-state revenues by less than $25 million

Additionally, Article 45-A directs the New York State Department of Health to publish the proposed transaction on its website for notice and comment from the public. The website publication will include the following information:

• A summary of the proposed transaction.
• An explanation of the groups or individuals likely to be impacted by the proposed transaction.
• Information about services currently provided by the healthcare entity, commitments by the healthcare entity to continue such services, and any services that will be reduced or eliminated.

Health care entities that are party to a material transaction are also required to notify the department upon closing of the transaction. Failure to notify the department of a material transaction shall be subject to civil penalties. Each day in which the violation continues shall constitute a separate violation. New York State Department of Health has the ability, if deemed necessary, to notify the New York Attorney General's office of its findings regarding a transaction.

Reporting Instructions

To provide notice to the department of a material transaction please submit notice of all material transactions to MaterialTransactionDisclosure@health.ny.gov at least 30-days prior to closing the transaction.

In addition to the information and supporting documentation required under Public Health Law section 4552, parties must also include with their notice a transaction summary for posting on the department's website. The following information must be included in the summary:

1. the names of the parties to the transaction;
2. anticipated transaction closing date;
3. an executive summary of the proposed material transaction, including the nature and purpose of the Material Transaction;
4. transaction's impact to groups or individuals: describe the groups or individuals most likely to be impacted by the Material Transaction and how;
5. transaction's impact to services: describe the health care services currently provided by the parties, and any ways in which these services are expected to be impacted by the material transaction (in terms of cost, quality, access, health equity, and competition), including any services that will be reduced or eliminated; and
6. any commitments by the parties to mitigate any potential impacts of the Material Transaction (e.g., commitments to continue services).

To facilitate these submissions, a Material Transactions Form is under development and will be posted shortly.

Upon closing of the transaction, the health care entities must inform the department via an email to: MaterialTransactionDisclosure@health.ny.gov

Public Comment

New York State Department of Health will publish proposed transactions on this website for notice and public comment. If you would like to submit comments regarding a material transaction, please submit your comments to the Department by sending an email to: MaterialTransactionDisclosure@health.ny.gov. In the subject line you should indicate that you are submitting a public comment and provide the transaction notice you are submitting comment for (example: Public Comment - Physician Group XYZ).

Frequently Asked Questions (FAQs)

FAQs are currently under development. In the meantime, please submit your questions to: MaterialTransactionDisclosure@health.ny.gov

Material Transaction Disclosures

• List of Material Transaction Disclosures