Last month, the New York State Department of Health (“DOH”) published a Frequently Asked Questions (“FAQ”) providing further clarity on the reporting requirements under Public Health Law Article 45-A (the “Act”), which took effect on August 1, 2023. As previously described, this Act imposes mandatory notice and reporting obligations on certain “health care entities” involved in “material transactions.” This FAQ was issued in response to “common questions” the DOH has received from various health care entities, and their legal representatives, regarding various topics, including, the types of health care entities and material transaction subject to the reporting requirements, and what constitutes “de minimis” revenue under the Act’s exception. This article focuses on key takeaways from the FAQ and provides insights for health care entities considering transactions which may be subject to the Act.
Overview of the Act
The Act requires health care entities engaging in a material transaction to submit notice to the DOH at least 30 days prior to closing. The DOH will publish summaries of such transactions and share them with the New York State Attorney General. Importantly, this is a pre-closing requirement and not merely a post-closing disclosure.
Key Highlights from the March 2025 DOH FAQ
- Who Must Report: Expanded Definition of “Health Care Entity”
The Act broadly defines a “health care entity” to include physician practices, management service organizations (“MSOs”), provider-sponsored organizations, health insurance plans, and other health care service providers. The FAQ explicitly confirms that the following are also included in the definition:
- Dental practices;
- Clinical laboratories;
- Pharmacies and wholesale pharmacies, including secondary wholesalers;
- Independent Practice Associations (“IPAs”); and
- Accountable Care Organizations (“ACOs”).
To note, even out-of-state entities that derive gross revenue from New York State health care services are subject to this law if their transaction(s) meet the revenue threshold.
- What Is a “Material Transaction”?
A transaction (or series of related transactions within a 12-month period) is considered “material” if it increases a health care entity’s total gross in-state revenues by $25 million or more. Covered transactions include:
- Mergers 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, equity, or the transfer of control);
- An affiliation agreement between a health care entity and another person; and
- Formation of partnerships, joint ventures, parent organizations, ACOs, or MSOs, for the purposes of administering contracts with health plans, third-party administrators, PBMs, or health care providers.
Importantly, an acquisition also includes the transfer of control, such as contracting for services commonly provided through a management or administrative services agreement between a practice and an MSO.
- What Is Exempt?
Not every transaction qualifies under the Act. The following are exempt:
- Clinical affiliations for clinical trials or graduate medical education;
- Transactions already subject to Certificate of Need (“CON”) or insurance-entity approval (PHL Articles 28, 30, 36, 40, 44, 46, 46-A, or 46-B), but only the portions covered by such approval processes; and
- “De minimis” transactions — where the increase in gross in-state revenue is less than $25 million in a 12-month lookback period.
For mixed transactions (i.e., partially subject to CON, and partially not), the non-CON portions must still be reported if they meet the $25 million threshold independently.
- Lookback Period and Aggregation
The $25 million revenue threshold must be calculated using a 12-month lookback period from the anticipated closing date. Transactions that are related or occur in a series must be aggregated to determine if they cross the threshold. For example:
- Company A plans to acquire Company B (“Deal 1”), closing on 9/1/25. Company B produced $5 million in the 12-month lookback period (9/1/2024-8/31/2025).
- Company A was previously involved with a related transaction with Company C (“Deal 2”), which closed on 1/1/2025 and produced $10 million gross in-state revenue in the lookback period for this transaction (1/1/2024-12/31/2024). Deal 2 falls within the 12-month lookback period of the anticipated Deal 1 closing.
- Company A was also previously involved with a related transaction with Company D (“Deal 3”), which closed on 4/1/2025 and produced $12 million in gross in-state revenue in the lookback period for this transaction (4/1/2024-3/31/2025). Deal 3 falls within the 12-month lookback period of the anticipated Deal 1 closing.
- Company A must calculate whether the sum of the revenue associated with Deals 1, 2, and 3 is greater than or equal to $25 million. Here, the sum of these three deals—$5 million (Deal 1) + $10 million (Deal 2) + $12 million (Deal 3)—totals $27 million, thereby meeting the monetary threshold to make the transaction subject to the Act’s reporting requirements.
- Disclosure of Transaction Impact
If subject to the Act’s reporting requirements, the subject health care entities must submit a good faith assessment of the transaction’s anticipated impact on a variety of circumstances, including such non-exhaustive items as follows:
- Eliminated, reduced, added or expanded services (in terms of staffing or available hours/days of service);
- Anticipated commercial payor rate increases;
- Changes in the share of services provided to historically underserved populations; and
- Expected impact on market share changes.
Additionally, the FAQ indicated that the DOH will eventually release a “Material Transactions Notice Form” which may require more specific information to conduct the above-described impact assessment.
- Public Comment Process
Once a transaction is posted by the DOH, the public may submit comments via email to the DOH, as provided on their website. The DOH does not currently maintain a list for transaction notifications, so stakeholders must monitor the DOH Material Transactions webpage for updates: DOH Material Transactions Page.
How Frier Levitt Can Help
As interpretation and enforcement of the Act continues to evolve, it is important that any health care entity which is considering a potential transaction in New York assess whether they or the proposed transaction meets the Act’s broad definitions of “health care entity” and “material transaction,” and whether any exemptions may apply. Given the complexities and potential risks associated with this law, early engagement with knowledgeable legal counsel is essential.
Frier Levitt handles a vast range of national and local healthcare transactions, including New York. Our attorneys have extensive knowledge of the rigorous requirements New York imposes on health care transactions. If you are considering a health care transaction in New York, we encourage you to contact us without delay.
