New York Department of Health Issues Long-Awaited FAQs for New York’s Disclosure of Material Transactions Law

The first quarter of 2025 has been eventful for New York’s Disclosure of Material Transactions Law. As discussed in our recent blog post, the proposed Fiscal Year 2026 New York State Executive Budget (FY 26 Executive Budget) contains an amendment that would alter reporting parties’ notice requirements, extend waiting periods, and increase oversight of material health care transactions by the New York State Department of Health (DOH). Now, nearly a year and a half after the Disclosure of Material Transactions Law took effect, DOH has published Public Health Law Article 54-A, Material Transactions Frequently Asked Questions (FAQs) on its website. The law currently requires “health care entities” engaged in a “material transaction” to provide written notice of the transaction to DOH at least 30 days before the transaction closing as well as notice to DOH upon the transaction closing. With the FAQs, DOH seeks to “provide responses to common questions the Department has received to date” and clarify health care entities’ obligations under the Disclosure of Material Transactions Law. The FAQs expand on the statute’s language, providing guidance on what “health care entities” are subject to the law, what constitutes a “material transaction,” how a transaction’s impact will be assessed, and the ability to comment on a proposed transaction.

Health Care Entities Subject to the Disclosure of Material Transactions Law

First, the FAQs address questions involving which entities are subject to the Disclosure of Material Transactions Law. DOH reiterates that the definition of “health care entities” under the Disclosure of Material Transactions Law, includes, but is not limited to:

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

DOH then expands on the definition with specific examples, confirming that dental practices, clinical laboratories, pharmacies, wholesale pharmacies (including secondary wholesalers), independent practice associations, and accountable care organizations are considered “health care entities.” under the law.

The FAQs also discuss whether entities located entirely outside of New York and/or hold a non-New York license or operating certificate come under the scope of the definition. DOH confirms that the definition “does not turn on whether or not an entity is physically located or domiciled in New York” and that both in-state and out-of-state entities are covered under the Disclosure of Material Transactions Law. The determining factor is whether the transaction would result in a “health care entity” generating the threshold amount of gross in-state (NYS) revenue regardless of whether such entity is physically located or domiciled in New York.

Clarifying the Definition of a “Material Transaction”

The FAQs confirm that a “Material Transaction” includes any of the below that occur during either (1) a single transaction or (2) a series of related transactions, in each case, within a rolling 12-month period that results in a “health care entity” increasing its gross in-state (NYS) revenue 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 (i) assets, (ii) voting securities, (iii) membership or partnership interests, or (iv) the transfer of control, such as contracting for services commonly provided through a management or administrative services agreement between a practice and a MSO;
• An affiliation agreement or contract formed between a health care entity and another person; and
• The formation of a partnership, joint venture, accountable care organization, parent organization, or MSO to administer contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers.

It is important to note that “contracting for services” pursuant to a management or administrative services agreement is now explicitly clarified in the FAQs. If a management or administrative services agreement will result in a transfer of control and the “health care entity” meeting the relevant revenue thresholds, then such arrangement will be subject to the Disclosure of Material Transactions Law. This section also addresses whether a transaction that consists of multiple components some of which are subject to review under Certificate of Need (CON) laws could be exempt from the Disclosure of Material Transactions Law’s reporting requirements. The FAQs flag that parties to such a transaction must make a good faith estimation of the difference between the total in-state gross revenues of the transaction and the total in-state gross revenues of those elements subject to CON review and approval. If the difference is at least $25 million, then the non-CON portions of the transaction must be reported. Otherwise, the transaction does not constitute a Material Transaction and notice does not need to be submitted to DOH. The FAQs also note that the parties “are responsible for determining whether any discrete portion(s) of a transaction” are subject to the reporting requirements.

Assessing a Material Transaction’s Impact

The FAQs also inform on the factors that should be considered when determining the impact of a proposed Material Transaction. DOH recommends that the parties should provide a good faith assessment and report on whether:

• Services will be eliminated, reduced, added, or expanded (in terms of staffing available or available hours/days of service);
• Contracts with certain insurance carriers will be added or eliminated as a result of the transaction, including whether Medicaid participation will be impacted;
• Locations will open or close, or expand or reduce service availability;
• Healthcare staffing changes are expected (i.e., staff additions or cuts);
• Contracted commercial payor rate increases are anticipated;
• Changes in the share of services provided to historically underserved populations are anticipated; and
• The parties expect any increase in market consolidation (as evidenced by changes in market share in any region of the state).

Public Comment on Proposed Material Transactions

When the Disclosure of Material Transactions Law was initially proposed in Governor Hochul’s Fiscal Year 2024 New York State Executive Budget it was drafted to include not only a pre-closing notice requirement but a DOH approval process as well. As we know, the law as enacted eliminated the approval process, but still provided that DOH should provide details on how the public can submit comments on the proposed transactions. The FAQ reemphasizes this, stating that comments can be emailed to [email protected]. DOH notes that it does not maintain a Material Transactions LISTSERV, and as such, those who are interested in commenting on Material Transactions must check the List of Material Transactions regularly for updates.

Conclusion

As of the date of this blog post, DOH has received notice of 9 material transactions. The publishing of the FAQs indicates DOH’s desire to ensure that all proposed transactions involving a “Material Transaction” are captured. With the additional detail provided by DOH, “health care entities” that may have previously avoided New York’s regulatory regime may determine that the reporting requirements now apply. Time will tell whether this additional information will lead to a greater number of transactions being reported to DOH.

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