May 4, 2023

UPDATE: Proposed New York "Material Transaction" Review Law Scaled Back

Holland & Knight Healthcare Blog
Nili Yolin
Healthcare Blog

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.



Proposed Bill

Final Bill


Review and Oversight of Material Transactions

Disclosure of Material Transactions

Definition of Health Care Entity

Includes physician practices, groups, MSO "or similar entity providing all or substantially all administrative or management services under contract with one or more physician practices," provider-sponsored organization, health insurance plan or any other kind of healthcare facility, organization or plan providing healthcare services in this state.

Does not include an insurer or a pharmacy benefit manager authorized to do business in the state

No material change

Definition of "Material Transaction"

Includes mergers, acquisitions, affiliations, the formation of partnerships, joint ventures, accountable care organizations, parent organizations or management services organizations "for the purpose of administering contracts with health plans, third party administrators, pharmacy benefit managers, or health care providers."

Excludes clinical affiliations of HCEs formed for the purpose of collaborating on clinical trials or GME programs.

Also excludes "de minimis transactions," which are transactions that result in an HCE increasing its total gross in-state revenue by less than $25 million.

DOH Review and Oversight

DOH has the authority to review and approve material transactions to assess the impact on cost, quality, access, health equity and competition in the healthcare service market.


DOH to adopt criteria for the consideration of requests by HCEs to consummate a material transaction.

Removed and replaced with: DOH shall adopt a process for the disclosure and notice of material transactions.

An HCE shall not consummate a material transaction without obtaining approval from DOH.


Notice and Application

An HCE must submit notice and an application with supporting documentation 30 days prior to the closing date of the transaction.

The HCE must only submit notice (no application) to DOH 30 days prior to closing.

New: Immediately upon receipt, DOH will submit copies of the notice and supporting documentation to the antitrust, healthcare and charities bureaus of the office of the New York Attorney General's Office.

Submitted Documentation

  • names of the parties to the proposed material transaction and their current addresses
  • copies of the definitive agreements
  • identification of all locations where healthcare services are currently provided by each party and the revenue generated in the state from such locations
  • any plans to reduce or eliminate services and/or participation in specific plan networks
  • the closing date of the proposed material transaction
  • a brief description of the nature and purpose of the proposed material transaction
  • the anticipated impact of the material transaction on cost, quality, access, health equity and competition in the impacted markets, which may be supported by data and a formal market impact analysis
  • any commitments by the HCE to address anticipated impacts
  • non-refundable application fee

Same documentation but no application fee

Material Transaction Review/30-Day Period

DOH will consider the financial wherewithal of the parties to the transaction, their character and competence, source of funding and the fairness of the financial consideration. DOH may also, as a condition to approval, require the parties to make investments in their communities or contributions to state-controlled funds "to preserve access or to otherwise mitigate the impact of the material transaction on the health care delivery system."


DOH will notify the parties within 30 days if it is approving or withholding approval of the material transaction; DOH may request additional information.


New: DOH is obligated to post on its website during the 30-day period prior to closing:

  • a summary of the proposed transaction
  • an explanation of the individuals likely to be impacted by the transaction
  • information about services currently provided by the HCE, commitments by the HCE to continue such services and any services that will be reduced or eliminated
  • details about how to submit comments, in a format that is easy to find and easy to read


DOH may impose civil penalties of up to $10,000 per day for violations and the New York Attorney General may apply to the courts to enjoin the transaction.

Failure to notify DOH shall be subject to civil penalties, and each day in which the violation continues will constitute a separate violation.



The HCE must notify DOH of the closing of the transaction in the form and manner to be prescribed by DOH regulation.

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.

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