New York Gov. Hochul’s FY 2026-27 Executive Budget Revives Material Transaction Law Amendments | Insights

New York Gov. Kathy Hochul released the fiscal year (FY) 2026-27 Executive Budget (Budget), which, among other things, largely reintroduces the same proposed amendments to Public Health Law Article 45-A (Disclosure of Material Transactions) that appeared in last year’s budget but were ultimately not enacted. Other notable healthcare-related amendments include shifting regulatory oversight of physicians and physician assistants (PA) from the State Education Department (SED) to the Department of Health (DOH), expanding PA practice authority to permit practice without physician supervision and establishing a new jointly administered licensing framework for providers of mental health and addiction services overseen by the Office of Mental Health (OMH) and Office of Addiction Services and Supports (OASAS).

Expansion of Disclosure of Material Transactions Law

The Budget’s proposed amendments to the Disclosure of Material Transactions law are not substantively different in policy design from those included in the FY 2025-26 Executive Budget, as summarized in a prior blog post. Instead, they reflect a renewed effort to advance the same expanded disclosure, transparency and post-closing reporting framework that failed during the prior budget cycle. Specifically, the amendments introduce several changes to existing reporting obligations and DOH authority, including:

• Additional Preclosing Disclosures. Parties to a material transaction would need to submit 1) a statement indicating whether any party to the transaction, or any person with control over the health care entity, has closed, is in the process of closing or experienced a substantial reduction in services within the past three years, and 2) a statement as to whether any sale-leaseback, mortgage or other financing arrangement is a component of the transaction, as well as copies of the applicable documents.
• Five-Year Post-Closing Reporting. For five years following the closing of a material transaction, parties would be required to report to DOH the factors and metrics used to assess the transaction’s impact on cost, quality, access, health equity and competition. DOH may request additional information, which must be provided within seven days of the request.
• Preliminary Review and Potential CMIR. DOH would have the authority to conduct a preliminary review of all proposed transactions and, for those valued at $100 million or more, could undertake a full cost and market impact review (CMIR). DOH may also initiate a CMIR for smaller transactions if it determines that the deal could affect cost, quality, access, health equity or competition. In either scenario, a CMIR could potentially delay closing by up to 180 days. This amendment is likely to draw significant attention as the 180-day review period could stall transactions that otherwise would have cleared the HSR waiting period.
• Use of Submitted Information. While documentation submitted to DOH remains exempt from disclosure under the Public Officers Law, DOH could use information, including any CMIR, as evidence in investigations, reviews or other actions of DOH or the attorney general. The law would require the submitting parties to pay for the costs of the DOH review (payable within 14 days).

The Budget allocates $150,000 to DOH for additional staffing to support these expanded oversight responsibilities, which the state characterizes as “critical to understanding the expected and initial impact of these private transactions on cost, quality, access, equity and competition in the New York healthcare delivery system.” If enacted, the amendments would take effect one year after becoming law.

Transitioning Professions from SED to DOH

For decades, New York maintained an unusual structure in which the SED was responsible for licensing the medical professions while DOH handled professional misconduct proceedings, including potential licensure revocation. Proposed amendments to the Education Law and Public Health Law would eliminate this split framework by transferring oversight of physicians, PAs and specialist assistants, including licensure, professional discipline and the formation of professional entities, from SED to DOH, effective January 1, 2027.

PA Practice Authority

The Budget proposes to permanently codify measures first implemented during the COVID-19 pandemic, allowing PAs to practice independently once they have completed more than 8,000 hours of practice in the same or a substantially similar specialty in which they seek to practice without supervision. To qualify, a PA must be employed by either 1) a rural emergency hospital or general hospital where they have been credentialed and granted privileges or 2) a non‑surgical diagnostic and treatment center or primary care practice (e.g., professional corporation, professional limited liability company or partnership) while practicing in primary care. Primacy care is defined to include general pediatrics, adult medicine, geriatrics, internal medicine, mental health/psychiatry, gynecology, obstetrics (with a collaborating OB physician), family medicine, urgent care and other areas designated by DOH.

PAs practicing independently would be authorized to perform a broad range of clinical functions, including histories and physicals, triage, ordering/interpreting diagnostics, formulating diagnoses and treatment plans, administering interventions, counseling, immunizations, referrals, palliative and end‑of‑life care, telehealth services, remote monitoring and prescribing/dispensing medications including controlled substances. The law also authorizes the DOH commissioner to further expand the PA scope by permitting “other functions” as deemed appropriate.

Finally, PAs seeking to practice independently in a new or substantially different specialty would be required to complete an additional 8,000 specialty‑specific hours before practicing unsupervised in that new field.

Integrated Behavioral Health Services

The Budget also proposes legislation establishing a new licensing framework for programs that deliver integrated, evidence‑based mental health and addiction disorder treatment, referred to as “Integrated Behavioral Health Services.” Key elements include:

• Joint Oversight. The commissioners of OMH and OASAS would jointly license and regulate all Integrated Behavioral Health Services Programs.
• Comprehensive Regulatory Standards. The agencies must issue joint regulations covering program scope (including related physical health services), facility standards, staffing, treatment records, billing structures, governance, patient rights, incident reporting and other operational requirements.
• Unified Enforcement Process. The two agencies may adopt a single process for license suspension, revocation or limitation, streamlining oversight across both systems.
• Provider Eligibility Requirements. Programs must demonstrate 1) experience delivering both mental health and addiction services, 2) capacity to provide integrated services at each approved site and 3) compliance with standards for service delivery and reimbursement.

Holland & Knight attorneys will continue to monitor these and other healthcare‑related proposals in the Executive Budget as they progress through the legislative process. As state oversight intensifies, particularly around transaction reporting and expanded regulatory authority, we will provide timely updates and practical guidance to help stakeholders assess potential impacts on operations, compliance and future strategic initiatives.