NY Department of Health Issues Clarifying FAQs on Healthcare Transaction Notice Law | King & Spalding

Earlier this month, the New York State Department of Health (DOH) released its first formal guidance under Public Health Law (PHL) Article 45-A, the state’s recently enacted healthcare transaction notice law. Issued in the form of Frequently Asked Questions (FAQs), the guidance addresses common inquiries received by DOH since the law’s effective date of August 1, 2023. It offers important clarifications on the scope of covered entities and transactions as well as instructions for calculating revenue thresholds and reporting anticipated impacts.

The FAQs come amid broader efforts by New York officials to expand oversight of healthcare consolidation. Legislation proposed in Governor Hochul’s FY 2025–26 executive budget would, if enacted, transition the current notice-only framework to a more robust review process and grant DOH authority to monitor market effects following the closing of a transaction. Below are selected highlights from the FAQs.

Entities Required to Report

PHL Article 45-A and its reporting requirements apply to “health care entities,” as defined in § 4550(2), which encompasses a broad range of healthcare-related organizations, including, but not limited to, physician practices, management services organizations (MSOs), provider-sponsored organizations, health insurance plans, and other facilities or entities that provide health care services in New York.

The FAQs further clarify that the following are also considered “health care entities” within the meaning of § 4550(2): dental practices, clinical laboratories, pharmacies, wholesale pharmacies (including secondary wholesalers), independent practice associations, and accountable care organizations (ACOs).

Importantly, the applicability of Article 45-A does not depend on whether an entity is physically located or domiciled in New York. Both in-state and out-of-state entities may be subject to the law, provided the proposed transaction would generate the threshold amount of gross in-state revenue. The determining factor is whether the transaction will result in sufficient New York-based revenue, regardless of the entities’ geographic location.

What Constitutes a Material Transaction

The notice requirement under PHL Article 45-A applies only to “material transactions.” As defined in § 4550(4), a material transaction includes:

• A merger involving a health care entity;
• The acquisition of one or more health care entities;
• An affiliation agreement or contract formed between a health care entity and another person; and
• The formation of joint ventures, partnerships, ACOs, or MSOs for the purpose of administering contracts with health plans, among other arrangements.

The notice requirement applies whether the transaction occurs as a single event or as part of a series of related transactions within a rolling twelve-month period, so long as it results in an increase of $25 million or more in gross in-state revenue.

Conversely, as highlighted in the FAQs, the following types of transactions are not considered material and are therefore exempt from the notice requirement under PHL Article 45-A:

• A clinical affiliation of one or more health care entities formed for the purpose of collaborating on clinical trials or graduate medical education programs;
• Any portion(s) of a transaction subject to the DOH’s Certificate of Need (CON) process or an insurance-entity approval process under PHL Articles 28, 30, 36, 40, 44, 46, 46-A, or 46-B; and
• De minimis transactions, defined as transactions or series of related transactions that result in a health care entity increasing its total gross in-state revenues by less than $25 million.

Notably, for transactions that include components subject to the CON or other regulatory review processes, the FAQs clarify that any discrete portion of the transaction not subject to those processes must still be reported under PHL Article 45-A if it independently exceeds the $25 million “de minimis” threshold. To determine whether notice is required, the parties must conduct the following analysis:

• Estimate in good faith the total in-state gross revenues attributable to the entire transaction, excluding the revenues associated with components subject to CON review and for which an application is anticipated;
• If the resulting amount is $25 million or more, the non-CON portions of the transaction must be reported under PHL Article 45-A.; and
• If the resulting amount is less than $25 million, the transaction does not meet the definition of a “material transaction,” and no notice to DOH is required.

Calculating the $25 Million “De Minimis” Threshold

The FAQs provide additional detail on how to assess whether a transaction falls below the $25 million “de minimis” threshold.

For single transactions, parties should evaluate whether the acquired or merged entities generated $25 million or more in combined gross in-state revenue during the 12-month period preceding the anticipated closing date (the “lookback period”).

For a series of related transactions, DOH expects parties to assess the gross in-state revenue associated with each individual transaction occurring within the 12-month lookback period, based on each transaction’s actual or anticipated closing date. If the total combined gross in-state revenue attributable to the related transactions is $25 million or more, the series will be subject to the notice requirement under PHL Article 45-A.

Required Impact Assessment

Under PHL § 4552(f), notices of material transactions must include information regarding the anticipated impact of the transaction on cost, quality, access, health equity, and competition. The FAQs clarify that submitting parties are expected to provide a good-faith assessment of these effects as part of the notice.

DOH provides a non-exhaustive list of factors that parties should consider in their analysis, including whether:

• Services will be eliminated, reduced, added, or expanded (in terms of staffing or service hours);
• Contracts with certain insurance carriers will be added or eliminated, including any impact on Medicaid participation;
• Locations will open or close, or otherwise expand or reduce service availability;
• Healthcare staffing changes are expected (e.g., staff additions or reductions);
• Increases in contracted commercial payor rates are anticipated;
• There will be changes in the share of services provided to historically underserved populations; and
• The transaction is expected to result in increased market consolidation (evidenced by changes in market share in any region of the state).

This new FAQ guidance offers healthcare providers and investors greater insight into how New York expects entities to comply with Article 45-A’s notice requirements. While the proposed budget legislation may further expand DOH’s oversight powers, this initial guidance is a key step toward operationalizing the law and helping parties structure deals in compliance with evolving regulatory expectations. The new FAQ guidance can be found here.