Per the notice below, the New York State Department of Health (NYSDOH) has issued Frequently Asked Questions (FAQs) on the new law requiring reporting of certain health care transactions to NYSDOH.  The FAQs advise that dental practices are subject to the new law even though the new law specifically states only "physician" practices.  Nevertheless, there is still a $25 million threshold for reporting that likely would exempt many dental practice transactions.

Public Health Law Article 45-A, Material Transactions Frequently Asked Questions

New York State (NYS) Public Health Law (PHL) Article 45-A took effect August 1, 2023.  This law requires statutorily defined "health care entities" involved in a "material transaction" to provide written notice to the NYS Department of Health (Department) at least 30 days prior to the closing of the transaction, which the Department will post on its website and share with the Office of the NYS Attorney General.  Since this law took effect, the Department has received multiple questions regarding reporting requirements and statutory interpretation.  The following Frequently Asked Questions (FAQs) provide responses to common questions the Department has received to date to provide clarity as health care entities and their legal representatives determine applicable reporting requirements.  The Department further encourages interested stakeholders, legal counsel, and the general public to review the Department's Material Transactions webpage at: Required Reporting of Material Transactions.  In addition to containing important information regarding PHL Article 45-A, this webpage also includes a link to summaries of reported Material Transactions.  Additional questions not addressed herein may be directed to the Department by e-mailing: MaterialTransactionDisclosure@health.ny.gov.

Topic 1: Health Care Entities Subject to PHL Article 45-A

Q1: Which entities are required to report Material Transactions under PHL Article 45-A?

The requirement to report Material Transactions 30-days prior to the proposed closing of the transaction applies to "health care entities."  Pursuant to PHL §4550(2), a health care entity includes, but is not limited to:

• A physician practice or group;
• A management services organization or similar entity that provides all or substantially all the administrative or management services that are under contract with at least one physician practice;
• 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.

The Department has previously advised that the following entities are considered a "health care entity" within the meaning of PHL §4550(2):

• Dental practices;
• Clinical laboratories;
• Pharmacies;
• Wholesale pharmacies, including secondary wholesalers;
• Independent Practice Associations (IPAs); and
• Accountable Care Organizations (ACOs).

The above list is not exhaustive, but illustrative of the types of entities covered under the Material Transaction law.

Q2: If an entity is located entirely outside of NYS, and/or holds a non-NYS license/operating certificate, would such an entity be considered a "health care entity" within the meaning of PHL Article 45-A?

Yes; the applicability of PHL Article 45-A does not turn on whether or not an entity is physically located in or domiciled in NYS.  Both in-state and out-of-state health care entities, as defined in PHL § 4552, are covered under PHL Article 45-A.  Whether or not a proposed transaction must be reported to DOH turns in part on whether the proposed transaction would generate the threshold amount of gross in-state (NYS) revenue, regardless of the entity's location.

Topic 2: Definition of "Material Transaction" under PHL Article 45-A

Q3: Generally, what constitutes a Material Transaction?

A Material Transaction includes any of the following that occur during a single transaction or in a series of related transactions within a rolling 12-month period that result in a health care entity increasing its total gross in-state revenues 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 assets, voting securities, membership or partnership interests or the transfer of control, such as contracting for services commonly provided through a management or administrative services agreement between a practice and a management services organization;
• 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 management services organization for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health-care providers.

Q4: Are there certain transactions that are exempt from the reporting requirement?

Yes.  The following transactions are not considered "material" within the meaning of the law and therefore exempt from Article 45-A's notice and reporting requirements:

• 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 Department'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; provided, however, that any discrete portions of a transaction which are not already subject to review under CON or insurance-entity approval processes shall be reportable under PHL Article 45-A so long as they independently exceed the "de minimis" threshold (refer to Q6 for further detail); parties are responsible for determining whether any discrete portion(s) of a transaction is reportable under PHL Article 45-A; and
• "De minimis" transactions, which for purposes of the law constitute a transaction or series of transactions that result in a health care entity increasing its total gross in-state revenues by less than $25 million.

Q5: Is the threshold of $25 million to meet the de minimis exception an annual number or total in aggregate without a time limit?

A "de minimis transaction" is a single transaction or series of transactions that would result in a health care entity increasing its total gross in-state revenues by less than $25 million.  The $25 million threshold must be assessed on an annual basis, based on a 12-month lookback period, to determine whether a transaction or a series of related transactions will result in a health care entity increasing its total gross in-state revenues by less than $25 million.  Specifically:

• (1) If the transaction is a single transaction, the parties must assess whether the entity(ies) to be acquired/merged into the surviving entity will have had $25 million or more of combined gross in-state revenue in the prior 12-month period from the anticipated closing date (referred to as the "lookback period").
  • Example 1: Company B will acquire Company A; Company B will be the surviving corporate entity.  In this case, the parties must assess if Company A (the acquired entity) produced $25 million or more in gross in-state revenue in the 12-month lookback period.  This will allow the parties to assess whether the proposed transaction (Company A's acquisition) would increase the revenue of the surviving entity by $25 million or more.
  • Example 2: Company A and Company B will merge to form a new corporate entity, Company AB.  In this case, Company A and Company B must assess whether their total combined gross in-state revenue from the 12-month lookback period is greater than or equal to $25 million.  For instance, if Company A produced $20 million in in-state revenue and Company B produced $10 million in in-state revenue during the lookback period, new Company AB would have a combined $30 million in in-state revenue that would exceed the $25 million threshold, making the transaction reportable.
• (2) If the transaction is a series of related transactions, the parties must assess the revenue associated with each related transaction that took place, or will take place, during the 12-month lookback period.  Specifically, for each of those transactions, the parties must assess the added gross in-state revenue that is attributable in the 12-month lookback period based on the actual or anticipated closing date of that particular transaction.  The series of related transactions will be subject to the Material Transactions law if the total added combined gross in-state revenue calculated across all of these transactions is $25 million or more.
  • Example:
    • Company A plans to acquire Company B in 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).  This transaction 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).  This transaction falls within the 12-month lookback period of the anticipated Deal 1 closing.
    • The parties 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 Material Transactions law.

Q6: If the transaction consists of multiple components, and some of those components are subject to review under CON laws, does that make the entire transaction exempt from reporting under PHL Article 45-A?

No.  If one or more elements of a transaction are subject to separate review and approval processes pursuant to PHL Articles 28, 30, 36, 40, 44, 46, 46-A, or 46-B, including but not limited to CON establishment or construction applications, then the parties to the proposed transaction must perform the following analysis to assess whether a transaction is subject to reporting under the Material Transactions law:

• First, conduct a good faith estimation of the total in-state gross revenues of the transaction less the total in-state gross revenues of those elements subject to CON review and approval for which an application is anticipated.
• If the resulting amount calculated above is at least $25 million, then the non-CON portions of the transaction must be reported pursuant to PHL Article 45-A.
• If, however, the resulting amount calculated above is less than $25 million, the transaction does not constitute a Material Transaction within the meaning of PHL Article 45-A and notice is not necessary to the Department.

Parties are responsible for determining whether any discrete portion(s) of a transaction is reportable under PHL Article 45-A.

Topic 3: Assessing Impacts of the Transaction

Q7: How should covered health care entities determine the Material Transaction's impact on cost, quality, access, health equity and competitionin the impacted markets?

Pending release of an electronic Material Transactions Notice Form, which may require more specific information to conduct this impact assessment, parties should provide a good faith assessment of the impact of the proposed transaction and should take into account a variety of circumstances, dependent on the nature of the particular proposed transaction.  For example, parties should assess 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).

The aforementioned examples are shared for illustrative purposes only and not intended to be an exhaustive list of impacts that should be assessed by the parties and reported to the Department.

Topic 4: Public Comments Process

Q8: How can an interested party comment on a proposed Material Transaction?

Summaries of reportable Material Transactions can be found at: https://health.ny.gov/facilities/material_transactions/transactions.htm.  If you would like to comment on a Material Transaction, you may e-mail comments to: MaterialTransactionDisclosure@health.ny.gov.  Please include the parties to the transaction in the e-mail Subject line.

The Department does not maintain a Material Transactions LISTSERV.  Individuals or entities interested in commenting on Material Transactions should visit List of Material Transactions regularly for updates.