For the second year in a row, Governor Hochul’s proposal to expand New York’s Material Transaction Law (Public Health Law Article 45-A) was left out of the final budget. The proposal would have given the Department of Health a preliminary review of every covered deal, a deeper cost and market impact review that could have delayed closing by up to 180-days, and five years of post-closing reporting. Dealmakers can exhale a little. However, the law that has been in effect since August 2023 is still fully in force, and DOH has been tightening how it is administered.
Who and What Is Covered
The law covers “health care entities,” which include physician practices, MSOs that provide all or substantially all administrative services to at least one physician practice, provider-sponsored organizations and health plans. The DOH has said dental practices, clinical labs, pharmacies, IPAs and ACOs count, too, and an entity does not have to be located in New York to be covered. A transaction is “material” if it is a merger, acquisition, affiliation, or the formation of an MSO or similar venture to specifically administer contracts with health plans, PBMs or providers, and it increases an entity’s New York gross revenue by $25 million or more, in one deal or a series of related deals over a rolling 12 months. Even contracting with an MSO for management services can count as an acquisition.
If a deal qualifies, the parties must file DOH’s electronic Material Transaction Reporting Form at least 30 days before closing. Email notices are no longer accepted. The form asks for financial statements, transaction documents, background on each party and an assessment of the deal’s impact on cost, quality, access, health equity and competition. DOH posts a summary for public comment, and the parties must notify DOH again when the deal closes. Failing to give notice can bring civil penalties, and each day the violation continues counts separately.
What This Means in Practice
Count related deals together. The $25 million threshold isn’t only about the deal in front of you. The DOH looks at a series of related transactions over a rolling 12-month period, so a few smaller acquisitions can add up to a reportable one.
A CON review doesn’t excuse the rest of the deal. If part of a transaction goes through Certificate of Need review, the remaining parts still have to be reported if they bring in $25 million or more in New York revenue on their own.
Thirty days is the minimum, not the plan. The form asks every party for financial statements, transaction documents and an impact analysis, and the DOH recommends reviewing the questions well before the 30-day mark. Gathering that from both sides of a deal takes time.
Closing means a second notice. Once the deal closes, the parties have to notify the DOH via email.
What Comes Next
The expansion will likely be back. It has now been proposed twice, and New York can also push in the same direction through regulations, guidance and more stringent forms. Even if it passes, the most recent version would not have taken effect until a year after enactment, so for deals on the table today, the current rules are the ones that matter. For how transaction reporting fits with New York’s corporate practice of medicine rules, see our earlier post, New York’s Corporate Practice of Medicine: Why 2026 Is a Turning Point.
The bill stalled. The paperwork didn’t. Build it into the deal timeline from day one.
At MDRXLaw, we counsel physician practices, MSOs, pharmacies and investors on New York health care transactions and regulatory compliance. Please feel free to contact our attorneys at info@mdrxlaw.com or at 212.668.0200.
