NY doctor follow, MSO, and different well being care transactions affected by new reporting guidelines | Hogan Lovells

NY doctor follow, MSO, and different well being care transactions affected by new reporting guidelines | Hogan Lovells

The New York legislature just lately enacted new reporting necessities that can have an effect on well being care transactions throughout the state. Efficient August 1, 2023, sure “materials” mergers, acquisitions, affiliation agreements, and joint ventures involving “well being care entities” should be reported to the New York Division of Well being (NY DOH) a minimum of thirty days previous to closing. NY DOH may even acquire deal paperwork and different data and solicit public touch upon summaries of those transactions. Whereas NY DOH needn’t approve reported transactions (a notable change from an earlier model of the laws), these new necessities might invite elevated regulatory and public scrutiny, particularly for administration providers organizations (MSOs) that assist doctor practices.

Transactions topic to the brand new reporting necessities

The brand new reporting necessities are codified in Article 45-A to the New York Public Health Code, and obligate “health care entities” involved in a “material transaction” to provide information and documentation to NY DOH about each transaction. As noted, the new reporting requirements take effect starting on August 1, 2023.

Scope of well being care entity reporting obligations for materials transactions

Well being care entities concerned in materials transactions that set off reporting beneath the brand new necessities should, as famous, present written discover of the transaction to DOH a minimum of 30 days previous to closing. The entity should then notify DOH when the transaction closes.(8) The brand new regulation additionally delineates sure extra necessities and processes related to the brand new reporting regime.

  • Supporting documentation. The preliminary discover relating to the transaction should be accompanied with the next supporting documentation: (a) the names of the events to the transaction; (b) “(c)opies of any definitive agreements governing the phrases of the fabric transaction, together with pre- and post-closing situations”; (c) the places the place the events to the transaction at the moment present well being care providers in New York and the income generated from these places; (d) “(a)ny plans to scale back or remove providers and/or participation in particular plan networks” in reference to the transaction; (e) the proposed cut-off date; and (f) a short description of the transaction that discusses its “anticipated influence” on “price, high quality, entry, well being fairness,(9) and competitors” and “any commitments to handle anticipated impacts.”(10)

  • Non-DOH regulatory overview. Instantly upon receipt of the preliminary discover and supporting documentation, DOH will ahead the knowledge “to the antitrust, well being care(,) and charities bureaus of the workplace of the New York lawyer normal.”(11)

  • Public touch upon transaction abstract. Within the 30-day interval earlier than the transaction closes, DOH will publish a abstract of the proposed transaction that features a description of the teams or people more likely to be affected by the transaction and details about providers that the well being care entity at the moment supplies, commitments by the well being care entity to proceed such providers and any providers that can be decreased or eradicated. NY DOH will then solicit public feedback on the abstract.(12)

  • Penalties for non-compliance with reporting necessities. Well being care entities that fail to report will typically face civil penalties of a minimum of $2,000 per day.(13)

The legislature has additionally delegated to NY DOH the duty of building extra detailed reporting necessities and specifying the shape and method for reporting and for public remark.

Key issues

The legislature seems to have had specific curiosity in concentrating on MSOs that handle administrative features for doctor practices. That mentioned, the scope of the brand new reporting necessities may be very broad, such that quite a few different well being care transactions are more likely to be swept into the scope of the brand new regulation.

With the passage of this statute, materials well being care transactions notably face a number of extra dangers/prices: private and non-private notion, heightened potential for regulatory scrutiny, elevated administrative burdens, and potential delayed closings/decreased transaction flexibility.

  • First, DOH will publicly launch abstract particulars a few transaction previous to it closing. DOH bulletins may entice information protection and lift questions from sufferers that well being care entities should be able to reply.

  • Second, DOH will acquire, amongst different issues, “(c)opies of any definitive agreements governing the phrases of the fabric transaction, together with pre- and post-closing situations”(14) and this can be transmitted to the Lawyer Common.(15) Well being care entities must be ready for the potential of better regulatory scrutiny of transaction phrases, particularly if a transaction touches specific coverage considerations of DOH, similar to broad non-compete agreements or preparations that might implicate the company follow doctrine.

  • Third, there are administrative burdens related to offering mandated data, together with the requirement to supply a dialogue of the transaction’s “anticipated influence” on “price, high quality, entry, well being fairness, and competitors” and “any commitments to handle anticipated impacts.”(16) It’s an open query for now as to what’s going to occur if the regulators aren’t glad with these descriptions however there is no such thing as a corresponding clear violation of any relevant New York State regulation.

  • Fourth, events should be ready to report a minimum of thirty days previous to a transaction closing.(17) In some instances the place a transaction is on a really quick observe, this requirement may delay a closing (though not sometimes, except the State intervenes as the results of the mandated disclosure).

New York’s new reporting necessities comply with comparable pre-closing reporting necessities(18) adopted by Massachusetts,(19) Connecticut,(20) Washington,(21) Oregon,(22) and California.(23) Different states are additionally contemplating and should enact comparable laws.

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Hogan Lovells will proceed to observe DOH’s implementation of this new regulation, and can replace purchasers upon DOH’s launch of laws or different related steering. We may even proceed to observe developments in different states requiring reporting of well being care transactions.

(View source.)

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