healthcare regulations are constantly evolving to address the needs of the population and advancements in medical technology. In New York, there is a noticeable shift towards a more hands-on regulatory approach in this arena. This shift was highlighted with the passage of New York State’s Public Health Law Article 45-A. The law introduces new reporting requirements for healthcare entities involved in material transactions. healthcare providers, business leaders, and stakeholders in the healthcare industry are wise to understand these changes to help better ensure compliance.
There are many questions about the application of this law. Some of the more common include the following.
Which healthcare entities are subject to reporting?
The Department of Health recently provided clarification with an FAQs on reporting requirements. healthcare entities, as defined under PHL §4550(2), must report material transactions. These entities include:
- Physician practices or groups
- Management services organizations
- Provider-sponsored organizations
- Health insurance plans
- Other healthcare facilities or organizations
This includes entities such as dental practices, clinical laboratories, pharmacies, and accountable care organizations. Importantly, both in-state and out-of-state entities generating significant NYS revenue must comply.
What is a material transaction for the purposes of reporting?
Material transactions involve mergers, acquisitions, affiliations, or formations that increase a healthcare entity’s gross in-state revenues by $25 million or more. However, certain transactions are exempt:
- Clinical affiliations for trials or education
- Transactions under the Department’s Certificate of Need process
- De minimis transactions increasing revenue by less than $25 million
healthcare professionals must assess transactions annually to determine if they meet the $25 million threshold.
What does this mean for those in the healthcare market in New York?
The increased reporting requirements and expanded information provided within the recently released FAQs highlight the state’s aggressive and more involved approach to regulating the business of healthcare in New York. Such efforts may continue into the future. As such, business leaders and stakeholders in healthcare organizations are wise to move forward with caution, particularly when it comes to completion of due diligence regarding healthcare transactions.