Office of Health Care Affordability Publishes Near-Final Regulations on Health Care Transaction Notice Requirements

On Tuesday, November 28, 2023, California’s Office of Health Care Affordability (“OHCA”) published its latest version of the proposed regulations requiring advanced notice of certain health care transactions in California for final approval by California’s Office of Administrative Law (“OAL”).  The publication included the proposed regulations, a notice of proposed emergency rulemaking, and a finding of emergency detailing the policy justifications and commentary on each part of the draft regulations.   OHCA is required to make its proposed regulations available for notice and comment five working days before submitting the regulations to OAL.  While OHCA may make further changes to the regulations in response to feedback during the notice and comment period, the language posted this week may be the final regulatory language that will go into effect on January 1, 2024.

SB 184 authorized OHCA to adopt the pre-transaction notice regulations through the emergency rulemaking process, but OHCA published multiple rounds of draft regulations for public input since this past summer.1  The regulations generally require prior notice of certain health care transactions if (1) at least one of the parties to the transaction is a “health care entity,” (2) at least one party which is a “health care entity” has California assets and/or revenue that meet certain thresholds, and (3) the transaction constitutes a “material change transaction.”  The regulations also detail the information to be included in the notices, OHCA’s standards of review, timelines for review, and procedures for protecting confidential information. 

Here are some important changes in the latest version of the proposed regulations:

OHCA may submit the proposed regulations to OAL after a five working day notice period, after which OAL will have 10 calendar days to review and approve the proposed emergency regulations.  If approved, the regulations will take effect on January 1, 2024 and will remain in effect as emergency regulations for five years, during which time OHCA may adopt permanent regulations through the regular rulemaking process.  Participants in the California health care sector should engage in early, careful review and assessment to determine whether they are potentially subject to the notice and review requirements and monitor any further changes to the regulations prior to January 1, 2024.

© Polsinelli PC, Polsinelli LLP in California
National Law Review, Volumess XIII, Number 334