California’s Office of Health Care Affordability (OHCA), established last year through new legislation, is taking action to tackle the growing issue of skyrocketing health care expenses in the state. With the authority to collect and analyze data on health care costs, OHCA also has the power to review mergers and acquisitions within the health care industry, ensuring that these transactions do not negatively impact the affordability of health care services.
Starting January 1, 2024, new notice and review requirements will be in place for health care entities in California. These requirements apply to transactions that close on or after April 1, 2024. Health care entities, as defined under the law, are obligated to provide written notice to OHCA if they plan to transfer a significant amount of their assets or transfer control over their operations to other entities. This notice must be given at least ninety days before the agreement or transaction takes place.
Once OHCA receives the notice, they have sixty days to either conduct a cost and market impact review of the proposed transaction or waive the review. If OHCA determines that the transaction poses a risk of significant impact on market competition, they are required to conduct a cost and market impact review. The implementation of a covered transaction is prohibited until sixty days after OHCA issues a final report, unless the review is waived.
In recently released revisions to the proposed regulations, important clarifications have been made. One significant change is the removal of management service organizations (MSOs) from the definition of “Health Care Entities.” However, MSOs may still be subject to notice requirements if they perform functions of a health care entity and meet certain criteria, such as being under the control or governance of a health care entity.
These new regulations aim to enhance transparency and oversight in the health care industry, ensuring that transactions are carefully reviewed to prevent any detrimental effects on market competition and health care costs for Californians.
1. What is OHCA?
OHCA stands for the Office of Health Care Affordability, which is a regulatory body in California responsible for collecting and analyzing data on health care costs and reviewing mergers and acquisitions within the health care industry.
2. When do the new notice and review requirements go into effect?
The new notice and review requirements for health care entities in California will take effect on January 1, 2024, and will apply to transactions that close on or after April 1, 2024.
3. What is the purpose of the cost and market impact review conducted by OHCA?
The purpose of the cost and market impact review is to examine proposed transactions in the health care industry and assess their potential impact on market competition and health care costs. If OHCA determines that a transaction poses a risk of significant impact, they are required to conduct a thorough review before the transaction can be implemented.