What’s happening: On Nov. 28, the Office of Health Care Affordability (OHCA) released a revised version of the cost and market impact review regulations, alongside an accompanying notice.
What else to know: The final regulations are expected to be effective on Jan. 1, 2024, for transactions intended to be completed on or after April 1, 2024. Stakeholders will have five days to comment on the regulations once officially filed.
The revised version of the regulations includes several key changes compared to the Oct. 9 draft version.
First, OHCA deleted two circumstances that would have required notice to OHCA:
- A health care entity joining, merging, or affiliating with another health care entity where either entity has at least $10 million in annual California-derived revenue (The regulations continue to require notice to OHCA for the formation of a new health care entity, affiliation, partnership, joint venture, or parent company that is projected to have at least $25 million in California-derived annual revenue, or transfer of control of California assets related to the provision of health care valued at $25 million or more)
- A transaction that would change the form of ownership of a health care entity that is a party to the transaction, such as a change from a physician-owned to a private equity-owned, or a publicly held to a privately held, form of ownership
Second, OHCA will automatically deem confidential information submitted about the valuation of a transaction. The submitter must mark this information as confidential.
Third, OHCA shortened certain deadlines:
- If OHCA reviews a notice and decides not to initiate a cost and market impact review, OHCA will inform the submitters within 45 days (instead of 60 days).
- OHCA may extend its 90-day timeline to complete a cost and market impact review by one additional 30-day period if it needs additional time (instead of an additional 45-day period).
- OHCA will issue its final report within 15 days of the close of the comment period (instead of 30 days).
Fourth, OHCA made technical or clarifying edits, such as to how revenues are to be reported.
In early December, OHCA will file this regulation with the Office of Administrative Law. From the date of filing, stakeholders will have five days to provide comment, and the regulations may be finalized after another five days.
