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New Regulations on Health Care Transactions in California

While this blog is focused on Texas and federal law, many of our clients offer telehealth or Internet-centric services which implicate the laws of other states.

Andrew J. Demetriou, for HuschBlackwell, discusses new California regulations that “contemplate a dramatic expansion of state review of transactions affecting health care services.”

When approved, final regulations would be effective January 1, 2024. …

The regulations have been proposed pursuant to California Health & Safety Code §§ 125507-125507.6, part of an omnibus health care law enacted in 2022 which created OHCA [California Office of Health Care Affordability] and gave it broad authority to set and enforce heath care cost targets for the State.  The law requires that OHCA receive 90 days’ advance notice of transactions intended to close on or after April 1, 2024, that affect health care services in California. OHCA is required within the notice period to decide whether to conduct a cost and market impact review (“CMIR”) to determine whether a proposed transaction will reflect a market failure, increase market power of a party or create a risk of significant impact on market competition, the State’s ability to meet cost targets or costs for health care purchasers or consumers. Any transaction subject to the notice requirements may not be closed until OHCA has determined not to conduct a CMIR or, alternatively, has completed a CMIR evaluating the transaction.