Coming soon: Final comment period for OHCA regulations expanding PE, MSO transaction reporting

On September 11, 2026, California’s Office of Health Care Affordability (OHCA) published a notice of emergency regulatory action, indicating its intent to submit proposed emergency regulations to the Office of Administrative Law (OAL) in five business days, on or around September 18, 2026. The proposed regulations would significantly expand California’s healthcare transaction notification process, specifically with respect to transactions involving private equity (PE) groups and management services organizations (MSOs).

We described and analyzed these issues in our prior client alerts:

• California amends AB 1415, bill that expands OHCA’s healthcare transaction review authority.
• OHCA publishes draft regulations expanding oversight of PE and MSO transactions.

Background

OHCA’s material change transaction notification process generally requires healthcare entities to provide OHCA with 90 days’ prior written notice of certain transactions. Although OHCA does not have the power to block or condition transactions, it can order a cost and market impact review (CMIR) that can significantly delay the closing of a transaction.

Effective January 1, 2026, Assembly Bill (AB) 1415 expanded the statute to impose notice requirements on what it calls “noticing entities,” defined as PE groups; hedge funds; MSOs; newly created entities established for the purposes of entering into transactions with healthcare entities; and certain entities that own, operate, or control a provider. AB 1415 also authorized OHCA to adopt regulations to implement these expanded notice requirements.

OHCA released an initial draft of the implementing regulations in May 2026 (Initial Regulatory Proposal). Following an informal comment period and public discussion, OHCA revised the proposed regulations and issued the proposed emergency regulation text on September 11, 2026 (Final Regulatory Proposal). Although the Final Regulatory Proposal responds to some of the concerns raised by stakeholders during the informal comment period, the regulations would still expand the number of transactions subject to OHCA’s review as well as the categories of information that submitters, in particular PE groups and hedge funds, would be required to disclose to OHCA.

Proposed changes

The Final Regulatory Proposal is largely the same as the Initial Regulatory Proposal from May. The most significant changes found in the Final Regulatory Proposal include the following:

• Definition of healthcare entity. Entities that own, operate, or control a provider are no longer expressly included in the definition of healthcare entity. The Initial Regulatory Proposal would have treated such entities as both a noticing entity and a healthcare entity.
• MSO qualification. Under the Final Regulatory Proposal, an MSO meeting at least one of the following thresholds would be required to file notice of certain transactions:
  • The MSO is owned by a hospital and has one or more physician organizations as clients or affiliates.
  • The MSO employs or otherwise contracts with the physician owner of one or more physician organizations.
  • The MSO shares directors, officers, investors, or other natural persons with the ability to exercise control with respect to a healthcare entity.
  • The MSO is affiliated with at least two of the following: a payer, two or more physician organizations, or a hospital.
• MSO changes of control. MSOs would need to report transactions that result in a PE group or hedge fund holding 10% or more of the assets, equity, debt, or liabilities of the MSO, or that give a PE group or hedge fund certain governance and/or operational rights over the MSO or a healthcare entity post-transaction. This 10% threshold was increased from the 5% threshold in the Initial Regulatory Proposal.
• Healthcare real estate. Under the Final Regulatory Proposal, a sale or transfer of real estate where a provider or fully integrated delivery system provides healthcare services would be considered a material change transaction, regardless of whether the provider or fully integrated delivery system is currently operating or providing healthcare services, or has a pending or suspended license.
• Disclosure requirements. The Final Regulatory Proposal would expand several ownership, organizational, and transaction-related disclosure requirements, including the following:
  • Organizational charts must extend through the ultimate parent and include subsidiaries and entities controlled by or under common control with the ultimate parent or its shareholders.
  • PE groups and hedge funds must identify healthcare entities and MSOs directly or indirectly owned, controlled, or financed by participating asset managers and the funds they manage.
  • MSOs must provide documentation showing the names of all healthcare entities to which they provide management and administrative support services.
  • Submitters must provide documentation of any options, compensation, or other financial incentives payable to officers, directors, or persons with management or operational responsibility with respect to the healthcare entity, including any compensation or financial incentives contingent on the close of the transaction.

Comment submission

Following the submission of the Final Regulatory Proposal to OAL, stakeholders will have five calendar days to submit comments. Assuming OAL receives the Final Regulatory Proposal on September 18, 2026, comments will be due September 23, 2026. Comments should be submitted simultaneously to both OHCA and OAL per OHCA’s instructions.

Stakeholders may submit comments on the text of the Final Regulatory Proposal and/or OHCA’s finding of emergency, which contains OHCA’s justification for utilizing the emergency rulemaking process. OAL will have 10 calendar days following OHCA’s submission to make a decision on the proposed emergency regulatory action and will likely do so on or around September 28, 2026. If the Final Regulatory Proposal is approved, OAL will file the regulations with the California Secretary of State, and they will be effective for five years.

Next steps

Stakeholders who wish to submit additional comments should prepare such comments for submission on or before September 23, 2026. This date is subject to change, depending on when OHCA submits the Final Regulatory Proposal to OAL. The public may monitor the OAL website to determine the precise date OAL receives the Final Regulatory Proposal.