OHCA Releases Proposed Regulations Broadening Health Care Transaction Oversight in California

On May 15, 2026, the California Office of Health Care Affordability (OHCA) released proposed regulations implementing Assembly Bill (AB) 1415 which took effect on January 1, 2026 (see our prior posts here and here). The new legislation expands the state’s health care material change transaction notice (MCN) process and requires private equity groups, hedge funds, management services organizations (MSOs), and certain newly created entities to give OHCA direct notice of proposed material change transactions involving a health care entity. Before formal rulemaking, OHCA issued Frequently Asked Questions providing high-level guidance for AB 1415 implementation, leaving many operational details for the proposed and final regulations. 

The proposed regulations were presented at OHCA’s Health Care Affordability Board meeting on May 27, 2026, and will remain open for informal public comment at [email protected] through June 11, 2026. In July 2026, the proposed regulations will be submitted for emergency rulemaking with a formal five day public comment period prior to an August 2026 effective date. Below is a summary of the key changes.

Expanded Filing Obligation for Noticing Entities

The proposed regulations extend filing obligations beyond traditional “health care entities” to a new and expansive category of “noticing entities.” Such noticing entities include private equity groups, hedge funds, MSOs, and a newly defined category of “business [entities] created for the purpose of entering into agreements or transactions with a health care entity,” preventing parties from avoiding direct reporting obligations through intermediaries such as acquisition vehicles or special purpose entities. The regulations also extend the existing financial thresholds ($25 million or $10 million in annual revenue or California assets) to transactions involving these entities. 

A noticing entity must file if it is a party to or the subject of a transaction involving a qualifying health care entity or MSO, creating independent filing obligations even where the health care entity itself is not the primary submitter or would not otherwise trigger a filing. In addition, the regulations tie these obligations to transactions already covered by the material change framework, such as transfers of assets, control, or operations, integrating noticing entities into OHCA’s existing jurisdiction rather than creating a separate regime. As a result, private equity sponsors, MSOs, and special purpose entities must assess filing requirements at the outset of deal structuring, expanding the range of transactions subject to OHCA review and limiting the ability to structure around notice requirements.

Expanded Circumstances Requiring Filing

The proposed regulations define three new categories of circumstances that require filing an MCN:

• Private Equity and Hedge Fund Investment or Control Transactions: A transaction involving a private equity group or hedge fund that either (1) results in the group holding 5% or more of the assets, equity, debt, or liabilities of a health care entity satisfying applicable revenue thresholds or an MSO, or (2) results in the acquisition of such interests through arrangements that confer operational control over a health care entity or MSO.
• MSO Service and Change-of-Control Transactions: A transaction involving an MSO that (1) results in the MSO providing management or administrative services to a qualifying health care entity; (2) results in the MSO providing such services to two or more providers that collectively generate at least $10 million annually from California patients; or (3) involves a transfer of control, responsibility, or governance of the MSO, in whole or in part, or a change of 25% or more of the MSO’s ownership.
• Health Care Real Estate Sale-Leaseback Transactions: A transaction that results in the sale-leaseback of real estate used to provide health care services, where the purchaser is not the entity acquiring the health care entity or its direct parent.

The low 5% threshold for private equity and hedge fund investments evidences OHCA’s intent to scrutinize even early-stage or minority investments, while the inclusion of “operational control” arrangements means governance rights and contractual influence, rather than formal ownership, could independently trigger review. At the same time, the MSO provisions bring management relationships squarely within the regulatory framework, treating administrative services and multi-provider network arrangements as economically meaningful forms of control. Together, these rules constrict the ability to rely on intermediary entities or contractual arrangements to avoid oversight.

Information and Documents Required with MCN

The proposed regulations add significant new or clarified requirements for information and documents submitted to OHCA in connection with an MCN. These include, among other things, the following information for public posting:

• For MSOs, all types of services offered and types of services provided to any health care entity involved in the transactions, and geographic service areas
• For private equity groups or hedge fund, names of health care entities or MSOs owned or financed by the participating asset managers and funds they manage
• For all submitters, the names of all affiliates, parents, and subsidiaries of the submitter
• For all submitters, the names of all members of the submitter’s governing body
• Post-transaction changes to (1) ownership, governance, and operational structure of the entity, including for entities or persons with 5% or more ownership,  (2) voting rights, decision-making authority, and management and compliance structures, and  (3) real estate where health care services are provided, including encumbrances and updates to landlord-tenant agreements. 

In addition, under the proposed regulations, submitters would need to provide the following documents:

• Copies of any sale-leaseback or lease-back agreements
• Expanded organizational charts, including identification of all entities or persons with 5% or more ownership
• For private equity groups and hedge funds:
  • Documentation of portfolio health care entities and MSOs, and
  • Information related to debt and capitalization (e.g., debt ratios)

Confidential Treatment of Submitted Information

The existing regulations permit submitters to request confidential treatment of information submitted with a material change notice (MCN). The proposed regulations reorganize these provisions into a standalone section and add several clarifications and substantive updates. Most notably, they would:

• Add and clarify the definition of nonpublic information
• Confirm that confidentiality protections apply to information submitted in connection with a cost and market impact review (CMIR), in addition to MCN submissions
• Require more detailed justification and supporting documentation for confidentiality requests, including clear identification of information for which confidential treatment is sought
• Permit a submitter to request confidential treatment for information obtained from another party to the transaction, subject to a supporting declaration from that party consistent with regulatory requirements

Expedited Review

Existing regulations allow parties to request expedited review of an MCN when they can demonstrate either severe financial distress or a substantial likelihood of a significant reduction in critical health care services. The proposed regulations retain those bases and add a third, expressly non-exhaustive ground for requesting expedited review. An expedited review can be requested for an urgent situation not of the submitter’s own making, such as a public health emergency, natural disaster, or legal mandate, where the public interest would be best served by expedited review. 

CMIR Determination Factors and New Remand Process

Under existing regulations, OHCA bases its decision whether to conduct a CMIR on considerations relating to access, cost, competition, labor market effects, hospital services, and quality. The proposed regulations add a new factor: whether the transaction involves a real estate investment trust (REIT) whose terms could weaken the financial status of the health care entity or place access to care at risk. In addition, the proposal creates a new remand  pathway when a submitter challenges OHCA’s decision to require a CMIR. Within five business days of receiving a compliant request for review, the Director of Health Care Access and Information must either:

• Decline review and uphold the CMIR determination;
• Grant the request and waive the CMIR; or
• Remand the determination to OHCA based on new information submitted with the review request

If remanded, OHCA has up to 30 calendar days to conduct an additional review as directed in the remand order. If OHCA needs additional information or documents from the parties, or receives voluminous materials requiring additional time, it may toll the 30-day review period. At the end of the remand review, the Director may either uphold the determination or issue a waiver.

Conclusion

The proposed regulations signal a significant expansion of California’s material change review framework by broadening filing obligations, increasing scrutiny of private investment and MSO arrangements, and enhancing transparency through more detailed disclosures. The rules collectively constrict the ability to structure transactions to avoid oversight by capturing a wider array of entities, ownership arrangements, and contractual relationships that may previously have fallen outside the reporting framework. At the same time, important procedural refinements, such as expanded bases for expedited review, more detailed expectations for supporting documentation, and a more structured remand process, promote administrative efficiency and potentially greater predictability in OHCA’s review timeline. The regulations also create an opportunity for greater clarity, consistency, and transparency in the transaction review process, enabling stakeholders to navigate OHCA oversight with more informed planning and to engage strategically as the framework continues to evolve through rulemaking.

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