California’s Office of Health Care Affordability (OHCA) has closed the comment period on its Proposed Emergency Regulations, which aim to expand reporting requirements for private equity, hedge funds, and management services organizations (MSOs) in health care transactions. These regulations, released on September 11, 2026, and posted on September 22, are part of a broader effort to enhance oversight in the state’s health care sector.
The regulations, submitted to the state’s Office of Administrative Law (OAL), implement AB 1415, a law that took effect on January 1, 2026. AB 1415 expanded OHCA’s oversight of these entities in the health care sector, marking a significant shift in how private equity groups, hedge funds, and MSOs operate within California. This law builds on the Health Care Quality and Affordability Act, which previously only required “health care entities” to provide notice of material transactions.
Clarifying Notice Requirements
The Proposed Emergency Regulations clarify the notice requirements under AB 1415 for private equity groups, hedge funds, and MSOs. These entities must now provide written notice to OHCA for certain agreements or transactions involving health care entities or MSOs. Specifically, the regulations detail scenarios where a “noticing entity” must inform OHCA of agreements or transactions with health care entities, MSOs, or entities that own or control them. This includes transactions that result in the acquisition of assets, equity, or liabilities, as well as those involving real estate used for health care services.
Stakeholders had five calendar days to review and comment on the regulations after they were posted on September 22. This period has now closed, marking a critical step in the regulatory process. The urgency of these regulations was showed by HCAI’s Finding of Emergency, which emphasized their necessity for preserving public health, safety, and welfare in California.
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Expanding the Scope of Reporting
AB 1415 amended California’s Health Care Quality and Affordability Act to include new entities in the reporting requirements. These include newly created business entities and those that own, operate, or control a provider. Additionally, the law mandates that MSOs notify OHCA of any agreements or transactions with other entities, regardless of their nature. OHCA, established in 2022 within the Department of Health Care Access and Information (HCAI), is tasked with (1) slowing health care spending; (2) promoting high-value system performance; (3) assessing market consolidation by collecting, analyzing, and reporting data on total health care expenditures; and (4) enforcing spending targets set by its Health Care Affordability Board.
Key Transaction Thresholds
The emergency regulations specify transactions that trigger reporting requirements. These include transactions where a private equity group or hedge fund acquires 10 percent or more of the assets, equity, debt, or liabilities of a health care entity or MSO. This threshold also applies to groups of investors acting collectively to reach the 10% mark. Additionally, transactions involving MSOs that provide management services for health care entities generating $10 million in annual California-derived revenue are covered. The sale or transfer of real estate used for health care services, under specific conditions, must also be reported.
Impact and Next Steps
If implemented, the regulations will remain effective for five years as emergency measures. During this period, OHCA will proceed with regular rulemaking, including another comment period, to finalize the regulations. This phased approach allows for flexibility while ensuring immediate oversight of critical transactions.
These changes will significantly affect private equity firms, hedge funds, and MSOs operating in California’s health care sector, ensuring greater transparency and oversight in transactions. For further questions related to this article, please reach out to the authors, including Epstein Becker Green Staff Attorney Ann W. Parks, who contributed to its preparation. [2] CA HLTH &S § 127500 et seq.
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