As highlighted in our previous blog on state antitrust enforcement, states across the country are increasingly scrutinizing healthcare transactions and investments by private equity firms and other financial sponsors.[1]
On February 5, 2026, the Massachusetts Health Policy Commission (the “HPC”) released amended regulation 958 CMR 7.00 (the “Proposed Amended Regulation”) to align the existing regulation with the changes enacted pursuant to Chapter 343 of the Acts of 2024, An Act Enhancing the Market Review Process, (the “Act”).[2] As discussed in our prior blog, the Act, and now the Proposed Amended Regulation, expands the HPC’s existing oversight over Management Services Organizations (“MSOs”), private equity groups, and real estate investment trusts investing in Massachusetts healthcare providers and further clarifies the scope of transactions subject to HPC oversight.[3]
A virtual public hearing to discuss the Proposed Amended Regulation will be held on Thursday, March 12, and public comments will be accepted through Friday, March 20. On April 16, the HPC will vote on adoption of the final regulation.
Key Provisions of 958 CMR 7.00[4]
Pre-existing Massachusetts law mandates that healthcare Providers and Provider Organizations, including physician practices, healthcare facilities, independent practice associations, accountable care organizations, and any other entities that contract with carriers for the payment of healthcare services, with more than $25 million in Net Patient Service Revenue in the preceding fiscal year must submit a Material Change Notice to the HPC, Center for Health Information and Analysis, and Office of the Attorney General at least 60 days prior to a proposed “Material Change” involving such entity.
Consistent with the Act, the Proposed Amended Regulation expands the scope of Material Changes requiring notice and codifies prior HPC guidance that had not been formally included.
1. Expanded Definition of “Control”
The Act notably broadened the definition of “Material Change” to include transactions involving a Significant Equity Investor that result in a change of ownership or control of a Provider or Provider Organization. While the Act expanded the definition of “Material Change,” the Act did not define “Control.”
The Proposed Amended Regulation includes an expansive definition of Control. Specifically, Control is the “partial or complete” power to direct the management, administrative functions, assets, or policies of an entity, whether through the ownership of voting securities or rights; appoint, designate, or remove board members or directors; or control, either directly or indirectly, by contract. Control is also deemed to exist if a person or entity directly or indirectly owns, has rights over, or holds with the power to vote 10% or more of the voting securities of an entity.
2. MSOs and Clinical Affiliations
Under the existing regulations, MSOs are only captured if an MSO falls within the definition of Provider Organization. In contrast, the Proposed Amended Regulation specifically includes MSOs in the types of Material Changes requiring notice, including changes of ownership or control, contract affiliations, and formation of MSOs.[5]
The Proposed Amended Regulation also clarifies the types of clinical affiliations that require notice. Covered affiliations include transactions that involve co-branding, co-located services, complete or substantial staffing of an acute hospital service line, the provision of funds to establish or enhance electronic health record interconnectivity, establishment of a preferred provider relationship, regular and ongoing provision of telemedicine services, and establishment of a discount arrangement.[6]
3. Out-of-State Entities
The Proposed Amended Regulation clarifies that out-of-state entities may be subject to the notice requirements even if the out-of-state entity is not itself licensed in Massachusetts.[7] Specifically, any acquisition, merger, corporate affiliation, or contracting affiliation would constitute a Material Change requiring notice if it involves an entity representing providers of Health Care Services in a state other than Massachusetts and such transaction would result in an increase in annual net patient service revenue equal to or greater than the revenue increase threshold ($10 million as of April 16, 2026, subject to annual adjustments).
4. Expanded Definition of Health Care Services
Under the existing regulations, the definition of Health Care Services includes various medical, behavioral health, hospital, and other clinical services. The Proposed Amended Regulation adds “pharmacy services” to the definition of “Health Care Services,” expanding the type of transactions subject to review.
FOOTNOTES
[1] See our prior blog post on state antitrust enforcement: State Antitrust Enforcement Roundup: Updates to Healthcare Merger Matrix; New Potential Legislation Targeting Private Equity and Other For-Profit Entities in Healthcare, available at https://www.sheppard.com/insights/blogs/state-antitrust-enforcement-roundup-updates-to-healthcare-merger-matrix-new-potential-legislation-targeting-private-equity-and-other-for-profit-entities-in-healthcare.
[2] 958 CMR 7.00
[3] See our prior blog post on state antitrust enforcement on the Act: Massachusetts Expands Oversight of Private Equity Investment in Healthcare, available at https://www.sheppard.com/insights/blogs/massachusetts-expands-oversight-of-private-equity-investment-in-healthcare-key-takeaways-from-house-bill-5159-signed-into-law-by-governor-healey.
[4] Terms not otherwise defined refer to the definitions in the Proposed Amended Regulation.
[5] Notice of Material Change (MCN) Process: Frequently Asked Questions Regarding Management Services, Transfers of Non-Clinical Assets, and Indirect Control (Jan. 10, 2024), available at https://www.mass.gov/doc/mcn-frequently-asked-questions-regarding-management-services-transfers-of-non-clinical-assets-and-indirect-control-issued-january-10-2024/download.
[6] Notice of Material Change (MCN) Process: Frequently Asked Questions (July 14, 2015), available at https://masshpc.gov/sites/default/files/2023-04/mcnfaq-20150714.pdf.
[7] Id.