Overview
The state of California is a national leader in healthcare price and competition initiatives and continues to make strides in healthcare system reform. In price transparency, California’s repeated efforts to establish an all-payer claims database came to fruition with the passage of AB 1810 in 2018, after a long road of legislative efforts spanning over ten years. With a one-time $60 million appropriation to California’s Office of Statewide Health Planning and Development (“OSHPD”), AB 1810 mandates the creation of Health Care Cost Transparency Database by July 2023. California also has robust legislative protections against surprise and balance billing, prohibiting out-of-network provider “surprise bills” for both emergency and non-emergency services.
California also leads the nation on the drug price transparency front with SB 17, a landmark law that requires drug companies to give advanced notice of prescription drug price increases to public and private purchasers of health care and health care coverage. Despite legal challenges to the law, it is seen as a meaningful step to negotiate the political and legal boundaries of state action to rein in drug prices.
In healthcare market competition, the state is active in antitrust enforcement of provider anticompetitive practices, most notably in the historic action against Sutter Health, in which the California attorney general sued the Northern California hospital giant for leveraging its dominant market power to demand all-or-nothing, anti-tiering and anti-steering, and gag clauses in its contracts with insurers. As an extension from the case, the legislature continues to seek increased merger review authority of health care entities as well as legislative prohibition of anticompetitive terms in provider contracts, most recently with the introduction of SB 977 in the 2020 session.
Overall, California remains an active participant in the initiative to reduce healthcare costs and improve price transparency. The state legislature has also explored healthcare market initiatives including a single payer system (SB 562) as well as state public option (AB 2472). California’s legislation and regulation aligns with similarly active and progressive states by focusing on pharmaceutical costs and stakeholder transparency measures. For more information and the latest updates, follow the California Legislative Beat on The Source Blog.
See below for an overview of existing California state mandates. Click on citation tab for detailed information of specific statutes (click link to download statute text).
State Action
Latest Legislative Session: 12/5/2022 - 9/8/2023 (2023-2024 term). *Current session bill updates are ongoing. Check back weekly for updates.
AB 0991 – California
Introduced: 2019 Status: Enacted
The board may refuse to issue any registration or license, or may suspend or revoke the registration or license of any associate or licensed professional clinical counselor, if the applicant, licensee, or registrant has been …
AB 1011 – California
Introduced: 2021 Status: Inactive / Dead
Health care coverage: substance use disorders. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care …
AB 1014 – California
Introduced: 2019 Status: Inactive / Dead
The Governor VETOED this bill. Health facilities: notices – This bill would require a hospital that provides emergency medical services to provide notice, as specified, at least 180 days before a planned reduction or elimination …
AB 1020 – California
Introduced: 2021 Status: Enacted
Health care debt and fair billing. Existing law requires a hospital to maintain an understandable written policy regarding discount payments for financially qualified patients and an understandable written charity care policy. Existing law requires that …
AB 1022 – California
Introduced: 2023 Status: In Process
Medi-Cal: Program of All-Inclusive Care for the Elderly. Existing federal law establishes the Program of All-Inclusive Care for the Elderly (PACE), which provides specified services for older individuals at a PACE center so that they …
Cal. Health & Safety Code § 1367.49. Ability of health care service plan to furnish information to consumers or purchasers concerning cost range of procedures or quality of services; contractual provisions; statement posted on Internet Web site: Knox-Keene Health Care Service Plan Act of 1975 – California
Introduced: Status: Enacted
Prohibits gag clauses preventing the disclosure to patients and enrollees of the quality of the services and a cost range of a procedure or a full course of treatment (including facility, professional and diagnostic fees).
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Cal. Health & Safety Code § 1367.50. Disclosure of claims data to enrollee or subscriber not to be restricted by contract between plan and provider or supplier; application of federal law; definitions: Knox-Keene Health Care Service Plan Act of 1975 – California
Introduced: Status: Enacted
Prohibits gag clauses preventing the disclosure to qualified entities of all claims data for health care services supplied to enrollee or beneficiary of a service plan or self-funded health coverage arrangement administered by a service …
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Cal. Health & Safety Code § 1371.22. Standards: Health Care Service Plans – California
Introduced: Status: Enacted
If a contract between a health care service plan and a provider requires that the provider accept, as payment from the plan, the lowest payment rate charged by the provider to any patient or third …
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Cal. Health & Safety Code § 1374.13. Telehealth; medical services without in-person contact; type of setting where services are provided; health care service plan and Medi-Cal managed care plan contracts with the department; use of telehealth not to be required if inappropriate: Knox-Keene Health Care Service Plan Act of 1975 – California
Introduced: Status: Enacted
It is the intent of the Legislature to recognize the practice of telehealth as a legitimate means by which an individual may receive health care services from a health care provider without in-person contact with …
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Cal. Health & Safety Code § 1374.14. Telehealth services; requirements for health care service plan contracts: Knox-Keene Health Care Service Plan Act of 1975 – California
Introduced: Status: Enacted
A contract issued, amended, or renewed on or after January 1, 2021, between a health care service plan and a health care provider for the provision of health care services to an enrollee or subscriber …
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Emanate Health et al v. Optum Health et al – California
District Court: California Central District Court Status: Pending
On November 20, 2023, Emanate Health filed an antitrust suit against Optum Health with the US District Court for the Central District of California. Specific …
FTC and California v. John Muir Health and Tenet Healthcare – California
District Court: Northern District of California Status: Decided
In November 2023, the FTC and the California AG challenged John Muir Health’s proposed acquisition of San Ramon Regional Medical Center from Tenet Healthcare. Both …
Pasadena Hospital d/b/a Huntington Hospital and Cedars-Sinai Health System v. California and Rob Bonta – California
District Court: Superior Court of California, County of Los Angeles Status: Decided
Pasadena Hospital d/b/a Cedars-Sinai Health System (Cedars-Sinai) and Huntington Memorial Hospital (Huntington) announced their intended affiliation in March 2020. The California AG’s office was concerned …
Texas et al. v. United States of America et al. – California, Federal, Texas
District Court: Northern District of Texas Status: Decided
[Consolidated with California et al. v. Texas et al. for Supreme Court review] This case arises out of the Supreme Court’s decision in NFIB v. …
People of the State of California ex rel. Xavier Becerra v. Sutter Health – California
District Court: Superior Court of California, County of San Francisco Status: Decided
On March 29, 2018, California’s attorney general filed an antitrust and unfair competition lawsuit against Sutter Health alleging that Sutter engaged in “all-or-nothing” contracts with …
Additional Resources
STATE BUDGET
California operates on an annual budget cycle. The fiscal year runs from July 1 through June 30. The Governor submits a proposed budget in January and the legislature adopts a budget in June.
REGULATION & ENFORCEMENT
- California was one of 16 states to file an amicus brief supporting the FTC’s winning position in the Ninth Circuit appeal of St. Luke’s Health Care Sys. v. FTC, No. 14-35173 (March 7, 2014), decided February 10, 2015. The States’ brief stated that the acceleration of health care costs due to the growth of large health care provider systems had become a matter of grave concern for the states.
KEY RESOURCES
- California State Legislature
- California Office of the Attorney General
- California Department of Health Care Services
- California Department of Insurance
- California Department of Finance