Our work continues to educate state policymakers about Office of Health Care Affordability (OHCA) policies that risk access to vital health care services.
Last week, CHA hosted an in-depth legislative briefing on how OHCA decisions impact patients and hospitals. Several hospital leaders joined to share firsthand perspectives with nearly 60 legislative staff, including many from the key Assembly and Senate Health committees, on how spending targets and penalties affect care delivery, service line viability, and access in California communities.
Many thanks to Barry Arbuckle, Ph.D., Executive Chairman, MemorialCare; Brett Tande, Corporate Senior Vice President & Chief Financial Officer, Scripps Health; and Kimberly Hartz, Chief Executive Officer, Washington Health, for taking time to talk about how OHCA is impeding access to care today — even before some its most egregious policies go into effect.
The briefing came ahead of a potential OHCA vote on penalties for exceeding spending targets on Aug. 26. Every hospital in California should comment ahead of or during that OHCA meeting (details are in CHA’s latest alert).
During the briefing, legislative staff heard how OHCA is charging headlong into decisions that will harm access to care for Californians in need. As they stand, these policies give no time for a massive health care system to adjust — a grave threat to access to critical services. For example, projections show that on the current course, OHCA policies will cause nearly 40,000 job losses, and tens of billions in lost resources that are used to provide care to patients.
This is at a time when California leads the nation in the past two decades in net hospital closures, with the state having lost more than 40 hospitals during that time period. Additional details of the briefing included data and perspectives about:
- Unfunded mandates and overlapping policies — OHCA’s spending targets do not reflect actual cost drivers that are outside hospitals’ control like expenses for labor, drugs, and state and federal mandates such as minimum wage increases, new security mandates, seismic retrofit requirements, potential 340B changes, loss of ACA subsidies, and more.
- Spending growth methodology — OHCA’s methodology uses unstable and incomplete data to determine “excess” spending and produces wild year‑to‑year swings (e.g., from large negative to large positive growth) that don’t match actual contracts or payment changes. This volatility makes violations and penalties almost inevitable for most hospitals.
- Penalties and financial risk — Penalties can start in the tens or hundreds of millions of dollars per hospital per year, far greater and levied far faster than in other states. For many hospitals, a single year’s penalty could exceed three years of operating earnings, threatening solvency.
- Systemwide impacts — OHCA policies will create chaos in California’s health care system, yielding tens of thousands of lost jobs, cuts or contractions in key services like labor and delivery, pediatrics, behavioral health, trauma, and community programs, and increased risk of hospital closures.
- Disconnection from premiums and payers — OHCA’s focus on reducing hospitals’ spending for health care services Californians need (while ignoring commercial health plan profits and administrative costs) will not translate into lower premiums.
- Data and process concerns — OHCA has major issues with data completeness (especially outpatient risk adjustment and self‑insured employee plans) and categorization, and no clear process to correct misclassification (e.g., “high cost” hospital list) or obtain data corrections.
The briefing concluded with speakers sharing what OHCA could do to create a better approach for guiding spending reduction while preserving access.
This briefing with key legislative staff was yet another step in building awareness of — and accountability for — the actions of OHCA and the loss of access to care, deterioration of quality care, and job reductions.
