What’s happening: The Office of Health Care Affordability (OHCA) board met on March 25 to consider the staff-proposed 3% statewide spending target and the related stakeholder feedback.
What else to know: While the board did not formally adopt the target, most board members expressed general comfort with the 3% proposal, with the possibility of moderate revisions. The final target will be adopted in April or May.
The board’s discussion focused on staff’s proposed spending target for 2025 through 2029. Board members aired their most candid views on the proposal to date, with two board members — Dr. Richard Pan, who was involved in crafting the legislation establishing OHCA, and Dr. Richard Kronick — maintaining their concerns that a 3% target would be unattainably low and lacks a sound rationale. OHCA’s board chair, Dr. Mark Ghaly, asked the board to consider a glide path to ramp the target down from 3.5% to 3% over time. Other board members supported the inclusion of a demographic adjustment to account for the aging of California’s population.
Additionally, OHCA staff provided information on how the office would enforce compliance with the spending target with respect to the different types of payers — Medicare, Medi-Cal, and commercial. First, they stated an intent to judge each line of business separately against the statewide spending target, meaning Medicare, Medi-Cal, and commercial lines of business would separately have to meet the statewide spending target (in contrast to having to meet the target in the aggregate).
Second, staff shared that Medicare and Medi-Cal payers that fail to meet the target would not be subject to enforcement, leaving only commercial payers exposed. However, providers would not receive such a blanket exemption from enforcement in their Medicare and Medi-Cal lines of business. Rather, OHCA shared it would “contextualize” the extent to which policy decisions drive the excess growth in these government programs, giving the office discretion around enforcement. Ultimately, these and other major decisions around how OHCA will enforce the spending targets remain outstanding.
CHA highlighted many of these flaws in a March 8 letter to OHCA and will continue its push for significant changes to the spending target. We thank the many hospitals and health systems that lent their voices in advocating for a more reasonable statewide spending target. With a vote set for either April 24 or May 22, hospitals must continue to urge the OHCA board to set a target that protects access to vital, lifesaving care.
