Office of Health Care Affordability tops the list
SACRAMENTO–Today, Assemblymember Jim Wood (D-Santa Rosa) announced his package of health care legislation for 2022, including his priority bill, AB 1130, creating the Office of Health Care Affordability (OHCA).
AB 1130, currently in the Senate Health Committee, creates an office that would collect and analyze the health care market for cost drivers and trends in order to develop data-informed policies, and ultimately cost targets, with the goal of lowering and controlling health care costs to provide quality and affordable health care to all Californians. Wood has been working with Governor Newsom’s Administration and Senate Health Committee Chair Dr. Richard Pan, and has spent the past year engaging a wide range of stakeholders in extensive discussions.
“OHCA would require all health care entities that are dominant enough in an area where they have significant impact on pricing--including health care service plans, health insurers, hospitals, and physician organizations—to provide information,” said Wood. “Having all major health care contribute this information is essential to making this process meaningful.”
AB 2080, the Health Care Consolidation and Contracting Fairness Act of 2022, will clarify the California Attorney General’s role and authority to review and give conditional consent, consent or not consent to transactions such as contracting between health care providers and health care service plans or insurers and mergers and acquisitions for a medical group, hospital or hospital system, health care service plan, health insurer or pharmacy benefit manager, except for a nonprofit corporation. In addition, before issuing a written decision, the Attorney General shall conduct one or more public meetings on a major transaction.
“We have reviewed, time and time again, many reports and studies that show these types of transactions in health care have, more often than not, resulted in higher health care costs and profits for the corporations rather than lower cost and better health care for patients,” said Wood. “That’s the wrong direction and absolutely something that needs more careful scrutiny by the Attorney General.”
AB 2079 would require skilled nursing facilities (SNFs) to spend a minimum of 85 percent of their aggregate health and non-health revenues from all payer sources to be spent on direct care of residents.
In 2020, of SNF total revenues, approximately 37 percent was spent on routine nursing care, 10 percent on ancillary services, 17 percent on support services (including social services, dietary, housekeeping and maintenance) for a total of 64 percent spent on direct care costs.
“Nearly 60 percent of skilled nursing facilities are owned or leased by multi-facility organizations that have developed increasingly complex corporate ownership structures, often including separate property companies and as many as seven to eight layers of holding companies and subsidiaries in control of each facility,” said Wood. “That complexity is designed to shield operating companies from litigation, reduce regulatory oversight and even conceal profits. My goal is to ensure that most of their operating costs are spent on direct care of its vulnerable residents.”
While there are some financial controls on Medi-Cal spending, there are no controls on spending for Medicare, managed care and private payers; therefore, SNFs can reduce staffing, wages and benefits while increasing spending on administration, profits and property.
“Facilities with the highest profit margins are often chains and have been found to have the worst quality and more quality and compliance problems than other nursing homes,” said Wood. Residents of California skilled nursing facilities need our support and protection. This bill continues my year-after-year efforts to ensure that our most vulnerable Californians get quality care that ensures their safety while still allowing the facilities to earn profits that are appropriate and fair.”
AB 1878 would continue efforts to provide financial help for plans offered through Covered California and lower out-of-pocket costs. This bill would allow “Silver” plans offered through Covered California to provide zero deductibles and lower cost sharing for consumers earning up to 600 percent of the federal poverty level (FPL). These improvements could be available if the estimated $525 million annual funding is included in the “Build Back Better” legislation being considered in Congress. There are also funds currently set aside in the state’s affordability fund (established in AB 133).
“I have supported making Covered California plans more affordable for many years, and although the timeframe and amount of the newest funding is not fully guaranteed at this time, I remain dedicated to finding opportunities to lower out-of-pocket costs whenever possible,” said Wood.
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