AB 1091: Health Care Consolidation and Contracting Fairness Act of 2023.

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, and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law regulates contracts between health care service plans or health insurers and health care providers or health facilities, including requirements for reimbursement and the cost-sharing amount collected from an enrollee or insured.

This bill, the Health Care Consolidation and Contracting Fairness Act of 2023, would prohibit a contract issued, amended, or renewed on or after January 1, 2024, between a health care service plan or health insurer and a health care provider or health facility from containing terms that, among other things, restrict the plan or insurer from steering an enrollee or insured to another provider or facility or require the plan or insurer to contract with other affiliated providers or facilities. The bill would authorize the appropriate regulating department to refer a plans or insurers contract to the Attorney General, and would authorize the Attorney General or state entity charged with reviewing health care market competition to review a health care practitioners or health facilitys entrance into a contract that contains specified terms. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

Existing law requires a nonprofit corporation that operates or controls a health facility to provide written notice to, and obtain the written consent from, the Attorney General before entering an agreement to dispose of its assets or transfer control of a material amount of its assets. Existing law requires the Attorney General, within 90 days of receiving the written notice, to notify the corporation of the Attorney Generals decision to consent to, give conditional consent to, or not consent to the agreement. Existing law authorizes that period to be extended by 45 days if specified conditions are met.

This bill would require a medical group, hospital or hospital system, specified health facility, health care service plan, health insurer, or pharmacy benefit manager to provide written notice to the Attorney General at the same time as another state or federal agency is notified or otherwise at least 90 days before entering an agreement or transaction to make a specified material change with a value of $15,000,000 or more. The bill would authorize the Attorney General to consent to, give conditional consent to, or not consent to that agreement, and would require the Attorney General to notify the entity of the decision within 90 days, which may be extended by one 45-day period if specified conditions are met. The bill would authorize the Attorney General to stay the running of the 90-day period, pending the outcome of any review required by a state or federal agency. The bill would authorize a medical group, hospital or hospital system, specified health facility, health care service plan, health insurer, or pharmacy benefit manager, within 10 calendar days of that notification, to apply for reconsideration of the Attorney Generals decision under specified circumstances. The bill also would authorize a party to an agreement or transaction to seek judicial review of the Attorney Generals initial decision or reconsideration by a petition for writ of mandate, as prescribed. The bill would authorize the Attorney General to waive the written notice and consent requirements established by the bill if certain conditions apply.

The bill would require the Attorney General to conduct one or more public meetings before issuing a written decision on a major transaction, and would authorize the Attorney General to contract for assistance in reviewing a proposed material change and for monitoring ongoing compliance with the terms of a material change. The bill would prohibit an entity from entering into an agreement without the Attorney Generals written consent.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.