Existing law, the California Health Care Quality and Affordability Act, establishes within the Department of Health Care Access and Information, the Office of Health Care Affordability to analyze the health care market for cost trends and drivers of spending, develop data-informed policies for lowering health care costs for consumers and purchasers, set and enforce cost targets, and create a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchasers.

Existing law requires the board to establish statewide health care cost targets for health care entities that meet specified requirements, including promoting the goal of improved affordability for consumers and purchasers of health care, while maintaining quality and equitable care. Existing law also requires the office to develop a methodology, for approval by the board, to set health care costs. Existing law requires the methodology to review historical trends and projects and requires the methodology to allow the board to adjust target costs downward when warranted, among other things.

This bill would require the cost targets to be adjusted for a provider or fully integrated delivery system, as appropriate, upon a showing that prescription drug costs are projected to grow faster than the rate of any applicable cost targets. The bill would require the methodology to require the board to adjust cost targets for a provider or fully integrated delivery system, as appropriate, to account for increased expenditures related to prescriptions drugs.