Section 127501.
Cal. Health and Safety Code - HSC § 127501.
in effect(a)
There is hereby established, within the Department of Health Care Access and Information, the Office of Health Care Affordability. The Director of the Department of Health Care Access and Information shall be the director of the office and shall carry out all functions of that position, including enforcement.
(b)
The office shall be responsible for analyzing the health care market for cost trends and drivers of spending, developing data-informed policies for lowering health care costs for consumers and purchasers, creating a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchasers, and enforcing cost targets.
(c)
The office shall do all of the following:
(1)
Increase cost transparency through public reporting of per capita total health care spending and factors contributing to health care cost growth.
(2)
Support the board, through data collection and analysis and recommendations, to establish a statewide health care cost target for per capita total health care spending.
(3)
Support the board, through data collection and analysis and recommendations, to establish specific health care cost targets by health care sector, including fully integrated delivery systems, geographic regions, and individual health care entities, as appropriate.
(4)
Collect and analyze data from existing and emerging public and private data sources that allow the office to track spending, set cost targets, approve performance improvement plans, monitor impacts on health care workforce stability, and carry out all other functions of the office.
(5)
Analyze cost and quality trends for drugs covered by pharmaceutical and medical benefits. The office shall consider the data in the reports required pursuant to Section 1367.243 and Section 10123.205 of the Insurance Code and pharmaceutical data reported in the Health Care Payments Data Program, established pursuant to Chapter 8.5 (commencing with Section 127671).
(6)
Oversee the state’s progress towards meeting the health care cost
target by providing technical assistance, requiring public testimony, requiring submission of and monitoring compliance with performance improvement plans, and assessing administrative penalties through enforcement actions, including escalating administrative penalties for noncompliance.
(7)
Promote, measure, and publicly report performance on quality and health equity through the adoption of a priority set of standard quality and equity measures for health care entities, with consideration for minimizing administrative burden and duplication.
(8)
Advance standards for promoting the adoption of alternative payment models.
(9)
Measure and promote sustained systemwide investment in primary care and behavioral
health.
(10)
Advance standards for health care workforce stability and training, as these relate to costs.
(11)
Disseminate best practices from entities that comply with the cost target, including a summary of affordability efforts that enable the entity to meet the cost target.
(12)
Review and evaluate consolidation, market power, and other market failures through cost and market impact reviews of mergers, acquisitions, or corporate affiliations involving health care service plans, health insurers, hospitals, physician organizations, pharmacy benefit managers, and other health care entities.
(13)
Analyze trends in the price of health care technologies.
(14)
Analyze trends in the cost of labor for both management and administration, as well as nonsupervisorial health care workforce, as well as analyzing the profits of health care entities, if that data is available.
(15)
Conduct ongoing research and evaluation on payers, fully integrated delivery systems, management services organizations, and providers, including physician organizations, to determine whether the definitions or other provisions of this chapter include those entities that significantly affect health care cost, quality, equity, and workforce stability.
(16)
Adopt and promulgate regulations for the purpose of carrying out this chapter.
(17)
Establish advisory or technical committees, as necessary.
(d)
For purposes of implementing this chapter, including hiring staff and consultants, through the procurement authority and processes of the department, facilitating and conducting meetings, conducting research and analysis, and developing the required reports, the office may enter into exclusive or nonexclusive contracts on a bid or negotiated basis. Until January 1, 2026, contracts entered into or amended pursuant to this chapter are exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and the State Administrative Manual, and are exempt from the review or approval of any division of the Department of General
Services.
References
referencesCal. Insurance Code - INS § 10123.205.
referencesCal. Government Code - GOV § 14825.
referencesCal. Public Contract Code - PCC § 10100.
referencesCal. Health and Safety Code - HSC § 1367.243.
referencesCal. Health and Safety Code - HSC § 127671.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026