On Tuesday, Gov. Gavin Newsom announced the appointment of members to California’s Health Care Affordability Board under the state’s new Office of Health Care Affordability (OHCA). The board will consist of eight members and is in charge of setting statewide and sector-specific spending targets.
“As a physician, I’ve seen too many patients struggle to pay for essential care or medications, and it’s heartbreaking,” California Health and Human Services Secretary Dr. Mark Ghaly said in a statement. “As a state we have a unique opportunity through the OHCA to identify what’s driving consistently high healthcare costs and set spending limits to slow the rate of growth, which can help families get high-quality, equitable care at an affordable cost.”
Ghaly will sit on the OHCA board with seven other members that offer a broad range of expertise and experience. Dr. David Carlisle will also sit on the board and has been president and CEO of Charles R. Drew University of Medicine and Science since 2011. Dr. Sandra Hernandez, who has been president and CEO of the California Health Care Foundation since 2014 and held several positions at the San Francisco Department of Public Health from 1988 through 1997, will also sit on the board.
Other board members include Dr. Richard Kronick, who served as the deputy assistant secretary for health policy for the US Department of Health and Human Services from 2010 to 2013, and who currently teaches as a professor at the Herbert Wertheim School of Public Health. Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health since 2019, and Don Moulds, chief health director of the California Public Employee Retirement System, will also sit on the board, with Moulds being a non-voting member.
Ian Lewis, the political and research director of the National Union of Health Care Workers, and Dr. Richard Pan, a pediatrician and former chair of the Senate Health Committee, will also sit on the board.
The members will work to increase public transparency on total healthcare spending in the state by collecting total healthcare expenditure data that is broken down by categories such as hospital care, physician services, and prescription drugs, and supplement it with additional resources. OHCA will publish an annual report in conjunction with a public meeting about healthcare spending trends and underlying factors, in addition to policy recommendations to contain costs.
The board will also set overall statewide spending targets, as well as more specific targets, for different sectors of the healthcare industry. They will establish an overall spending target for per capita spending in the state, while obtaining the authority to set specific targets by healthcare sectors, geographical regions, and individual healthcare entities.
To enforce compliance with spending targets, technical assistance will be provided to healthcare entities that are noncompliant with spending targets, which may lead to providing testimony at public meetings, establishing performance improvement plans, and assessing financial penalties.
“Healthcare costs are growing faster than Californians’ wages and it’s simply unsustainable for California families,” Department of Health Care Access and Information (HCAI) Director Elizabeth Landsberg said in a statement.
The board will also measure and publicly report on system performances to prevent unintended consequences. It will set statewide benchmarks for the adoption of alternative payment models that reward high-quality and cost-efficient care, and develop standards for use for payers and providers during contracting.
OHCA states that primary care plays a foundational role in the healthcare system and associates the greater use of primary care with key outcomes such as lower costs, fewer hospitalizations and emergency department visits, and lower mortality rates. The board will promote the integration of primary care and behavioral health services throughout the healthcare system to improve outcomes and reduce healthcare costs.
Additional responsibilities of the board include examining the role of the healthcare workforce in the state, and assisting healthcare entities with strategies to put cost-reduction strategies in place to promote healthcare workforce stability. According to OHCA, research has connected market consolidation among health plans, hospitals, medical groups, physician organizations, pharmacy benefit managers, and other healthcare entities to higher prices for healthcare services. The board will increase public transparency on healthcare consolidation and market power through cost and market impact reviews on transactions that are likely to create a significant impact to market competition and affordability for consumers and purchasers.
“The board will be an essential partner to the HCAI OHCA in achieving the vision of a more sustainable, affordable healthcare system for all Californians,” Landsberg said.
The board will hold their first meeting on March 21st, but prior, they will appoint the Health Care Affordability Advisory Committee, which will provide input to the board on topics like spending targets and benchmarks for the adoption of alternative payment models.