On May 15, 2025, the California Assembly enacted AB 1415, incorporating various amendments aimed at broadening the jurisdiction of the California Office of Health Care Affordability (OHCA). This legislation mandates that additional entities inform OHCA when they engage in material change transactions with health care entities. Among the notable modifications are clarifications that refine certain definitions and adjust the notification obligations associated with the bill.
Key Insights:
1. Notification Obligations: Although management services organizations (MSOs) and specific parent entities are excluded from the classification of “health care entities,” they remain obligated to notify OHCA when entering into material change transactions involving health care entities.
2. Definition Refinements: The amendments have clarified and restricted several definitions, which will influence the application of notice requirements under AB 1415.
3. Expanded Oversight: OHCA’s authority is set to broaden, allowing for the evaluation and potential regulation of additional entities, indicating an increase in oversight concerning health care transactions within California.
As the bill progresses, it is currently awaiting deliberation in the California Senate, which has until August 31, 2025, to act on it.
Summary of Amendments to AB 1415:
– MSOs and certain parent entities that own, operate, or manage a provider have been excluded from the “health care entity” definition. Nevertheless, these entities must still provide notice to OHCA when engaging in material change transactions with recognized health care entities, thus slightly refining their notification scope.
– The term “hospital,” within the context of defining a “health system,” has been explicitly defined to encompass general acute care hospitals, acute psychiatric hospitals, specialty hospitals, psychiatric health facilities, and chemical dependency recovery hospitals.
– The definition of “health system” now encompasses combinations of hospitals and various providers, rather than solely focusing on hospitals and physician organizations.
– The definition of “provider” has been revised to exclude entities that own, operate, or control other entities classified as providers.
– OHCA is empowered to conduct research and evaluations concerning payors, providers, MSOs, and fully integrated delivery systems to ascertain if these entities significantly impact health care cost, quality, equity, and workforce stability. Previously, MSOs were not included within OHCA’s evaluative scope.
– OHCA may establish data submission requirements for MSOs as necessary to fulfill its operational duties.
These amendments reflect California’s commitment to enhancing OHCA’s authority over a broader range of health care transactions within the state. Despite these revisions, the enactment of AB 1415 will impose additional notification responsibilities on MSOs and companies that own, control, or operate providers when entering into material change transactions with health care entities. This could further complicate the existing regulatory landscape and potentially hinder investment activities in California’s health care sector.
