(a) The office shall promote the shift from payments based on fee-for-service to alternative payment models that provide financial incentive for equitable high-quality and cost-efficient care. In furtherance of this goal, the office shall convene health care entities and organize an alternative payment model working group, set statewide goals for the adoption of alternative payment models, and measure the state‘s progress toward those goals. With input from the working group, the office shall set benchmarks that include, but are not limited to, increasing the percentage of total health care expenditures delivered through alternate payment models or the percentage of membership covered by an alternative payment model.

(b) (1) To advance statewide goals for adoption of alternative payment models, the office shall consider existing alternative payment models and work with the working group to develop standards for alternative payment models that may be used during contracting between health care entities. The office shall adopt the standards for alternative payment models on or before July 1, 2024.

Terms Used In California Health and Safety Code 127504

  • Alternative payment model: means a state or nationally recognized payment approach that financially incentivizes high-quality and cost-efficient care. See California Health and Safety Code 127500.2
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • State: means the State of California, unless applied to the different parts of the United States. See California Health and Safety Code 23
  • Total health care expenditures: means all health care spending in the state by public and private sources, including all of the following:

    California Health and Safety Code 127500.2

(2) The standards for alternative payment models shall focus on encouraging and facilitating multipayer participation and alignment, improving affordability, efficiency, equity, and quality by considering the current best evidence for strategies such as investments in primary care and behavioral health, shared risk arrangements, or quality-based or population-based payments.

(3) The standards shall include minimum criteria for what is considered an alternative payment model, but be flexible enough to allow for innovation and evolution over time. The standards shall be consistent, and align, to the extent possible, with the quality and equity measures outlined in Article 4 (commencing with Section 127503) to encourage physicians and other providers to make investments and aim to see year-over-year improvement.

(4) The standards shall address appropriate incentives to physicians and other providers and balanced measures, including, but not limited to, total cost of care and quality, access, and equity requirements and shared savings models, to protect against perverse incentives and unintended consequences.

(5) The standards shall attempt to reduce administrative burden by incorporating alternative payment models that facilitate multipayer participation and align with other state payers and programs or national models.

(6) The office shall review the standards at least every five years or more frequently, as appropriate, in order to determine whether the standards are rewarding high-quality, cost-efficient, and equitable care.

(c) The office shall include an analysis of alternative payment model adoption in the annual report required in Section 127501.6.

(d) In implementing this section, the office shall consult with state and federal departments to ensure consistency with state and federal laws, and shall also consult with external organizations promoting alternative payment models and other entities and individuals with expertise in health care financing and quality and equity measurements.

(Added by Stats. 2022, Ch. 47, Sec. 19. (SB 184) Effective June 30, 2022.)

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