OCA staff led an extended discussion on Aug. 28 about which factors the office should consider when deciding whether and how to pursue enforcement steps for entities that exceed annual spending targets.
Staff framed the exercise as a way to prioritize progressive enforcement — technical assistance, public testimony, performance improvement plans and, if warranted, financial penalties — after an entity’s unadjusted spending growth exceeds the target. Staff emphasized that enforcement considerations would not automatically change reported performance but could shape which entities receive which enforcement steps.
The board and public discussed a long list of candidate considerations: changes in an entity’s age and demographic composition; the emergence of high‑cost patient outliers in a single year; an entity’s historical spending trend; an entity’s baseline cost level; the effect of market share and regional monopoly power on consumer access and affordability; investments in primary and preventive care that may raise costs before generating savings; the role of new high‑cost drugs or technologies; changes in state or federal law; and acts of God or catastrophic events.
Several themes emerged in the discussion. Board member Richard Kronick said demographic adjustments could be useful as a diagnostic but recommended comparisons to statewide averages so adjustments reflect differential population shifts rather than undifferentiated year‑to‑year noise. Don Moltz and other board members urged the office to prioritize enforcement capacity on large “systemic” outliers or entities whose market position meaningfully affects consumer access and prices, rather than pursuing many small actors at once. Doctor Pan and other members cautioned that the office should avoid sending signals that discourage legitimate investments or new service lines, such as pediatric specialty care or novel therapies, and suggested options for case‑by‑case review where investments are justified or accompanied by measurable performance plans.
Board members also discussed high‑cost drugs and new technologies. Staff acknowledged these items can have large, sometimes transient budget impacts and said the office would need to consider whether cost changes are broadly distributed across the market or concentrated at a single entity. Several members proposed distinguishing one‑time outlier events (for example, a small provider that unexpectedly treats several high‑cost patients in a year) from deliberate decisions to adopt costly new technologies, which may call for a different enforcement or review approach.
Public commenters echoed many of the board’s concerns. Jen Yuen of the California Hospital Association asked the office to include macroeconomic trends, payer mix and uncompensated care as considerations. Janice Rocco of the California Medical Association and Beth Capelle of Health Access California urged that the office avoid disincentives to needed services and requested transparent summaries of reasons entities exceed targets so the public can follow enforcement outcomes.
Discussion vs. decision: staff framed the slides and asked for board feedback; no enforcement rules or penalties were adopted. Staff said technical assistance, a deeper discussion of corrective actions and proposed rule language would follow at future meetings. Staff’s published board calendar lists continued discussion of spending target enforcement in October, technical assistance and public testimony in November and December, and potential further actions in early 2026.
Ending: board members asked staff to return with concrete proposals for how to operationalize the most‑useful considerations (for example, baseline cost thresholds, thresholds for size/dominance, and monthly escalation for data penalties) and to ensure any adjustment rules do not inadvertently discourage access or innovation.