Office of Healthcare Affordability sets a 3.5% statewide spending growth target; hospitals contest proposed tighter hospital sector targets

The Office of Health Care Affordability (OCA), operating within the Department of Health Care Access and Information, briefed the Assembly Budget Subcommittee No. 1 on Health on its first statewide spending growth target and a hospital sector‑target methodology intended to address widely varying hospital prices.

OCA staff told the committee the Health Care Affordability Board in April adopted a five‑year statewide spending growth target that starts at 3.5% in 2025 and declines to 3.0% by 2029. "The target for this year is 3.5%, and then it goes down progressively to 3%, by 2029," OCA staff said during the hearing. The target measures annual per‑capita total health‑care spending growth — the combined payments to health plans, providers and for medications — and is tied to household income growth to ensure limits are commensurate with the ability of families to pay.

OCA also presented a hospital sector methodology to identify disproportionately high‑cost hospitals using measures such as net patient revenue per case‑mix adjusted unit and a commercial‑to‑Medicare payment ratio. The office proposed lower growth targets for the identified high‑cost hospitals; in committee questions OCA staff described a proposed target formula that in some cases…