CHA says proposed healthcare cost-setting bill could slash California hospitals' annual revenues by at least $18B

California's hospitals have come out against a proposal to allow the state to set prices for various medical services covered by commercial payers.

Assemblymember Ash Kalra, D-San Jose, introduced Assembly Bill 3087 on April 9. The bill would create an independent commission "to control in-state healthcare costs and set the amounts accepted as payment by health plans, hospitals, physicians, physician groups and other healthcare providers." Prices would be based off Medicare rates.

The California Hospital Association opposed the bill in a statement, saying hospitals stand to lose billions of dollars if the measure passes through the legislature and becomes law. Hospitals called it "a recipe for disaster."

"Based on an initial review of AB 3087, [the] CHA estimates that the state's hospitals may lose at least $18 billion annually in revenues. Approximately 60 percent of hospitals would likely lose money under this legislation, and an estimated 175,000 healthcare workers could lose their jobs," the statement reads.

The CHA goes on to contend the measure does not address underfunding of Medicare and Medicaid in the state. "Instead, AB 3087 would likely push all prices to insufficient levels for the care provided to patients. As a result, California's healthcare system will be thrown into turmoil, with massive cuts in hospital services, and forcing the closure of many hospitals across the state," the group said.

The California Medical Association also opposed the bill. Proponents of California's measure, which include labor unions and consumer groups, see the bill as a way to curb healthcare costs.


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