California Health Care Quality and Affordability Act.

The document source changed from the official authenticated chaptered text to a web-displayed version. All website UI elements (navigation menus, search fields, share buttons, version dropdowns) were added, and the formal state authentication header and page numbers were removed. No policy language was altered.

The definition of 'management services organization' in Section 127500.2(o) was narrowed. The phrase 'Management and administrative support services may also include any of the following:' and the four listed items (utilization management, claims handling, customer service, network development) were removed. This means an entity providing only those services without rate negotiation or revenue cycle management would no longer clearly qualify as a management services organization under the statute.

A typo in Section 127507(c)(2)(A)(i) was corrected: 'management services organizations organization's' was changed to 'management services organization's'.

Header changed from enrolled bill format (showing Assembly and Senate passage dates, clerk signatures) to chaptered law format (STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL, CHAPTER 641, Governor approval date of October 11, 2025).

Page numbering changed from 'AB 1415' header style to 'Ch. 641' header style throughout the document.

Line breaks and indentation were reformatted throughout all sections (definitions, office functions, notice requirements) without any change to the actual statutory text or policy content.

The entire definition of 'health system' (subdivision (l)) is deleted. This definition had covered hospital systems, combinations of hospitals with other providers, and combinations involving health care service plans or insurers under common ownership or control.

A new exclusion is added to the 'management services organization' definition: entities that own one or more health facilities (as defined in Section 1250, subdivisions (a) or (b)) are no longer considered management services organizations. This means hospital-owning MSOs fall outside the bill's MSO-specific reporting and notice requirements.

Paragraph (10) of the 'provider' definition, which included 'a health system, as defined in subdivision (l),' is removed. Health systems are no longer classified as providers subject to the bill's requirements.

A duplicate word is corrected in Section 127507(c)(2)(A): 'management services organizations organization's assets' is changed to 'management services organization's assets.'

Management services organizations are removed from the definition of 'health care entity,' which now covers only payers, providers, and fully integrated delivery systems. This means MSOs are no longer subject to all provisions that apply to health care entities generally.

The 'provider' definition is narrowed by removing the catch-all provision that included any entity that owns, operates, or controls a listed provider regardless of whether it is currently operating or has a valid license. The Senate version instead requires that the entity actually delivers or furnishes health care services.

The 'management services organization' definition is expanded to explicitly require that management and administrative support services include provider rate negotiation, revenue cycle management, or both, and adds claims handling to the list of covered activities. This broadens which entities qualify as MSOs.

A new requirement mandates that a management services organization must provide written notice of ANY agreement or transaction with any other entity (not just those involving health care entities), in addition to the existing notice obligations for transactions involving health care entities.

Section 127501.5 is expanded from requiring MSOs to submit 'data' to submitting 'data and other information,' giving the Office of Health Care Affordability broader authority to request information from MSOs.

The 'health system' definition is broadened by replacing references to 'physician organizations' with 'other providers' in paragraphs (2) and (3), so a health system can now include combinations of hospitals with any type of provider, not just physician organizations.

New Section 127501 establishes the Office of Health Care Affordability within HCAI with 17 enumerated functions, including public reporting of per capita spending, supporting cost target establishment, collecting and analyzing data, overseeing compliance through administrative penalties, promoting quality and equity measures, advancing alternative payment models, and conducting ongoing research on payers, fully integrated delivery systems, management services organizations, and providers.

New Section 127501.5 requires the office to establish data submission requirements for management services organizations as necessary to carry out its functions.

The definition of 'health care entity' was expanded to include 'management services organization' alongside payers, providers, and fully integrated delivery systems.

The definition of 'provider' was changed from 'any of the following that delivers or furnishes health care services: a private or public health care provider' to simply 'a private or public health care provider,' removing the requirement that the entity actively deliver or furnish services.

The definition of 'health system' was expanded in paragraph (2) to include combinations of hospitals and 'other providers' (not just physician organizations), with a new sub-paragraph defining 'hospital' to explicitly include general acute care hospitals, acute psychiatric hospitals, special hospitals, psychiatric health facilities, and chemical dependency recovery hospitals.

A new concept of 'noticing entity' was introduced in Section 127507(c)(2), replacing references to 'health care entity' in the context of private equity groups, hedge funds, and newly created business entities providing written notice of material changes.

The notice requirement in Section 127507(c)(1) removed the date restriction 'that will occur on or after April 1, 2024,' making the notice obligation apply to all agreements or transactions going forward without a specific start date.

Section 127501(d) grants the office contracting authority for staff, consultants, meetings, research, and reports, with an exemption from state procurement rules (Government Code, Public Contract Code, State Administrative Manual) until January 1, 2026.