California implements healthcare spending penalties and smoke damage standards

The California Office of Health Care Affordability has adopted a new framework to penalize hospitals, physician groups, and insurers that exceed state spending caps. Under these rules, violators could be required to pay up to 125% of the amount spent over the limit. The state currently caps annual spending growth at 3.5%, with plans to reduce it to 3% by 2029. Enforcement is expected to begin in 2028, following the release of guidelines this October. Officials noted that penalties would serve as a last resort after providers undergo technical assistance and performance improvement plans.

Separately, two California bills, Assembly Bill 1642 and Assembly Bill 1795, are awaiting the governor’s signature to establish the nation’s first standards for wildfire smoke damage. These bills aim to address the challenges faced by survivors of the January 2025 Los Angeles County fires, where many residents struggled to determine when it was safe to return to homes containing ash, soot, or toxic materials. The legislation would set standards for testing and remediation and require insurance companies to follow these new protocols.