Health care cost targets.

Assembly Member Patterson proposes modifying California's health care cost target system to account for prescription drug expenditure growth. The legislation would require the Office of Health Care Affordability to adjust cost targets for providers and integrated delivery systems when prescription drug costs are projected to increase faster than established targets.

The bill builds upon the existing California Health Care Quality and Affordability Act framework, which authorizes the office to analyze market trends and set cost growth benchmarks. Under the new provisions, health care entities could receive adjusted targets based on documented increases in pharmaceutical spending, similar to current allowances for labor cost growth. The office would validate adjustment requests through supporting documentation and retain audit authority over submitted data.

This change adds prescription drug costs as a specific factor the board must consider when developing its target-setting methodology, alongside existing elements like economic indicators, population demographics, and historical cost trends. The adjustment mechanism would apply starting with the 2026 enforcement period, following the 2025 reporting baseline year established in current law.