December 27, 2024 – California Health Care Legislative Update: Governor Gavin Newsom signed more than 1,300 bills and vetoed nearly 190 during 2024. As in prior years, California’s legislative actions have introduced significant changes to the health care sector. These reforms—ranging from regulations on artificial intelligence (AI) to health plans and providers—demand proactive efforts to ensure compliance. Below, we spotlight the most impactful health care-focused legislation passed this year. Unless otherwise stated, these new laws take effect on January 1, 2025.
Vetoed Health Care Bills
Among the notable vetoed measures, AB-3129 would have granted the California Attorney General authority to review certain health care transactions involving private equity and hedge funds. Similarly, SB-966 sought to establish licensing, oversight, and reporting requirements for pharmacy benefit managers. Additionally, the California Department of Managed Health Care issued a rare enforcement action, fining a behavioral health company for failing to secure a health care service plan license while offering employee assistance programs. California Health Care Legislative.
Artificial Intelligence in Health Care
AB-3030: AI-Generated Patient Communication
AB-3030 mandates that any AI-generated communication involving clinical information—beyond scheduling or billing—include a disclaimer. The disclaimer must clearly state that the message was created using generative AI and provide instructions for contacting a human health care provider. The law applies to health facilities, clinics, and physician’s offices and requires the disclaimer for each generative AI message, even if similar communications were previously sent. Notably, the disclaimer is unnecessary if a licensed health care provider reviews the AI communication before it reaches the patient.
SB-1120: AI in Prior Authorizations
SB-1120 establishes strict guidelines for health care service plans and disability insurers using AI or algorithmic tools in utilization review (UR) or utilization management (UM). These entities must:
- Ensure that medical necessity determinations are based on fair and equitable clinical information.
- Prohibit AI tools from making final decisions to delay, deny, or modify care.
Final medical necessity determinations require evaluation by licensed health care professionals who consider the provider’s recommendation, the patient’s medical history, and individual clinical circumstances.
Health Facilities and Providers
AB-2107: Remote Review of Clinical Laboratory Tests
AB-2107 allows California laboratories to conduct remote review and reporting of digital laboratory materials, provided the remote location operates under the primary laboratory’s CLIA certificate. Digital materials include data, results, and images that do not require microscopes or specialized lab equipment. By June 20, 2025, the California Department of Public Health must consult with federal authorities to determine compliance with CLIA standards.
AB-2297: Expanded Charity Care for Patients
AB-2297 increases the income eligibility threshold for discounted hospital and emergency physician services to 400% of the federal poverty level. It also eliminates the consideration of most monetary assets, except health savings accounts, when determining eligibility. Hospitals and emergency physicians can no longer:
- Place liens on patients’ property to recover unpaid bills.
- Deny eligibility based on the timing of a patient’s application.
AB-2319: Maternal Health Training
AB-2319 expands the requirement for implicit bias training to include all licensed health care providers involved in perinatal care and individuals facilitating access to treatment. Providers must complete training by June 1, 2025, and newly hired staff must comply within six months. Hospitals must annually report compliance to the California Attorney General and detail exempt personnel categories by February 2026.
SB-1061: Medical Debt Protections
SB-1061 prohibits health care providers from sharing medical debt information with consumer credit reporting agencies. Violations void the underlying debt, making it unenforceable. Hospitals must maintain lists of debt collectors and document litigation related to assigned debts. Providers may report unpaid bills as medical debt only after notifying both the insured and the provider.
SB-1300: Public Input on Closing Maternity and Psychiatric Units
SB-1300 extends the notice period for closing maternity wards or psychiatric units from 90 to 120 days and requires at least one public hearing within 60 days of the notice. Facilities must inform the county board of supervisors and solicit feedback on the proposed closure’s impact on community health systems.
Health Plans
AB-3275: Faster Claim Reimbursement
AB-3275 shortens the time frame for health care service plans and insurers to reimburse clean claims from 45 days to 30 days. Insurers must notify claimants of incomplete claims within the same 30-day period. The law also increases penalties for late payments to the greater of $15 per day or 10% of the accrued interest.
For more detailed analyses of these and other health care legislative changes, visit MedLegal News. To access the full text of these laws, see the California Legislative Information site here.
