Changes to prior authorization, charity care screening and corporate influence in medicine are on the way for Californian healthcare organizations.
Among the dozens of bills signed this week by Gov. Gavin Newsom ahead of an Oct. 12 deadline were several outlining new requirements or broader enforcement of healthcare practices.
The new laws, as well as some others that were vetoed, address nationwide policy topics and trends within the country’s most populous state. Some will take effect Jan. 1, 2026, while others outline a more gradual rollout of notice deadlines before full implementation.
Here are the standouts:
Prior authorization cutbacks
Senate Bill 306 broadly seeks to phase out insurance plans' use of prior authorization for covered healthcare services shown to receive high rates of approval.
More specifically, plans in the state will receive instructions by July 1, 2026, on how they will be required to collect and report data on prior authorizations. Those reports would be due by Dec. 31, 2026. From there, services approved at rates of 90% or higher would need to be more broadly published July 1, 2027, with these services no longer requiring a prior authorization beginning Jan. 1, 2028.
Under the law, plans are permitted to reinstate prior authorization for specific providers due to circumstances like fraud or clinically inappropriate care delivery. The state’s health departments are also required to publish reports on the impact of these changes. The law broadly expires Jan. 1, 2034.
The bill’s passage was applauded by the California Medical Association (CMA), which said the provisions would limit care delays and administrative burdens stemming from “unnecessary red tape.”
“This law is a decisive step toward ending wasteful prior authorization practices that too often delay or deny patients the care they need,” CMA President Shannon Udovic-Constant, M.D., said in a statement. “By cutting out redundant requirements and increasing accountability, SB 306 puts patients’ health above paperwork.”
Notably, Newsom also vetoed a separate package, Assembly Bill 512, that would shorten payers’ required response times for prior authorization requests.
“I am concerned that this bill’s significantly shortened deadlines may inadvertently increase the number of denials and force healthcare plans to make critical decisions with incomplete or inaccurate information,” he wrote in a letter to lawmakers explaining the veto. “I believe SB 206 is a more balanced approach to improve the [prior authorization] system as a whole, alleviate burdens for providers and improve patient outcomes in the long term.”
Another bill prohibiting prior authorization for initial physical therapy visits was also vetoed by the governor.
Corporate healthcare restrictions
Senate Bill 351 prohibits private equity groups or hedge funds that operate or invest in physician and dental practices from a range of actions involving a clinician’s medical decision-making or certain other operations that could affect care delivery.
For the former category, the bill’s text specifies that these entities may not determine what diagnostic tests are appropriate for particular conditions, whether a referral or consultation with another provider is necessary, what treatment options are available to a patient or how many patients or hours a clinician is required to address in a period of time.
These corporate entities also have restrictions related to patient medical record ownership and content, competency-based staffing decisions, practitioners’ third-party contracting and coding and billing, among other areas.
Further, the bill’s language prohibits, with some exceptions, private equity groups or hedge funds from holding a provider to noncompete clauses in their contracts, and from contracts with language restricting their ability to speak about the entity’s practices.
Finally, the bill empowers California’s attorney general to enforce these policies and seek injunctive relief and other fees from those that violate the law.
The bill comes amid rising scrutiny into corporate interests affecting care delivery, as highlighted by major hospital bankruptcies stemming from investors’ influence on management. California is the second state to enact such restrictions this year, following Oregon.
The bill was again applauded by the CMA’s Udovic-Constant, who said the legislation “further protects the integrity of the physician-patient relationship against the expanding influence of private equity in healthcare.”
The Private Equity Stakeholder Project, a watchdog group that reports on and often advocates against private equity in industries including healthcare, said the law “prioritizes the health of patients and communities over short-term investor returns, and reflects a growing trend among states working to curb the risks of private equity.”
Of note, Newsom’s signature comes a year after he had vetoed a bill that would restrict private healthcare acquisitions and while another bill requiring the reporting of healthcare deals by private equity and hedge funds (Assembly Bill 1415) is sitting on his desk.
SB 351 goes into effect Jan. 1, 2026.
Hospital charity care
Assembly Bill 1312 builds on California’s existing charity care requirements by requiring hospitals to begin screening patients for presumptive eligibility for discounted or compensated care, starting July 1, 2027.
Such screening will be required if a patient is uninsured, enrolled in or eligible for cost sharing under the state’s Medicaid program (Medi-Cal) or in a plan purchased through the state’s health insurance marketplace (Covered California).
Hospitals will be prohibited from requiring patients to be enrolled in insurance coverage before conducting their screening. Patients may opt out of such screening, and hospitals may use third-party tools or services to conduct the screening.
Telehealth, medical chaperones, coverage gaps
Other bills signed into law this week include:
Senate Bill 402, which amends sections of California law to include definitions related to autism to improve health coverage and reporting. It also prohibits payers from requiring individuals with autism or pervasive developmental disorder to be re-diagnosed in order to receive behavioral care.
Senate Bill 530, an extension of time, distance and appointment time standards for certain Medi-Cal managed care covered services, which would otherwise expire Jan. 1, 2026.
Assembly Bill 688, which requires the state’s health department to produce a report on telehealth utilization within the Medi-Cal program every other year, to help identify potential care access issues.
Assembly Bill 849, which requires healthcare facilities with ultrasound services to notify and provide patients with medical chaperones when receiving an ultrasound on a sensitive area. It also establishes relevant medical chaperone training.
Assembly Bill 1418, a requirement that health facilities, clinics, home health agencies and hospices report annually whether their employees are eligible to receive employer-sponsored health coverage without a waiting period, intended to prevent gaps in coverage.