06/14/2026

CASA's California: Legislative Update

Here are the latest updates for you!

Advocacy is not optional in our industry - it is essential. The decisions made in Sacramento directly impact how our ASCs operate, how we are reimbursed, how we are regulated, and ultimately how we care for patients. Simply put, if we are not at the table, we are on the menu.

Because of your engagement - and your PAC contributions — CASA is able to actively monitor, influence, and protect the interests of ambulatory surgery centers across California. Your PAC dollars ensure we have a voice in critical policy conversations and access to the lawmakers shaping our industry’s future. We deeply appreciate your investment in protecting and advancing ASC care.

PART I — LEGISLATIVE SESSION OVERVIEW

State Budget

The California Legislature is expected to pass the 2026–27 state budget on Monday, June 15th, meeting the constitutional deadline. However, the budget bill itself is expected to represent the broad framework agreement - with the more politically sensitive budget trailer bills continuing to be negotiated through June 30th, the statutory deadline for a balanced budget.

Key items expected to remain in active negotiation through the trailer bill process include:

• MCO Tax Extension - The managed care organization (MCO) tax, which generates billions of dollars annually from health plans to fund Medi-Cal, is up for reauthorization. Its extension is among the most consequential and contested items in the trailer bill package, as it is foundational to the state's ability to maintain Medicaid funding levels.
• Proposition 35 Implementation - Provider reimbursement increases, including for specialty care, are tied to the MCO tax revenues directed through Prop. 35. Negotiation of the trailer bills will determine how and when those reimbursement increases are structured and disbursed.

Legislative Calendar

The following key dates govern the remainder of the 2025-26 legislative session:

The period between reconvening on August 3rd and end of session on August 30th represents the final and most intensive stretch of legislative activity. Bills that have not cleared both houses by August 30th are dead for the year. The Governor then has until September 30th to act on legislation that advanced to his desk for signature.

PART II — CASA PRIORITY BILLS STATUS SUMMARY

Artificial Intelligence

Three AI-related healthcare bills are moving through the Senate in the coming week, all with near-term committee hearings. CASA is monitoring all three closely.

Medi-Cal

One Medi-Cal bill is currently in the Assembly fiscal process, responding to federal Medicaid changes enacted under Public Law 119-21 (signed July 4, 2025).

Other Priority Bills

The following bills span antitrust, health facility standards, workforce, prior authorization, and reimbursement - all areas of direct relevance to ambulatory surgery centers.

KEY THEMES & STRATEGIC CONTEXT

Reimbursement & MCO Tax

The MCO tax reauthorization and the implementation of Proposition 35 are the most consequential budget issues for CASA members this session. The tax generates multi-billion-dollar revenues that directly fund Medi-Cal provider rate increases, including for specialty care delivered in ambulatory surgery settings. CASA should monitor trailer bill negotiations closely and be prepared to weigh in on rate-setting parameters.

Artificial Intelligence Regulation

Three bills this week represent California's continued push to regulate AI in healthcare. AB 1979 and AB 2575 would impose new disclosure and override requirements on AI tools used in clinical settings. SB 1146 targets AI-generated health care advertising. The CMA, CHA, and CalChamber are all opposing the clinical bills, reflecting broad provider-sector concern about implementation burdens.

Prior Authorization Reform

SB 964 (Smallwood-Cuevas) passed its policy committee 15-0 and is now advancing to the Assembly Appropriations Committee. The bill would allow treating providers to adjust medication dose or frequency without prior authorization under defined conditions - a meaningful operational win for facilities managing complex patient drug regimens.

Claims Reimbursement

SB 1049 (Weber Pierson) heads to the Assembly Health Committee on June 23rd. The bill would give providers a 90-day window to submit corrected claims after a denial or overpayment notice - directly addressing a persistent administrative friction point for ASCs. Health plans are opposed; CHA and provider groups support.

PART III — REGULATORY UPDATE: CAL/OSHA SURGICAL PLUME STANDARD

CASA Submits Formal Comments on Cal/OSHA Surgical Plume Regulation

CASA has been closely monitoring Cal/OSHA's proposed workplace safety standard governing occupational exposure to surgical plume since AB 1007 was signed into law in October 2023. On May 27, 2026, CASA formally submitted written comments to the Cal/OSHA Regulatory Services Unit in response to the agency's April 6, 2026, revised discussion draft of proposed § 51XX — marking a significant milestone in CASA's active engagement in this rulemaking on behalf of California's ambulatory surgery centers.

Background

Surgical plume — the smoke and aerosol generated during energy-based surgical procedures — poses a genuine occupational hazard to surgical staff. AB 1007 directed Cal/OSHA to establish a standard requiring health care facilities to use plume scavenging systems to the extent technologically feasible. CASA supports the core goals of the regulation. Many member facilities are already using plume evacuation systems consistent with the AORN evidence-based Guideline for Surgical Smoke Safety, and we are not writing to oppose this rulemaking.

CASA's Core Concern

CASA's letter was a targeted request to revise two specific provisions that exceed the statutory mandate of AB 1007, lack technical and operational support, and in their current form would impose costs and burdens severe enough to threaten the viability of California ASCs. CASA's engagement reflects the association's longstanding commitment to advocating for workable, evidence-based regulatory standards that protect both our workforce and patient access to care.

What CASA Requested

• Remove or revise the CIH requirement; replace with a practical, facility-appropriate competency standard consistent with existing Title 8 frameworks.
• Eliminate the 25-foot outdoor exhaust requirement; allow a properly operating source-capture system with ULPA and gas phase filtration to satisfy the engineering control standard.
• Apply a proportionality standard to filter requirements, calibrated to the level of plume generation reasonably anticipated for the type of procedure performed.
• Adopt the AORN Guideline for Surgical Smoke Safety as the primary technical benchmark, allowing the regulation to remain current as technology evolves without requiring repeated rulemaking.
• Provide a minimum of 12 months following final adoption for full implementation, to allow for procurement, training, and where necessary HCAI facility review and approval.

CASA is actively engaged in this rulemaking and will continue to represent ASC interests as Cal/OSHA moves toward a final standard. Members with questions or operational concerns about the proposed regulation are encouraged to contact CASA staff.

PART IV — REGULATORY AWARENESS: OHCA HEALTH CARE MARKET OVERSIGHT (AB 1415 / CMIR)

State Advances Emergency Regulations Governing Health Care M&A Transactions

The Office of Health Care Affordability (OHCA), housed within the Department of Health Care Access and Information (HCAI), is moving forward with emergency regulatory amendments to its Cost and Market Impact Review (CMIR) process — the state's oversight framework for material change transactions involving health care entities in California. CASA is monitoring this regulatory development given its potential implications for ambulatory surgery center ownership, affiliation, and transaction activity.

What Is CMIR?

Created under AB 1415 (2024), the CMIR process added management services organizations and private equity to the requirement to review health care transactions which meet a certain size and revenue thresholds to provide and require an advance notice to OHCA before closing a material change transaction — such as a merger, acquisition, affiliation, or significant asset transfer. OHCA then reviews the transaction for potential impacts on market competition, health care costs, access to services, and workforce conditions. The process is designed to give the state visibility into — and in some cases the ability to condition — major health care industry consolidations before they close.

What the Proposed Emergency Regulations Do

The May 2026 proposed emergency text updates and clarifies several elements of the existing CMIR regulatory framework under 22 CCR § 97431 et seq. Key changes include:

• Definition Refinements — The regulations refine definitions of core terms including "health care entity," "management services organization," "transaction," and "affiliation." The amended definition of "health care entity" is expanded to include entities that own, operate, or control a provider — even if that provider is not currently operating or holds a suspended license — and to expressly include pharmacy benefit managers.
• Expanded Filing Triggers — New circumstances now trigger mandatory notice filings, including transactions involving private equity groups or hedge funds that acquire even a 5% stake in a qualifying health care entity, transactions involving management services organizations, and real estate sale-leaseback transactions where the surviving entity will be required to pay rent for the property.
• Aggregation of Related Transactions — A series of related transactions over the past ten years involving the same entities will be treated as a single transaction for threshold purposes — closing a potential loophole for incremental acquisitions that individually fall below the filing thresholds.
• Confidentiality Protections — A structured process allows submitters to request confidential treatment of sensitive business information, including stock purchase agreements, compensation documents, contract rates, and transaction valuation materials, which are deemed confidential by default.
• Review Timelines — OHCA must determine within 45 days of a complete filing whether it will conduct a CMIR, and within 60 days if it will. If a full CMIR is initiated, the review must be completed within 90 days (extendable by 30 days), with a preliminary report, a public comment period, and a final report.

What This Means for ASCs

Ambulatory surgery centers engaged in ownership transitions, affiliations, joint ventures, or management service arrangements — particularly those involving private equity, health systems, or management services organizations — should be aware that these regulations may require pre-transaction OHCA notice filings depending on the size and structure of the transaction. The regulations apply to health care entities with annual California-derived revenue or California assets of $10 million or more that are parties to qualifying transactions.

CASA will continue to monitor OHCA's CMIR regulatory activity. Members contemplating transactions involving affiliations, acquisitions, or management arrangements are encouraged to consult with legal counsel to assess whether OHCA notice obligations may apply.