SB 538 Summary

• Prohibits hospital contracts with health insurers, health care service plans, and contracting agents from setting payment rates for nonparticipating hospital affiliates or requiring contracting with specific affiliates.

• Bans requirements that contracting agents keep hospital payment rates confidential from existing or potential payors, though reasonable nondisclosure agreements are permitted.

• Prohibits contracts from requiring contracting agents to impose identical cost-sharing obligations on beneficiaries across different hospital tiers or requiring payors to certify they are bound by hospital-contracting agent terms.

• Declares any contract provisions violating these restrictions void and unenforceable, and exempts small and rural hospitals unless affiliated with nongovernmental hospitals.

• Applies restrictions to contracts between hospitals and contracting agents (Business and Professions Code Section 513), health care service plans (Health and Safety Code Section 1367.32), and health insurers (Insurance Code Section 10133.57).