CA AB1537

Requires skilled nursing facilities to spend a minimum of 85% of total non-Medicare health revenues on direct patient-related services, effective July 1, 2024.

Mandates annual reporting to the State Department of Health Care Services by June 30, including total revenues and expenditures on direct and nondirect patient-related services, certified by an authorized facility official.

Establishes that "direct patient-related services" include staffing, ancillary services, support services, and facility costs, while excluding administrative costs and profits paid to related parties.

Requires the State Department of Health Care Services to audit facility financial reports every three years during Medi-Cal audits to ensure compliance and recover overpayments.

Imposes sanctions including pro rata rebates to payers and administrative fines set at double the percentage of undistributed pro rata payments for facilities that fail to comply with the spending requirement.