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HomeBusiness and Professions CodeDiv. 7Pt. 2Ch. 2Art. 4§ 16770 Health Care Contracting Efficiency

§ 16770 Health Care Contracting Efficiency

Business and Professions Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 16770 Health Care Contracting Efficiency

Key Takeaways

  • •This law wants people in California to get good health care that doesn’t cost too much.
  • •It says doctors, hospitals, and insurance companies can team up to make deals that help everyone save money.
  • •Small groups (like single doctors or small hospitals) can’t make the best deals, so bigger groups are allowed.
  • •The law makes sure these big groups aren’t breaking rules just for working together to make health care better.

Example

A group of small doctors’ offices joins together to negotiate better prices with insurance companies.

Before this law, these doctors might have been in trouble for teaming up, but now it’s okay because it helps patients get cheaper and better care.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 16770 Health Care Contracting Efficiency

(a) It is the intent of the Legislature to ensure that the citizens of this state receive high-quality health care coverage in the most efficient and cost-effective manner possible. (b) In furtherance of this intent, the Legislature finds and declares that it is in the public interest to enhance the ability of California purchasers, providers, and payers to form efficient-sized bargaining units for the purpose of contracting for the delivery of health care services. (c) This Legislature has previously demonstrated its intent in this area by the recent enactment of Chapters 328, 329, and 1594 of the Statutes of 1982 authorizing various types of contracts to be entered into between public or private purchasers or payers of health care coverage, and institutional or professional providers of health care services. (d) The Legislature further finds and declares that individual providers or purchasers, whether institutional, professional, or otherwise, have not proven to be efficient-sized bargaining units for these contracts, and that the formation of groups and combinations of institutional and professional providers and purchasing groups for the purpose of creating efficient-sized contracting units represents a meaningful addition to the health care marketplace. (e) The Legislature, however, recognizes that the 1982 decision of the United States Supreme Court in Arizona v. Maricopa Medical Society serves as a disincentive to the development of contracting for health care services because purchasers, providers, and payers who enter into contracts bear the risk of being found guilty of committing per se antitrust violations. (f) The Legislature further finds and declares that the public interest in ensuring that citizens of this state receive high-quality health care coverage in the most efficient and cost-effective manner possible is furthered by permitting negotiations for alternative rate contracts between purchasers or payers of health care services, and institutional and professional providers, or through a person or entity acting for, or on behalf of, a purchaser, payer, or provider. (g) It is the intent of the Legislature, therefore, that the formation of groups and combinations of providers and purchasing groups for the purpose of creating efficient-sized contracting units be recognized as the creation of a new product within the health care marketplace, and be subject, therefore, only to those antitrust prohibitions applicable to the conduct of other presumptively legitimate enterprises. These provisions are in addition to those provided for under Section 1342.6 of the Health and Safety Code and Section 10133.6 of the Insurance Code. (h) This section does not change existing antitrust law as it relates to any agreement or arrangement to exclude from any of the above-described groups or combinations, any person who is lawfully qualified to perform the services to be performed by the members of the group or combination, where the ground for the exclusion is failure to possess the same license or certification as is possessed by the members of the group or combination. (Amended by Stats. 1987, Ch. 56, Sec. 12.)

Last verified: January 22, 2026

Key Terms

the legislaturemedicalcontractcoveragehealthportqualityformation

Related Statutes

  • § 11267 Time-Share Management Agreements
  • § 3640.2 Naturopathic Assistant Scope
  • § 4076.5 Prescription Drug Label Standards
  • § 4430 Health Plan Definitions
  • § 580 Degree Sale Prohibition

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Business and Professions Code. Section 16770.
View Official Source