20250AB__219496AMD INTRODUCED 2026-02-19 AMENDED_ASSEMBLY 2026-03-26 AMENDED_SENATE 2026-06-15 AMENDED_SENATE 2026-07-02 2025 AB AMD Introduced by Assembly Member Valencia LEAD_AUTHOR ASSEMBLY Valencia

An act to amend

Section 14087.59 of, and to add

Section 14087.591 to, the Welfare and Institutions Code, relating to Medi-Cal. Medi-Cal Medi-Cal: special commissions. Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services, under which health care services are provided to qualified, low-income persons. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.

Existing law authorizes a county board of supervisors to establish a commission to negotiate an exclusive contract with the department to provide, or arrange for the provision of, health care services under the Medi-Cal program. Pursuant to the authority described above, the County of Orange established a commission and existing law established the governance of that commission, known as the Orange County Health Authority or CalOptima, to provide health care services under the Medi-Cal program.

Existing law prescribes who can serve on the 10-member governing body of the commission and requires each member to serve a 4-year term, except as described. This bill would require the terms for members of the governing body to be staggered and would require, for the term beginning prior to January 1, 2027, 3 members to serve years, with a 4-year term beginning thereafter.

The bill would require the governing body of the Orange County Health Authority to authorize and pay for an independent external audit of its governance procedures and practices, including the roles and responsibilities of the governing body, executive leadership, and staff, among others. The bill would require the audit to be completed by July 1, 2027, and would require that a copy of the report be provided to the Legislature and made public.

Because this bill would impose a unique requirement on how services are provided on a local government and would require additional duties of county authorities, the bill would impose a state-mandated local program. This bill would make legislative findings and declarations as to the necessity of a special statute for County of Orange. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason. MAJORITY NO YES YES NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION

Section 14087.59 of the Welfare and Institutions Code is amended to read: 14087.59. (a)

(1) Notwithstanding subdivision (

d) of

Section 14087.54, governance of the commission in the County of Orange established pursuant to

Section 14087.54, known as the Orange County Health Authority, shall be vested in a governing body consisting of members: 9 voting members and nonvoting member. The nonvoting member shall be the Director of the Orange County Health Care Agency. The nine voting members shall be nominated by the Orange County Health Care Agency and appointed by a majority vote of the Board of Supervisors of the County of Orange and shall consist of the following: (A)<xhtml:span class="EnSpace"/>The Director of the Orange County Health Care Agency.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The Director of Social Services for the County of Orange.</xhtml:p>"?> (

A) Two members shall each be a member of the Board of Supervisors of the County of Orange, with one additional member of the Board of Supervisors of the County of Orange to serve as an alternate. (C)</xhtml:p>"?> (

B) One member shall be a current or former hospital administrator. (D)</xhtml:p>"?> (

C) One member shall be a representative of a community clinic, which may include, but is not limited to, a representative of a federally qualified health center, as defined in

Section 1396d(l)(2)(

B) of Title of the United States Code. (E)</xhtml:p>"?> (

D) One member shall be a member of the public who is a legal resident of the County of Orange. (F)</xhtml:p>"?> (

E) One member shall be a practicing licensed medical provider who is not an owner or officer, or a member of the board of directors, of a contracted independent physician’s association or provider network. (G)</xhtml:p>"?> (

F) One member shall be a current Orange County Health Authority member or a family member of a current Orange County Health Authority member. (H)</xhtml:p>"?> (

G) One member shall be an accounting or public finance professional, or an attorney who is an active member of the State Bar. (I)</xhtml:p>"?> (

H) One member shall be a practicing licensed physician who is a representative of a contracted independent physician’s association or provider network.

(2) For purposes of identifying qualified individuals to be considered as members of the governing body, the Board of Supervisors of the County of Orange shall consult with stakeholders in the County of Orange, including, but not limited to, providers who serve CalOptima members, consumers, and advocates. (

b) Each member of the governing body shall reside in, or be employed in, the County of Orange and shall be generally representative of the diverse backgrounds, interests, and demography of persons residing in the County of Orange. Each member of the governing body shall have a commitment to a health care system that seeks to improve access to high-quality health care for persons served by the commission and that in fact delivers high-quality care and is financially viable. Each member shall possess the requisite skills and knowledge necessary to design and operate a quality publicly assisted health care delivery system. (c)

(1) Members of the governing body of the commission shall serve four-year terms, which shall be staggered, except for those members who are members of the Board of Supervisors of the County of Orange, who shall serve a one-year term. The term of office of members of the governing body described in any of subparagraphs (B), (D), (F), and (

H) of paragraph (1) of subdivision (

a) duly serving prior to January 1, 2027, shall remain unchanged. The term of office for members of the governing body described in subparagraphs (C), (E), and (

G) of paragraph (1) of subdivision (

a) serving a term beginning prior to January 1, 2027, shall be a two-year term. Thereafter, members described in subparagraphs (C), (E), and (

G) of paragraph (1) of subdivision (

a) shall serve a four-year term and are subject to the limitations provided for in paragraph (2) of this subdivision. Members who are appointed to fill the unexpired term of a vacant seat shall have an initial term that corresponds to the unexpired term of the vacant seat. A vacancy that occurs in the last days of a term shall not be filled until the expiration of the term.

(2) A member of the governing body shall serve no more than two consecutive terms. The limitations set forth in this paragraph apply only to service for consecutive terms. No other limitation on the number of terms a person may serve is intended.

(3) A member of the governing body of the commission may be removed from the governing body by a vote in favor of that removal of at least two-thirds of the full membership of the Board of Supervisors of the County of Orange. (

d) The governing body of the commission, subject to a two-thirds vote of the full membership, may increase the number of public members, or the number of members who are current Orange County Health Authority members or family members of current Orange County Health Authority members who may serve as a member of the governing body, subject to an affirmative vote by a majority of the Board of Supervisors of the County of Orange, provided, however, that a change in the composition of the governing body under this subdivision shall not result in the elimination of any member described in paragraph (1) of subdivision (a). (

e) Each member of the governing body shall have the responsibility and duty to follow the requirements of applicable federal and state laws and regulations, including

Section of the Government Code, the applicable provisions of Sections to 87500, inclusive, of the Government Code, and

Section 14047.6 of this code, to serve the public interest of the members of the Orange County Health Authority, and to ensure the operational well-being and fiscal solvency of the Orange County Health Authority.

Members of the governing body shall further strive to improve health care quality, promote prevention and wellness, ensure the provision of cost-effective health and behavioral health care services, reduce health disparities, address the needs of Medi-Cal members who are affected by homelessness and housing instability, improve quality outcomes, and manage the risk and needs of Medi-Cal beneficiaries through whole-person care approaches and addressing social determinants of health.

The Orange County Health Authority shall work to earn the public’s trust through its commitment to accountability, responsiveness, transparency, reliability, and cooperation. (

f) A member of the governing body who has a financial interest, within the meaning of

Section of the Government Code, in a decision before the governing body shall, upon identifying a conflict of interest or a potential conflict of interest and immediately prior to the consideration of the matter, do all of the following:

(1) Publicly identify the financial interest that gives rise to the conflict of interest or potential conflict of interest in detail sufficient to be understood by the public, except that disclosure of the exact street address of a residence is not required.

(2) Recuse the member’s own self from discussing and voting on the matter.

(3) Leave the room until after the discussion, vote, and any other disposition of the matter is concluded, unless the matter has been placed on the portion of the agenda reserved for uncontested matters.

(4) Notwithstanding paragraph (3), the member may speak on the issue during the time that the general public speaks on the issue. (g)

(1) A member of the governing body shall not, for a period of one year after leaving office, act as an agent or attorney for, or otherwise represent, for compensation, any other person, by making any formal or informal appearance before, or by making any oral or written communication to, the commission, or any committee, subcommittee, or present member of the commission, or any officer or employee of the commission, if the appearance or communication is made for the purpose of influencing administrative action or influencing any action or proceeding involving the issuance, amendment, awarding, or revocation of a permit, license, grant, or contract, or the sale or purchase of goods or property.

(2) In addition to paragraph (1), a member of the governing body described in subparagraphs (

A) and (

G) of paragraph (1) of subdivision (

a) shall not, for a period of one year after leaving office, serve as an employee, agent, or attorney, or otherwise represent, for compensation, the Orange County Health Authority or any other entity that received an expenditure of Medi-Cal funds from the Orange County Health Authority during the prior five years. This paragraph does not apply to expenditures of Medi-Cal funds from the Orange County Health Authority for routine administrative expenses for reimbursement for travel, continuing education costs, routine office expenses, and other ongoing routine administrative expenses.

This paragraph does not prevent any member from returning to or continuing the role that they held when they were appointed to the governing body. (h)<xhtml:span class="EnSpace"/>(1)<xhtml:span class="EnSpace"/>The members of the governing body shall be nominated and selected by a majority vote of the selection committee as established pursuant to this subdivision.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/> Applications to become a voting member of the governing body shall be submitted to the Orange County Health Care Agency.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>The selection committee shall be administered by the Orange County Health Authority and shall consist of all of the following:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>The Senator who represents the most Medi-Cal beneficiaries who are members of the Orange County Health Authority or their surrogate.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The Assembly Member who represents the most Medi-Cal beneficiaries who are members of the Orange County Health Authority or their surrogate.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>The United States Representative who represents the most Medi-Cal beneficiaries who are members of the Orange County Health Authority or their surrogate.</xhtml:p><xhtml:p>(D)<xhtml:span class="EnSpace"/>An Orange County Health Authority member or family representative.</xhtml:p><xhtml:p>(E)<xhtml:span class="EnSpace"/>An at-large representative.</xhtml:p><xhtml:p>(F)<xhtml:span class="EnSpace"/>A financial or legal representative.</xhtml:p><xhtml:p>(G)<xhtml:span class="EnSpace"/>An independent practice physician representative.</xhtml:p><xhtml:p>(H)<xhtml:span class="EnSpace"/>A hospital representative.</xhtml:p><xhtml:p>(I)<xhtml:span class="EnSpace"/>A provider representative.</xhtml:p>"?>

SEC.

Section 14087.591 is added to the Welfare and Institutions Code , to read: 14087.591. (

a) The governing body of the Orange County Health Authority shall authorize and pay for an independent external audit of the Orange County Health Authority’s governance procedures and practices. The audit shall be conducted by an independent entity with demonstrated expertise in health care governance, board oversight, and managed care operations. The entity conducting the audit shall be announced at an Orange County Health Authority board meeting and opportunity for interested stakeholders to submit input to the entity for particular actions to be reviewed shall be permitted. (

b) The independent external audit shall evaluate, at a minimum, all of the following:

(1) The Orange County Health Authority’s conflict-of-interest policies and procedures, including policies governing disclosures, recusals, and potential conflicts involving members of the governing body, officers, employees, and individuals participating in contracting or procurement decisions.

(2) The roles and responsibilities of the governing body, executive leadership, and staff to ensure appropriate separation between governance and oversight functions and the day-to-day operations and management of the Orange County Health Authority.

(3) The Orange County Health Authority’s policies and practices governing contracting, procurement, and vendor selection to ensure decisions are made consistent with applicable laws, regulations, fiduciary obligations, and established governance practices. In reviewing the governing practices, the independent audit shall review particular actions identified by interested stakeholders as described in subdivision (a).

(4) The Orange County Health Care Agency’s policy for nominating members to the governing body. The audit shall determine if the policy sufficiently prioritizes strategies to attract and retain professionals with a background in health care to be nominated to the board and provide suggestions on recruitment as necessary.

(5) Whether the Orange County Health Authority’s governance structure, policies, or practices appropriately preserve the ability of executive leadership and staff to independently conduct contracting and procurement functions consistent with the governing body’s oversight role.

(6) Recommendations to strengthen governance practices, accountability, transparency, and appropriate oversight by the governing body. (

c) In order to evaluate the items in subdivision (b), the independent audit shall conduct interviews with staff of the Orange County Health Authority and provide anonymous opportunities to share feedback. (

d) The independent external audit shall be completed and the governing body shall submit the audit report to the Legislature and the department no later than July 1, 2027.

(1) The requirement for submitting a report imposed under this subdivision is inoperative on July 1, 2031, pursuant to

Section 10231.5 of the Government Code.

(2) A report to be submitted pursuant to this subdivision shall be submitted in compliance with

Section of the Government Code. (

e) The governing body of the Orange County Health Authority shall review the findings and recommendations of the independent external audit and develop a corrective action plan, as appropriate, to address any identified deficiencies. (

f) The Orange County Health Authority shall make the audit report and any corrective action plan available to the public, consistent with applicable confidentiality and proprietary information requirements.

SEC. 3. The Legislature finds and declares that a special statute is necessary and that a general statute cannot be made applicable within the meaning of

Section of

Article IV of the California Constitution because of the unique circumstances applicable to the County of Orange with respect to the operation and governance of the Orange County Health Authority, which is a county-organized health system known as CalOptima.

SEC. 4. No reimbursement is required by this act pursuant to

Section of

Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district are the result of a program for which legislative authority was requested by that local agency or school district, within the meaning of

Section of the Government Code and

Section of

Article XIII B of the California Constitution.