CA Eliminates FQHC PPS Rates for Undocumented Patients July 2026 — $1B Annual Revenue Impact

Starting July 1, 2026, California's budget eliminates use of the Prospective Payment System for FQHC services to state-only-funded individuals with unsatisfactory immigration status (UIS). FQHCs will instead be paid at the regular Medi-Cal fee-for-service rate or negotiated managed care plan rates — roughly 50–70% less per encounter than the PPS rate ($200–400/visit). The CA LAO scores this as $1 billion in annual General Fund savings, meaning $1 billion in annual FQHC revenue loss beginning 2026–27. FQHCs with large undocumented patient panels — concentrated in LA, San Diego, and Central Valley — face the most severe financial exposure. Dental benefits for undocumented Medi-Cal enrollees also eliminated: $308M savings in 2026–27.