Funding & Budget

CalAIM Section 1115 Waiver Expires December 2026 — $1.2B/Year at Stake

The CalAIM waiver authorizing Enhanced Care Management and Community Supports expires December 31, 2026. DHCS formally submitted its 1115 renewal to CMS on May 11, 2026 (CMS approval pending; ECM and most Community Supports also continue under standalone managed-care authority regardless of waiver timing). Without renewal of the 1115-dependent services, an estimated $1.2 billion annually in ECM/Community Supports funding is at risk — threatening thousands of care coordination, CHW, and housing navigator positions at FQHCs statewide.

CMS defers $867.5M in federal Medicaid funds from California DHCS, with a July 31 documentation deadline on the largest line

CMS issued a deferral letter to California State Medicaid Director Tyler Sadwith on July 21, 2026, withholding $709,311,454 in federal medical assistance (MAP) and $158,153,833 in administrative (ADM) funds — a negative grant award of $867,465,287 in federal share for Q2 FY2026. READ THE SCOPE CORRECTLY: this is a federal action against the STATE MEDICAID AGENCY, not an enforcement action against any health center. No FQHC is named anywhere in the letter. It matters to health centers because it constricts the Medi-Cal funding channel they are paid through, and because two line items sit directly adjacent to health-center billing categories. The single largest line is Community First Choice personal care services (CFC-PCS) at $646,373,682, of which a $250,223,401 program-integrity component rests on CMS-identified figures: $19,178,403 in federal share adjudicated more than a year after date of service, $237,549,233 flagged as statistical outliers, and $25,149,396 where a provider billed for four or more beneficiaries. Two smaller lines touch the unsatisfactory-immigration-status (UIS) population that FQHCs serve heavily: $12,038,376 in UIS supplemental payments (CMS reduced its calculation by the state's voluntary $42,992,833 Q2 reduction) and $4,118,159 in FFS claims for individuals lacking satisfactory immigration status that CMS says 'appear not to meet the state's criteria for emergency services.' Every one of the 12 deferrals is marked REPEAT — none is a new category. Deadlines: CFC-PCS sample documentation is due to CMS July 31, 2026; the state has 60 days from receipt on the other claims to avoid disallowance, with up to a 60-day extension available on written request under 42 CFR 430.40. California is not alone — the same week CMS deferred $199 million from Minnesota, bringing the two-state total above $1 billion. WHAT THIS IS NOT: a deferral is a withholding pending documentation, not a final disallowance, and none of it changes PPS rates or health-center payment methodology. Watch it as pressure on the state budget that funds Medi-Cal, not as a direct cut to your organization.

D.C. Circuit: drug makers can't force a 340B rebate model without HHS approval — the Secretary, not manufacturers, controls the program

On July 21, 2026 the U.S. Court of Appeals for the D.C. Circuit upheld a lower court and ruled that Section 340B does not permit manufacturers (Novartis and Johnson & Johnson) to unilaterally replace up-front 340B discounts with a post-purchase rebate model unless the HHS Secretary approves it — holding, in effect, that the statute puts the Secretary and not the manufacturers in control of the program. The decision preserves the up-front-discount structure that community health centers and their contract pharmacies depend on, while leaving open whether HHS could authorize a rebate model in the future. It is a defensive win, not a permanent fix: other manufacturer proposals and HHS's own rebate-pilot review remain live.

Samuel Dixon Family Health Center wins $655K in state funding to erase the mortgage on its Newhall behavioral-health clinic

Assemblymember Pilar Schiavo (D-Chatsworth) secured $655,000 in California state funding to pay off the mortgage on Samuel Dixon Family Health Center's stand-alone behavioral-health facility at 23206 Lyons Ave. in Newhall. Samuel Dixon is a nonprofit FQHC that has served the Santa Clarita Valley for more than 40 years across eight sites; CEO Philip Solomon said the freed debt service will be redirected to expand behavioral-health programs and recruit additional clinicians.

DHCS opens comment on CalAIM Community Supports Policy Guide updates — comments close July 31, and Volume 2 sunsets Short-term Post Hospitalization Housing at the end of 2026

DHCS posted proposed updates to the CalAIM Community Supports Policy Guide for public comment in its July 20, 2026 stakeholder news, with comments due July 31 to CommunitySupports@dhcs.ca.gov under one of two required subject lines ('Feedback on the Community Supports Policy Guide: Volume 1 Updates' or 'Feedback on the Community Supports Housing-Related Updates'). This is the operating rulebook for the Community Supports services many health centers deliver, so the changes are worth reading rather than skimming. Volume 1 covers 'streamlined administrative guidance, clearer service definitions, improved coding direction, alignment with managed care plan contract language, and refinements related to In-Home Supportive Services and medical necessity criteria.' The Volume 2 housing changes are the more consequential ones: the transition of Recuperative Care to managed care In Lieu of Services (ILOS) authority, the SUNSET OF SHORT-TERM POST HOSPITALIZATION HOUSING AT THE END OF 2026, and refinements to Housing Transition Navigation Services and Housing Tenancy and Sustaining Services. An organization that has built a post-hospitalization housing workflow has roughly five months of runway and one week to comment on it. HONEST SCOPE: this is an administrative-guidance update, not a payment or rate action — the announcement states no effective date for the Volume 1 changes, and DHCS does not characterize it as a reimbursement change. Read it alongside the already-tracked June proposal to trim Community Supports and ECM utilization ($184M in 2026-27, rising past $530M/yr by 2029-30): the same program whose spending is being narrowed is now having its service definitions rewritten.

San Francisco Lists $76.1M Chinatown Public Health Center Renovation In Progress

At the July 19 source-review checkpoint, San Francisco Public Works listed the $76.1 million seismic retrofit and modernization of Chinatown Public Health Center as in progress. Public Works describes the facility as the city's most seismically vulnerable public health clinic and says this is its first major renovation since opening in 1971. During construction, services are temporarily operating on the fourth floor of Chinese Hospital. The project is expected to finish in spring 2029 with expanded exam and consultation rooms, a larger dental clinic, and modernized women, infant-care and nutrition space. The clinic records more than 19,000 visits annually, and more than 80% of its patients speak a Chinese dialect.

CenCal CEO projects 25,000 Santa Barbara County residents could lose coverage in 2026, rising to 50,000 in 2027

The Santa Barbara Independent reported that CenCal Health CEO Marina Owen projected 25,000 Santa Barbara County residents could lose health insurance in 2026, with the projected figure rising to 50,000 in 2027. The article gives no methodology or denominator, so these are attributed forecasts, not observed losses. Owen also reported that major county hospitals, clinics, Santa Barbara County, CenCal, and the Santa Barbara Foundation had held two response meetings and planned a third. Their immediate priority was helping residents retain coverage; longer-term work concerned care models for people who become uninsured. The article identifies county health centers, Santa Barbara Neighborhood Clinics, and American Indian Health & Services within the local FQHC safety net, but does not identify individual meeting attendees or quantify organization-specific effects.

Santa Barbara County Restores 15 Clinic Positions After the PPS Delay Delivers $6.6M — First County-Level Proof the Budget Reprieve Is Restoring Capacity

Santa Barbara County will restore 15 positions cut in its June-16 adopted budget — 7 staff nurses, 2 medical assistants, 2 administrative office professionals, 2 financial office professionals, 1 health education assistant, and 1 pharmacy technician, placed 'specifically in the clinics, in order to increase productivity' per Health Director Dr. Mouhanad Hammami — because the state's 12-month delay of the UIS-PPS rate change (SB 164) gives the county $6.6 million in unexpected revenue for the fiscal year that began July 1, 2026. It is the first named-county dollar figure showing the June budget's PPS reprieve restoring safety-net capacity — the concrete counterpart to Santa Cruz Community Health's ~$2.3M/yr projected loss from the pre-delay era. The reversal is partial: in-house blood draws, some pharmacy services, and four specialties (nephrology, urology, neurology, gastroenterology) remain shifted to private providers and the CenCal Health network. The Board of Supervisors receives a full state-budget impact report August 18, 2026. Central Coast FQHCs should note the county clinics are re-staffing nursing and MA capacity while phlebotomy and specialty referrals stay externalized.

Vista Community Clinic Opens Glendale PACE Center — FQHC Expands Coordinated Senior Care in Los Angeles County

Vista Community Clinic (VCC) — an FQHC with sixteen locations across North San Diego, Orange, Los Angeles, and Riverside counties serving more than 70,000 residents — opened a new Program of All-Inclusive Care for the Elderly (PACE) center in Glendale (425 East Colorado Street, Los Angeles County). The center serves adults 55 and older who would otherwise qualify for nursing-home-level care, with a day center seating up to 98 participants, a medical clinic, therapy gym, activity and dining spaces, and wheelchair-accessible transportation between homes, the center, and medical appointments. VCC PACE accepts Medi-Cal beneficiaries, dual-eligibles, and private-pay participants, with eligible Medi-Cal participants served at no cost — a rare net-positive access-and-hiring signal in a cut-heavy budget year.

SAC Health Acquires a Former Rite Aid in Victorville for Its Second High Desert Clinic — ~150,000 Medi-Cal-Eligible Residents in the Victor Valley

SAC Health — the largest specialty-based teaching FQHC in the United States, with 11 clinics across San Bernardino and Riverside counties — announced July 7, 2026 that it has acquired the former Rite Aid property at 14629 7th St. in Victorville for its second dedicated High Desert location. Nearly 150,000 Medi-Cal-eligible patients live in the Victor Valley alone, and residents have had to travel roughly 35-40 miles in either direction to San Bernardino or Barstow for comparable care; SAC Health says renovations of this scale typically take about two years. A rare Inland Empire access-expansion signal in a cut-heavy year, following the organization's ~$3.6M HRSA grant renewal in June.

New Federal Data: ACA Marketplace Enrollment Fell to 19.2M — Down ~2.6M Year-Over-Year — After Enhanced Subsidies Expired; Ohio and Oklahoma Each Lost a Third of Enrollees

Federal effectuated-enrollment data posted in late June — analyzed in an ASPE issue brief (June 26) and reported state-by-state by the Associated Press on July 6 — shows about 19.2 million people had ACA Marketplace coverage in February 2026, roughly 2.6 million fewer than in February 2025, following the January 1 expiration of enhanced premium tax credits. Measured from 2025's 22.1 million peak, KFF puts the decline at 13% and notes average monthly premium payments jumped 58%; KFF projects enrollment could average roughly 17.5 million by the end of 2026. The state picture is stark: Ohio and Oklahoma each lost more than 32% of enrollees; Arizona, South Carolina, Minnesota, Indiana, Michigan, Mississippi, Louisiana, and Missouri each lost more than a quarter; Florida lost the largest raw number (~443,000). Only New Mexico gained enrollees (+14%) — the one state that fully replaced the lost federal subsidies with its own funds. HHS separately attributes 2.9 million of the enrollment reduction to program-integrity actions (a distinct measure, not the same 2.6M year-over-year figure). Every Marketplace dropout is a prospective uninsured sliding-fee patient — a durable uncompensated-care pressure signal for FQHCs nationwide through 2026.

DHCS Confirms California's Current MCO Tax Remains Intact Through December 31, 2026—No June 30 Transition Cliff

Correction (July 15, 2026): DHCS's current financing page states that the February 2026 CMS final rule leaves California's existing Managed Care Organization tax intact through its authorized term ending December 31, 2026. The same tax structure will no longer be federally approvable after that date, so the live planning cliff is year-end—not June 30—and the earlier claim of a required six-month extension and associated ~$1.1 billion June-triggered gap is retired. FQHC leaders should preserve the December financing transition in forecasts while DHCS works with partners on a successor tax and related payment methodologies.

California's Budget Funds Public Hospitals and Enrollment but Zero for Indigent Care — Sonoma County Projects CMSP Caseload Could Jump From 97 to ~11,560

California's enacted FY2026-27 budget provides $250 million for public hospitals and $420 million for benefits-enrollment staffing, but $0 for the mandated indigent-care costs counties must absorb as H.R. 1's Medicaid changes phase in. The California State Association of Counties (CSAC) had sought $50 million for the fiscal year that began July 1 and $462 million for 2027-28; CSAC CEO Graham Knaus said flatly, 'There is zero in the state budget related to indigent care.' Sonoma County — which in May estimated a three-year, $39.6 million indigent-care cost including its County Medical Services Program (CMSP, the safety net for people who don't qualify for Medi-Cal) — projects per April estimates that its CMSP caseload could balloon from 97 people today to roughly 11,560 as coverage losses hit. Local clinics have asked the county for $12 million to prepare for the coming wave of uninsured patients; county officials are holding off on committing funds until next year's full H.R. 1 impact is clearer.

Enacted CA Budget Funds $5M Central Coast Behavioral-Health Pilot Through CenCal Health — Rare Net-Positive for Santa Barbara + SLO

California's enacted FY2026-27 budget includes a one-time $5 million investment for CenCal Health — the Medi-Cal managed-care plan that Central Coast FQHCs bill — together with the Santa Barbara and San Luis Obispo county behavioral-health departments, to launch a pilot for individuals living with severe schizophrenia and anosognosia. The funds support LEAP (Listen-Empathize-Agree-Partner) training, strengthened family-support services, enhanced behavioral-health crisis response and de-escalation, and emergency treatment access, delivered through community-organization partnerships. Adjacent to Section 330 FQHCs rather than a direct grant, it is a rare positive Central Coast behavioral-health signal in a budget year dominated by cuts, and a potential referral/partnership channel for CHC of the Central Coast and Community Health Centers of the Central Coast behavioral-health teams.

Medi-Cal Posts FQHC/RHC PPS 2025 Q4 Claim Reprocessing Notice — Positive Adjustments Started June 25, Negative Adjustments Begin July 23

Medi-Cal posted the 2025 fourth-quarter FQHC/RHC Prospective Payment System rate-adjustment notice on July 2. The fiscal intermediary will automatically reprocess affected claims; positive adjustments began appearing on RAD forms June 25, 2026, and negative adjustments begin July 23, 2026, using RAD code 0882. Revenue-cycle teams should watch the July 23 negative-adjustment wave, reconcile PPS cash flow against remittance detail, and preserve appeal/CIF timing where needed.

The Budget's Quieter First Cliff: ~2M UIS Medi-Cal Enrollees Move to Fee-for-Service January 1, 2027 — Six Months Before the PPS Change

The signed 2026-27 budget's headline for FQHCs is the 12-month delay of the UIS-PPS clinic-payment cut to July 1, 2027 — but CalMatters' final-deal breakdown reveals the reprieve is a TWO-STAGE cliff, not one. Stage one arrives January 1, 2027: roughly 2 million Medi-Cal enrollees with unsatisfactory immigration status (mostly undocumented immigrants) transition from managed care to fee-for-service, saving the state ~$470M/year — and in the move those enrollees lose benefits like case management, housing assistance, and medically tailored meals (the ECM/Community Supports-style services FQHC care-management teams deliver), even though coverage itself continues. The budget appropriates $39M for care coordination and navigators to assist the transition. Stage two is the already-tracked July 1, 2027 date, when the PPS rate mechanism and full-scope dental for this population expire unless extended. Other final-deal details: starting July 2027, ~150,000 humanitarian immigrants (refugees, asylees, trafficking survivors) are limited to emergency and pregnancy care only — refining the earlier 'humanitarian immigrants protected' framing into a 12-month runway; $250M in grants goes to public hospitals plus up to $140M for hospitals in significant financial distress; counties get $200M to verify eligibility for health and food benefits, but the Legislature's $125M ask for county indigent-care systems was EXCLUDED from the final deal; and $300M subsidizes private coverage for low- to middle-income Californians. Strategic implication: FQHC care-management and ECM-adjacent revenue tied to the UIS population ends January 1, 2027 — six months ahead of the rate cliff most boards are planning around — and the navigator funding window is the transition-support contract opportunity. UPDATE (July 13, 2026): DHCS now officially attributes the PPS postponement to trailer bill SB 164 and has posted a Third Addendum to its state-only reimbursement guidance confirming the July 1, 2027 date (plus a June 24 follow-up Q&A webinar). CCALAC's June 30 statement calls the PPS year 'a lifeline' while formally OPPOSING the FFS transition as creating 'a two-tiered system' — the first named PCA opposition on record to the January 1, 2027 shift. The final budget also includes $100M in Covered California premium subsidies for the lowest-income enrollees, $197M to counties for H.R. 1 eligibility workload, and preserves acupuncture as a Medi-Cal benefit.

Newsom Signs California's 2026-27 Budget — Formalizing the One-Year FQHC UIS-PPS Reprieve

Governor Gavin Newsom signed California's 2026-27 state budget on June 29, 2026, including the Budget Act bills and the health trailer bill package. For California FQHCs, the signature matters because it converts the June budget deal from a negotiating position into enacted law: the major State-Only / Unsatisfactory-Immigration-Status clinic-payment reduction, UIS adult dental benefit cut, and Proposition 56 dental supplemental-payment cut move out of the July 1, 2026 operating window and into a July 1, 2027 planning horizon. The Governor's release is the primary citation for the fact of signature; the companion June 11 Assembly floor-report item remains the detailed source for the $1.034B General Fund clinic-PPS appropriation and the 12-month reprieve mechanics.

NACHC: Integrated Behavioral Health Is Working in CHCs, but Payment Reform Has to Catch Up

NACHC's June 29 national brief argues that community health centers have proven integrated primary care and behavioral health can work, but current payment structures still underpay same-day behavioral health access, care coordination, telehealth infrastructure, and risk adjustment for complex patients. The brief cites 34 million annual CHC patients, nearly 3.3 million behavioral-health patients in 2024, telehealth adoption rising from 42% to 98% between 2019 and 2024, and Medicaid supplying 44% of total CHC revenue — making stable Medicaid coverage and VBC models central to sustaining integrated care.

SF Budget Committee Reverses $750K of Mayor Lurie's Cuts to HIV and Health Access Points — Full Board Votes July 21 and 28

San Francisco's Board of Supervisors budget committee, chaired by Sup. Connie Chan, reversed part of Mayor Daniel Lurie's proposed 6.6% across-the-board cut — specifically restoring a proposed $750,036 cut to health access points, including those serving gay and bi men and trans people (Bay Area Reporter, late June 2026). Affected providers include SF AIDS Foundation's Magnet, San Francisco Community Health Center's TransThrive, LYRIC, Instituto Familiar de la Raza, UCSF's Alliance Health Project and Ward 86, and the Rafiki Coalition. 'We have restored HIV services,' Chan said. The restoration is a slice of the broader cuts, not a blanket reversal — DPH's clinic consolidations move on a separate track — and it awaits full-Board votes July 21 and 28 ahead of the August 1 adoption deadline. It also partially answers the tracked TransThrive funding-termination story.

DHCS Reports CalAIM ECM Up 59% Year-Over-Year — Then Proposes Utilization 'Refinements' Saving $184M in 2026-27, Growing to Over $530M/Year by 2029-30

DHCS's June 26, 2026 quarterly update shows Enhanced Care Management served nearly 227,500 members in Q3 2025 — up 59% from Q3 2024, with nearly 453,000 members served since 2022 — even as a May 2026 DHCS fact sheet ('Refinements and Efficiencies for Community Supports and ECM') proposes utilization-management changes to both programs. The fact sheet cites that ECM members have been receiving fewer than 2 ECM services per month, below the 3+ services consistent with appropriate ECM care models, and proposes constraining referral sources (including prohibiting authorization requests directly from Community Supports providers for services like asthma remediation and medically tailored meals), limiting housing-service eligibility beyond an initial six-month period, tightening authorizations that overlap IHSS, and adding graduation/duration criteria. Projected savings: $111.8 million ($41.4M General Fund) in 2026-27 for ECM, rising to $394.4 million ($145.9M GF) in 2029-30 and ongoing, plus $72.5 million ($26.9M GF) in 2026-27 for Community Supports, rising to $137.8 million ($51.0M GF) ongoing — a combined ~$532M/year at maturity. FQHCs and community partners billing these CalAIM services face tighter referral, duration, and payment rules even as demand hits record highs.

Elica Health Centers buys its West Sacramento clinic with $1.09M in CDFI financing, guarding against displacement

Community Vision, a CDFI, provided $1.09 million in financing for Elica Health Centers — a nonprofit FQHC — to purchase its longtime leased clinic at 155 15th Street in West Sacramento (Yolo County), which it has operated since 2013. The site averages 5,400+ patients a year with 20 staff. Elica has grown from two sites in 2002 to 12 clinics plus four mobile units, serving 64,000+ patients in 2024. Owning the building protects the FQHC from displacement amid healthcare-funding uncertainty.

At House Oversight Hearing, California's Medicaid Director Testifies CMS Cited 'No Instances of Fraud' to Justify Its $1.3B Medi-Cal Deferral

At a House Energy & Commerce oversight subcommittee hearing on June 25, 2026, California Medicaid Director Tyler Sadwith testified that despite CMS's May deferral of roughly $1.3 billion in federal Medicaid funds — the largest such deferral in CMS history, aimed mainly at in-home/personal-care (IHSS) spending — 'CMS decided to defer the payments, and they have not provided any instances of fraud, waste or abuse as part of their review.' Sadwith noted California has suspended approximately 5,000 providers for fraud over the past five years and recovered more than $1 billion in fraudulent payments over the past three; Minnesota's Medicaid director testified about a $350 million deferral there, with CMS threatening to withhold $2 billion annually. Democrats characterized the CMS actions as politically targeted, while Republicans defended the administration's anti-fraud posture. For FQHCs, the hearing sharpens a fact implicit in the original deferral: the withheld dollars are not (yet) tied to any documented fraud finding, even as the freeze tightens the Medi-Cal cash pool the safety net draws on.

Alameda County Adopts a $6.7B Budget With an $85.3M Community Health Center Line — and Backstops Alameda Health System With $19.3M, Preventing 92 Layoffs

The Alameda County Board of Supervisors unanimously adopted a $6.7 billion FY2026-27 budget on June 25, closing a ~$91M gap without layoffs or major service cuts. The line that matters most to East Bay health centers: $85.3 million for community health centers serving low-income residents — the most FQHC-specific county allocation in the Bay Area this budget cycle. The county also put $19.3 million into stabilizing Alameda Health System, preventing 92 layoffs and extending a behavioral health program through October 31 pending a system audit; that materially changes the AHS picture, which had been heading toward an August 2026 cash runout and a June 30 contract expiration. Other items: $1.2B in community-based-organization contracts, $288M in Measure W homelessness funding, $17M food security, $4.6M deportation defense. For LifeLong Medical Care, La Clínica de la Raza, Asian Health Services and Native American Health Center, this is a rare local counterweight to the federal and state cuts — and it shows counties still have room to choose the safety net when they want to.

HRSA Quietly Restarts the 340B Rebate Model Pilot — Revised Application Package in the Federal Register, Comments Due July 15

Four months after a federal court vacated the first 340B Rebate Model Pilot (AHA v. Kennedy, February 2026), HRSA has taken the first formal step toward Rebate Pilot 2.0: an Information Collection Request for a revised '340B Rebate Model Pilot Program Application, Implementation, and Evaluation' published in the Federal Register June 15, 2026, with public comments due July 15, 2026. A June 22 correction notice revised the estimated responses to include 11 manufacturer Pilot Program Plan submissions — signaling HRSA anticipates MORE manufacturers in the revived pilot than the ~8-9 approved in the vacated first round. Guardrails from the February joint vacatur motion still bind: any new rebate program requires fresh public notice-and-comment and an effective date no earlier than 90 days after manufacturer-application approvals, sliding the earliest realistic go-live toward late 2026 or 2027. Strategic implication for FQHCs: a rebate model converts upfront 340B discounts into after-the-fact rebates — a working-capital hit covered entities (including NACHC) fought in round one. The July 15 comment window is the 13-day action item.

CMS Issues State Medicaid Director Letter #26-003 — Chief Actuary Must Certify Section 1115 Demonstrations Won't Increase Federal Spending Starting Jan. 1, 2027

On June 11, 2026, CMS released State Medicaid Director Letter #26-003, giving states early notice of a new statutory requirement (Section 71118 of H.R. 1, the law also referred to as the Working Families Tax Cut Act) that the CMS Chief Actuary must certify that new, renewed, or amended Section 1115 Medicaid demonstrations approved on or after January 1, 2027 will not increase federal Medicaid spending. The letter replaces the historical 'without waiver' expenditure-cap budget-neutrality model with a stricter no-increase standard and a more rigorous, individualized financial-impact analysis for each 1115-only activity. CMS followed on July 7 with a bulletin formally rescinding its 2015 'fast-track' review process for certain 1115 extensions, citing the new actuarial requirement. For California, this narrows the room available when CalAIM's Section 1115 waiver — which funds Enhanced Care Management and Community Supports that many FQHCs bill through managed-care plans — comes up for renewal ahead of its December 31, 2026 expiration; states with 2027 renewals in the pipeline should expect added actuarial documentation burden.