Legislation

CMS Interim Final Rule on Medicaid Work Requirements Due June 1 — Will Define Exemptions, Reporting, and Enforcement

CMS must issue an Interim Final Rule by June 1, 2026 defining critical work requirement implementation details: exemption criteria, reporting mechanisms, compliance verification, and non-compliance consequences. The 80-hour/month requirement scope depends entirely on this rule — narrow exemptions could mean millions losing coverage, broad exemptions could limit damage. States must conduct member outreach June 30–August 31, 2026. CMS is distributing $200M in 'Government Efficiency Grants' for state tracking systems, but no direct funding flows to FQHCs despite bearing the patient-facing burden.

HRSA 340B Rebate Model RFI — Comment Deadline April 20

HRSA's Request for Information on the 340B rebate model closes April 20, 2026. FQHCs have a narrow window to shape how manufacturer rebates, contract pharmacy oversight, and documentation requirements are structured. Combined with 2026 Data Request List changes tightening contract pharmacy scrutiny, this deadline is the single most consequential 340B policy window of the year. NACHC is mobilizing comments.

HRSA 340B Rebate Model RFI: Comment Deadline April 20 — Possible Expansion to All IRA Drugs

After a Maine federal court vacated the original 340B rebate pilot program, HRSA is gathering stakeholder input with a 60-day comment window closing April 20. HRSA has signaled it may expand the rebate model to ALL drugs selected for Medicare price negotiation under the IRA through 2027. FQHCs that depend on 340B upfront discounts for cash flow could face a shift to delayed rebate payments — a devastating change for smaller FQHCs without reserves.

SB 1422 Committee Hearing April 20 — Bill to Restore Full Medi-Cal for Undocumented Adults Faces Critical Gate

Sen. Durazo's SB 1422 — which would restore full Medi-Cal eligibility for undocumented adults, reversing the January 2026 enrollment freeze — reaches its first committee hearing April 20, 2026. CPCA and health center advocates are expected to testify. If the bill advances, FQHCs could see UIS patient revenue restored by 2027; if it stalls, the PPS payment elimination for undocumented patients is entrenched through at least the end of the current legislative session.

NACHC Warns Senate Finance: Reconciliation Bill Would Cut $7B from Community Health Centers Over 10 Years — 'The Most Significant Threat in 60 Years'

NACHC submitted formal testimony to the Senate Finance Committee warning that H.R. 1's combined Medicaid provisions — per-capita caps, work requirements, FMAP reductions, and Section 330 grant cuts — would eliminate $7B in community health center funding over 10 years, close an estimated 1 in 5 health centers, and displace 7.6M patients. NACHC CEO Gerard Clancy called it 'the most significant threat to the health center movement in 60 years.' The testimony is being circulated directly to Senate moderates (Collins, Murkowski, Capito) as budget reconciliation negotiations intensify.

PhRMA Sues Washington State Over 340B Contract Pharmacy Law — Ruling Will Set National Precedent for CA AB 1460

The pharmaceutical industry trade group PhRMA filed suit April 15 against Washington State's SB 5981, which requires drug manufacturers to reimburse 340B-covered entities when contract pharmacies are used. If courts enjoin the law before its June 10 effective date, it will freeze similar CA legislative action (AB 1460); if SB 5981 survives, AB 1460 has a significantly clearer path to passage and enforcement. This is the most directly applicable state-level 340B precedent for California FQHCs in 2026.

House Passes Budget Reconciliation Framework April 10 — Medicaid Cuts Now Move to Senate

The U.S. House passed a budget reconciliation framework on April 10, 2026 enabling the Senate to proceed with work requirements, per-capita caps, and FMAP reductions. NACHC calls it the most consequential legislative vote for health centers in a generation — and is activating in-district advocacy through April 25.

California AB 1113 Would Require Nonprofits to Spend 90% on Mission — FQHCs with Holding Companies or Pharmacy Subsidiaries Face Compliance Risk

AB 1113, advancing in the California Legislature, would require nonprofit health organizations to spend at least 90% of revenue on their stated mission, with penalties for excess executive compensation and administrative overhead. FQHCs with holding company structures, real estate subsidiaries, or 340B pharmacy operations could face dual-status compliance exposure. CPCA and CCALAC are monitoring the bill, which passed committee in early April and advances to the full Assembly. Health center CFOs should model the 90% threshold against current expense allocation.

SB 1422 Passes Senate Health Committee 9–2 — Durazo Bill to Restore Medi-Cal for Undocumented Adults Advances to Appropriations

SB 1422 passed the Senate Health Committee 9–2 on April 8, 2026 and was re-referred to Appropriations. The bill would reverse the January 2026 enrollment freeze for undocumented adults aged 19+, directly restoring PPS reimbursement for FQHC visits to this population. Its fate in Appropriations is uncertain given California's projected $22B deficit by FY2028.

AB 2161 Medi-Cal Work/Community Engagement Requirements — 'Do Pass' Committee Recommendation

AB 2161 — directing DHCS to implement work/community engagement requirements for Medi-Cal applicants and beneficiaries under the 2025 federal law 'in ways that are least administratively burdensome' — received a 'Do pass' recommendation from committee April 7, 2026. The bill establishes California's framework for compliance with the federal mandate. Direct operational impact: FQHCs will need redetermination workflows, work-status documentation support, and CHW navigation services. Coverage churn risk for thousands of patients statewide. CPCA likely to engage on implementation guardrails. Health Net (Centene) launched parallel $1M 'Get Informed, Stay Covered' campaign April 1 to educate enrollees.

LA County Medi-Cal Enrollment Crisis: Redeterminations + Asset Limits + Undocumented Cutoffs Converge

Three simultaneous Medi-Cal eligibility changes hit LA County in 2026: (1) asset limits reinstated Jan 1 ($130K individual), (2) undocumented adult enrollment frozen Jan 1, (3) H.R. 1 accelerated redeterminations (every 6 months vs annual) beginning Q3 2026. L.A. Care Health Plan — the largest public Medicaid plan in the US — is actively warning members. AltaMed published redetermination FAQs for patients. LA County FQHCs face revenue disruption as disenrollment waves begin.

KFF: California Faces $3B Deficit While Implementing Work Requirements That Could Disenroll 1.4 Million

KFF publishes the most detailed analysis of California's work requirements implementation challenges. Key data: FY2027 deficit of $3B (growing to $22B by FY2028), $1.1B Medicaid cost from reconciliation law alone, up to 1.4M projected disenrollments. Only 63% of affected adults already comply. State allocated just $4M for navigators across 19 languages. HHS interim final rule due June 2026 leaves minimal prep time before January 2027 implementation. For FQHCs: disenrolled patients become uninsured sliding-fee-scale patients — a massive revenue hit.

Nebraska Becomes First State to Enforce Medicaid Work Requirements May 1

Nebraska will enforce 80-hour/month work requirements starting May 1, 2026 — 8 months ahead of the federal January 2027 mandate. This is the first real-world test of how work requirements affect community health center patient panels and revenue. KFF estimates work requirements nationally will leave 5.3 million newly uninsured. Nebraska CHCs will serve as the early warning system for California FQHCs.

HHS Shuts Down Minority Health Offices — CLAS Training Infrastructure at Risk for FQHCs

The CMS Office of Minority Health (~40 employees eliminated) and HHS Office of Minority Health have been restructured under federal cost-cutting. OMH sponsors Think Cultural Health and free CLAS Standards training that FQHCs rely on for staff cultural competency education. CMS funding would drop $674M, explicitly eliminating health equity funding categories. FQHCs may need to self-fund cultural competency training previously available free from HHS. FY2026 budget proposes ~26% cut to HHS discretionary spending.

LAO: H.R. 1 Will Cost California $3.2B Through Provider Tax Restrictions and FMAP Cuts

The California Legislative Analyst’s Office published its April 6 fiscal analysis quantifying H.R. 1’s damage: $5.1B in provider tax revenue eliminated, administrative cost sharing drops to 25% federal / 75% state effective October 2026, and Medi-Cal rates will edge toward Medicare levels via directed payment caps beginning 2028. Net state cost: $3.2B. FQHCs already on negative margins face further reimbursement compression.

KFF: California Faces $22B Deficit by FY2028 While Implementing Medicaid Work Requirements — 1.4M Disenrollments Expected

KFF's deep-dive shows California must implement Medicaid work requirements (affecting ~5M expansion enrollees) while managing a projected $3B deficit for FY2027 growing to $22B by FY2028. The state faces $1.4B in General Fund costs from H.R. 1, is cutting FQHC/RHC reimbursement for state-funded UIS services (July 2026), and expects 1.4M disenrollments from work requirement implementation. The $5.1B provider tax revenue loss undercuts a major state financing mechanism.

California Billionaire Tax Act Proposed: $100B Revenue Source Could Offset H.R. 1 Healthcare Cuts

A proposed California Billionaire Tax Act would generate up to $100B in state revenue, explicitly framed as a response to H.R. 1 stripping $100B from CA healthcare over 5 years. If enacted, this could be the largest single state-level funding source to offset federal Medicaid cuts. The proposal faces significant political opposition but represents the most ambitious state counteroffensive to federal cuts yet proposed.

Trump Administration Files Amicus Brief Siding with Pharma Against 340B in Louisiana Federal Case

The US government filed an amicus brief in a Louisiana federal 340B case siding with pharmaceutical manufacturers, arguing states cannot enforce 340B contract pharmacy protections. Combined with a Fourth Circuit ruling blocking West Virginia's 340B law, this signals coordinated erosion of state-level 340B protections that could cost CA FQHCs millions in drug discount revenue.

SEIU-UHW Submits Signatures for California Executive Pay Cap Ballot Initiative — Second Front on FQHC Compensation

SEIU-UHW submitted signatures April 3, 2026 for two parallel California ballot initiatives: the 90% mission-spend measure (already tracked) AND a NEW executive compensation cap targeting nonprofit clinic CEOs, CMOs, and CFOs. The exec-pay initiative is material leadership-retention risk for large CA FQHCs — AltaMed, LACC, Neighborhood Healthcare, St. John's — whose top executives earn in ranges the cap would target. Combined with AB 1113, this is a two-front SEIU-UHW campaign heading to the November 2026 ballot.

SEIU-UHW Submits Ballot Signatures for 90% Patient Care Spending Mandate — CMA Opposes as 'Dangerous'

SEIU-UHW submitted ballot signatures for two California initiatives: one capping executive pay at healthcare companies and another requiring community health clinics to spend 90% of revenue on patient care. CMA calls the clinic measure 'dangerous' and has formed the 'Protect Patients' opposition coalition. The June 25 signature verification deadline is approaching. If qualified, FQHCs would face mandatory spending floors that could restrict reserves, capital investment, and administrative capacity during the H.R. 1 financial crisis.

California DOJ Charges $267M Hospice Fraud Ring — Tightens Medi-Cal Program Integrity Scrutiny

'Operation Skip Trace' — CA DOJ charges 21 individuals in a $267M hospice fraud scheme involving 14 fraudulent hospice companies using stolen identities enrolled in Medi-Cal. While not FQHC-specific, signals intensified program integrity enforcement across all Medi-Cal providers. FQHCs should expect tighter enrollment verification and billing audit scrutiny as the state cracks down.

Health Net Commits $1M to Prepare 4.7M Medi-Cal Members for Work Requirements

Health Net (Centene subsidiary) launched 'Get Informed, Stay Covered' — the first managed care plan to begin formal member outreach for H.R. 1 work requirements taking effect January 2027. California will check eligibility every 6 months. DHCS requires outreach June 30 – August 31, 2026. FQHCs must prepare for massive patient documentation burden: helping patients navigate 80-hour/month activity requirements, exemptions, and compliance reporting to avoid procedural disenrollment.

San Diego County Activates CalFresh and Medi-Cal Eligibility Restrictions — 400K+ Enrollees Affected

Effective April 1, 2026, lawfully present noncitizens in San Diego County lost CalFresh eligibility, with an 80-hour monthly work requirement for most CalFresh adults starting June 1 and Medi-Cal work requirements taking effect January 2027. The changes affect approximately 400,000 CalFresh enrollees and 800,000+ Medi-Cal members in San Diego, overwhelming FQHCs with eligibility navigation needs as patients seek to maintain coverage.

Executive Order 14398 Bans DEI Activities by Federal Contractors — FQHCs as HRSA Grantees Face Compliance Risk

Trump signed EO 14398 prohibiting 'racially discriminatory DEI activities' by federal contractors and grantees. FQHCs receiving HRSA Section 330 grants face compliance deadlines: contract clauses (30 days), FAR guidance (May 25), agency reports (July 24). The EO creates direct tension with CLAS Standards requiring culturally concordant workforce recruitment. Violations can trigger contract termination, debarment, and False Claims Act liability. FQHCs with workforce diversity programs, culturally concordant hiring, or race/ethnicity-targeted training need compliance review.

NACHC Recommends CHCs as Volunteer Sites to Fulfill Medicaid Work Requirements — CMS Rule Expected June 2026

NACHC issued updated guidance on Medicaid work requirements (80 hrs/month, effective Dec 31, 2026). Key recommendation: states should permit patients to volunteer at health centers to fulfill work requirements — preserving patient volumes AND satisfying the mandate. CBO estimates 10.9M patients will lose coverage. Arkansas precedent: 18,000 lost coverage (28% of target population). Georgia: only 20% of work requirement program funding went to health services. Implementation costs projected at hundreds of millions per state. CMS interim final rule expected by June 2026.