DHCS Releases Formal State-Only PPS-to-Non-PPS Reimbursement Notice — July 1, 2026 Effective Date Confirmed
DHCS released its formal Federally Qualified Health Center and Rural Health Clinic State-Only Reimbursement Methodology Change Notice on April 24, 2026 — confirming the July 1, 2026 effective date for transitioning State-Only services (provided to undocumented adults via state-only funding) from Prospective Payment System (PPS) reimbursement to fee-for-service Medi-Cal Fee Schedule rates (FFS delivery system) or to negotiated managed-care plan rates (MCP delivery system).
This formalizes the May 2025 budget framework now codified through the FY2026-27 budget cycle. Roughly 50-70% revenue cut per encounter compared to existing PPS rates ($200-400/visit). $1B annual GF savings = $1B FQHC revenue loss, with concentrated impact in LA, San Diego, and Central Valley.
CPCA, CCALAC, and Health Access have called the formal notice the trigger point for:
- MCP rate negotiation strategy
- cross-subsidization re-modeling
- fundraising acceleration, and
- labor relations transparency about FY26-27 staffing implications.
CFOs must now build explicit FY26-27 line-item modeling.
Key takeaways
- Formal April 24 notice codifies July 1, 2026 effective date
- 50-70% revenue cut per encounter for State-Only services
- CFOs must now model FY26-27 line-item impact
- Trigger for MCP rate negotiation + cross-subsidy + fundraising acceleration
Primary source
California DHCSFQHC Talent. (2026, April 24). DHCS Releases Formal State-Only PPS-to-Non-PPS Reimbursement Notice — July 1, 2026 Effective Date Confirmed. Primary source: California DHCS. Retrieved June 18, 2026, from https://www.fqhctalent.com/intel/dhcs-fqhc-rhc-state-only-non-pps-formal-notice-april-24-2026
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