Prop 35 Rate Increases Explicitly Exclude FQHCs from Direct FFS Benefit, Managed Care Floor Is the Only Protection
While Prop 35 raised Medi-Cal rates to 87.5% of Medicare for most providers starting January 2026, FQHCs and RHCs are explicitly excluded from the FFS Targeted Rate Increase system. Managed care plans must only ensure FQHC payments are 'no less than' TRI rates — meaning FQHCs receive no direct PPS rate enhancement from Prop 35 and remain fully exposed to PPS elimination risk under H.R.
1. CFOs should not assume Prop 35 provides a rate floor backstop.
Part of
- Medicaid financing and eligibility operations
Managed-care plan exits and transitions
- California's budget, the MCO tax and Proposition 35
The MCO tax and Proposition 35
Key points
- FQHCs are excluded from direct Prop 35 TRI benefits in the FFS system — do not assume Prop 35 provides a PPS rate backstop
- Under managed care, plans must pay FQHCs at least TRI rates — but this is a floor, not an enhancement above PPS
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FQHC Talent. (2026, January 1). Prop 35 Rate Increases Explicitly Exclude FQHCs from Direct FFS Benefit, Managed Care Floor Is the Only Protection. Source: DHCS. Retrieved September 28, 2026, from https://www.fqhctalent.com/intel/prop-35-fqhc-excluded-direct-tri-benefit
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