Risk & Compliance in California

California AB 3030 + SB 1120 Are Active FQHC AI Compliance Triggers — Disclosure + Consent + UM Restrictions in Effect

A May 2026 Holland & Knight legal review highlights two California laws that are now operational compliance triggers for any FQHC running AI: (1) AB 3030 — mandatory patient disclosure plus explicit consent before AI is used in care; (2) SB 1120 — restrictions on AI in utilization management and prior-authorization decision-making (human clinician must make the final medical-necessity call). Compliance obligations apply now to any FQHC running AI scribes (Abridge, Nabla, Suki, Heidi), AI patient-outreach (Artera Squads, healow Genie), or AI-assisted UM/prior-auth (eClinicalWorks AI Workbench). Federal preemption push is underway in Washington but no enacted preemption yet. Pairs with already-tracked CHAI/NACHC Medicaid-eligibility AI Best Practice Guides — CHAI gives the governance scaffolding, AB 3030 + SB 1120 are the legal floor. Strategic implication: FQHC CIOs and Compliance Officers should audit current AI deployments for AB 3030 patient-disclosure scripts and SB 1120 UM-decision pathways before mid-2026.

DOJ Launches West Coast Health Care Fraud Strike Force — NorCal U.S. Attorney Calls Silicon Valley 'Ground Zero for Tech-Driven Fraud'

On April 30, 2026, the DOJ National Fraud Enforcement Division (NFED — created April 7, 2026) launched the West Coast Health Care Fraud Strike Force, uniting the DOJ Health Care Fraud Section with U.S. Attorney's Offices for Arizona, Nevada, and Northern California, plus DEA and FBI. NorCal U.S. Attorney Craig Missakian called Silicon Valley 'ground zero for technology-driven health care fraud.' The strike force model has prosecuted 6,200+ defendants nationally with $45B+ in alleged fraudulent billing. NorCal FQHCs (Alameda, Contra Costa, San Mateo, Santa Clara, SF, North Bay) face heightened scrutiny on telehealth distant-site billing, incident-to PPS billing, AI-augmented billing schemes, and 340B claim integrity. Pairs with the OCR April 23 four-entity ransomware sweep ($1.165M) — May 2026 is shaping up as the most enforcement-intensive month of the year for FQHC compliance.

California's Largest-Ever Medi-Cal Hospice Fraud Takedown — $267M State + $50M Federal Indictments Signal Enforcement Posture Shift

California DHCS and DOJ announced the largest-ever Medi-Cal hospice fraud takedown: 14 fraudulent hospice providers, $267M in improper claims, plus a parallel US Attorney (Central District) federal indictment of 8 defendants for $50M. No FQHCs named, but the signal matters: transnational criminal networks used stolen patient identities to enroll people in Medi-Cal — meaning FQHCs may see duplicate/fraudulent enrollees that trigger downstream eligibility disputes. DHCS is now investigating 300+ hospices. The House Oversight Committee has demanded documents from Gov. Newsom on hospice oversight. FQHCs should expect heightened DHCS audit activity and re-verify Medi-Cal eligibility at the point of service for 2026.

DOJ Federal Hospice Fraud Takedown: 8 Arrests, $50M Alleged Billing — Medi-Cal Enforcement Intensifies

U.S. Attorney's Office (Central District of California) announced an April 2 takedown — 8 defendants arrested for $50M in fraudulent hospice billing using stolen identities to enroll in Medi-Cal. Coordinated DHCS + DMFEA + federal action. State enhanced identity verification and multifactor authentication for Medi-Cal applicants in 2026. Over 300 hospices currently under DHCS investigation for license revocation. While hospice-specific, signals stepped-up Medi-Cal billing scrutiny across all enrolled providers — FQHCs should review identity verification, beneficiary attestation, and billing documentation.

DHCS Files Formal H.R. 1 Implementation Plan with California Senate — Authoritative Timeline for All Medi-Cal Changes

DHCS filed a formal implementation plan with the California Senate Budget and Fiscal Review Committee detailing how California will implement H.R. 1's Medicaid provisions. The document lays out the exact timeline: asset test reinstatement (Jan 2026), enrollment freeze (Jan 2026), dental benefit elimination for undocumented adults (July 2026), 6-month redetermination cycles (Dec 2026), work requirements (Jan 2027), and copayment implementation (Oct 2028). This is the authoritative state-level planning document FQHCs need for operational preparation.

California DHCS Launches FQHC Billing Compliance Review Initiative

The California Department of Health Care Services announced a targeted billing compliance review for 50 FQHCs in 2026, focusing on PPS encounter documentation, Medi-Cal managed care billing accuracy, and UIS patient service tracking ahead of the July 2026 PPS elimination for UIS patients. FQHCs must ensure documentation standards meet both HRSA and DHCS requirements. Reviews will examine 24 months of billing data with particular attention to ECM and Community Supports claims.

Alameda Alliance Switched Medi-Cal Vision Vendor from March Vision to VSP Effective Jan 1, 2026 — Bay Area Network Disruption

Alameda Alliance Health Plan moved its Medi-Cal vision benefit administration from March Vision Care to VSP effective Jan 1, 2026. Bay Area FQHCs contracting with Alameda Alliance must establish or update VSP credentialing. This signals broader managed-care vision-vendor reshuffling — a billing landmine for FQHC vision programs. Each MCO contracts separately with vision sub-vendors (VSP, March Vision Care, Envolve Vision, MES Vision) and credentialing requires separate paperwork. FQHCs operating across multiple MCOs must maintain credentials with all relevant sub-vendors. Operational implication: FQHC billing teams need a vision-vendor credentialing matrix tracking each MCO's current sub-vendor.