Legislation in California

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.

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.

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.

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.

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.

H.R. 1 Caps Medi-Cal Directed Payments — Provider Rates Will Edge Toward Medicare Levels by 2028

A distinct revenue threat beyond PPS elimination: H.R. 1 caps state-directed payments, ending California's ability to direct managed care plans to pay providers at commercial insurance rates. Provider rates will edge toward Medicare levels starting 2028. While FQHCs have PPS protection for base rates, supplemental/wrap payments through managed care plans will be affected. CHCF analysis details how the provider tax crackdown and directed payment restrictions will reduce overall Medi-Cal funding flowing to FQHCs through managed care.

AB 2161: Bill to Block Work Requirements for State-Funded Undocumented Medi-Cal Coverage

Oakland Democrat Mia Bonta introduced AB 2161, which would prohibit California from imposing federal work requirements on individuals whose Medi-Cal coverage is entirely state-funded — including undocumented immigrants. This is separate from SB 1422 (Durazo's bill to restore full Medi-Cal eligibility). Both face uncertain prospects given the state's budget deficit. If passed, AB 2161 would protect ~1.5M undocumented Californians whose coverage comes from state general funds, not federal Medicaid matching.

CalAIM Waiver Expires December 31, 2026 — $1.2B in ECM/Community Supports at Risk

California's CalAIM 1115 and 1915(b) waivers expire December 31, 2026. DHCS has indicated it will seek renewal, but no formal application has been submitted. If not renewed, $1.2 billion annually in ECM and Community Supports funding disappears — threatening thousands of care coordination, CHW, and housing navigator positions at FQHCs statewide. Combined with the CHCF authorization cliff (also December 2026), this creates a double uncertainty event for the safety net.

AB 1460: California's 340B Contract Pharmacy Protection Bill Expected to Return in 2026

AB 1460 (Assemblymember Chris Rogers, D-Santa Rosa) would prohibit pharmaceutical manufacturers from restricting 340B contract pharmacy arrangements. The bill passed the Assembly in 2025 but stalled in the Senate. It's expected to return in 2026. Eight states have enacted similar laws; 23 have pending bills. For rural FQHCs, passage would expand access to 340B pharmacy discounts. However, the IRA is simultaneously creating structural pressure: 340B hit $81B in 2024 (+23% YoY), and Medicare Part D/B manufacturer rebate exemptions begin impacting 340B margins in 2026.

CA Eliminates FQHC PPS Rates for Undocumented Patients July 2026 — $1B Annual Revenue Impact

Starting July 1, 2026, California's budget eliminates use of the Prospective Payment System for FQHC services to state-only-funded individuals with unsatisfactory immigration status (UIS). FQHCs will instead be paid at the regular Medi-Cal fee-for-service rate or negotiated managed care plan rates — roughly 50–70% less per encounter than the PPS rate ($200–400/visit). The CA LAO scores this as $1 billion in annual General Fund savings, meaning $1 billion in annual FQHC revenue loss beginning 2026–27. FQHCs with large undocumented patient panels — concentrated in LA, San Diego, and Central Valley — face the most severe financial exposure. Dental benefits for undocumented Medi-Cal enrollees also eliminated: $308M savings in 2026–27.

LAO: Counties Need 2,400+ New Eligibility Workers for H.R. 1 — Zero Funded, Creating Second Disenrollment Pathway

The CA Legislative Analyst's Office details the massive staffing gap counties face implementing H.R. 1. Counties estimate needing 2,000+ additional Medi-Cal eligibility workers and 400+ CalFresh workers statewide. The Governor's budget proposes $2.4B for Medi-Cal county administration but includes zero funding for new positions. Starting October 2026, H.R. 1 also cuts federal CalFresh administrative cost share from 50% to 25%. The CWDA warns of 'longer application processing times' and heightened churn where eligible people temporarily lose benefits due to processing backlogs. For FQHCs: patients will lose coverage through administrative delays — not just work requirements — a second disenrollment vector driving uncompensated care.

CalAIM 1115 Waiver Expires Dec 2026 — Renewal at Risk Under Restrictive Federal Posture

California's CalAIM 1115 waiver expires December 31, 2026. Since launching in January 2022, 326,000+ members have enrolled in ECM and 368,000+ in Community Supports. DHCS released a concept paper in July 2025 and plans to submit the renewal application in 2026. But the federal administration has withdrawn guidance supporting SDOH through Medicaid and won't approve new funding for rent assistance or medically tailored meals. For FQHCs: ECM revenue (the fastest-growing revenue stream for many centers) depends on this renewal. Build ECM volume NOW while the waiver is active, and prepare contingency plans if renewal is delayed or narrowed.

California Democrats Push to Restore Healthcare Benefits for Undocumented Immigrants

California Democratic legislators introduce measures to restore Medi-Cal benefits for undocumented adults that were frozen in January 2026, citing the public health and economic costs of coverage gaps. If successful, this would reverse the enrollment freeze and restore PPS encounter revenue for FQHCs serving undocumented populations.

California Sues Federal Government Over $600M in Health Funding Cuts

California Attorney General files suit challenging federal clawback of $600 million in health funding, arguing the cuts violate federal spending agreements and disproportionately harm safety-net providers including FQHCs.

FQHC Transparency Ballot Initiative Filed — Could Appear on Nov 2026 Ballot

California ballot initiative #25-0008 proposes requiring FQHCs to spend at least 90% of revenue on direct patient care and services, with full financial transparency reporting. If it qualifies for the November 2026 ballot, it could fundamentally reshape FQHC administration budgets and executive compensation.

CHW Medi-Cal Billing Codes Now Active: Structural Shift for FQHC Hiring

Community Health Worker services are now a billable Medi-Cal benefit. FQHCs can bill for CHW encounters, creating a sustainable funding stream for positions previously dependent on grants. This is the most significant change for CHW workforce sustainability in a decade.

Cal Budget Center Publishes Definitive Bilingual Timeline of All Medi-Cal + CalFresh Cuts — Primary Planning Resource for FQHCs

The California Budget Center published a bilingual timeline mapping every eligibility deadline, enrollment freeze date, and administrative burden change to a calendar date — quantifying up to 2 million Californians losing Medi-Cal coverage and $2.3B–$5.1B in annual federal losses. The Spanish-language version makes it directly useful for FQHC patient navigators and community outreach staff.

SB 525: Healthcare Minimum Wage Rising to $25/hr by 2027 for FQHCs

California's phased healthcare minimum wage law reaches $25/hr for FQHC workers by 2027. This restructures compensation across the sector — raising floors for MAs, front desk, and entry-level clinical staff while compressing wage differentials for experienced workers.