AB164 - Health.

Amended IN Senate June 26, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 164 Introduced by Assembly Member Gabriel Committee on Budget (Assembly Members Gabriel (Chair), Addis, Ahrens, Alvarez, Bennett, Bonta, Caloza, Connolly, Fong, Haney, Hart, Jackson, Lee, Ortega, Patel, Petrie-Norris, Quirk-Silva, Ramos, Rogers, Schiavo, Schultz, Sharp-Collins, Solache, Stefani, Ward, and Wilson) January 08, 2025 An act relating to the Budget Act of 2025. An act to amend Sections 2191 and 2811.5 of, and to add Sections 2190.4, 2454.7, and 3524.65 to, the Business and Professions Code, to amend Section 100520.5 of the Government Code, to amend Sections 1254, 1256.05, 1256.06, 1367.03, 1367.04, 1367.626, 1728.1, 1728.3, 1728.7, 1734, 1735, 11832.2, 11832.18, 11834.015, 11834.02, 11834.026, 11834.26, 11834.30, 11834.31, 11834.40, 11834.50, 11839.2, 11839.3, 11839.6.1, 11839.16, 120956, 127630, 127631, 127632, 127633, 127634, 127635, 127638, 130201, and 130290 of, to add Sections 1253.4, 1367.252, 1367.253, 1728.75, 1728.9, 1728.95, 127437, and 127631.1 to, to add Chapter 11 (commencing with Section 127770) to Part 2 of Division 107 of, and to repeal Sections 11834.29, 130204, 130206, 130208, and 130209 of, the Health and Safety Code, to amend Section 10133.8 of, and to add Sections 10123.861 and 10123.862 to, the Insurance Code, to amend Sections 1602, 1603, and 1604 of the Penal Code, to amend Section 30461.6 of the Revenue and Taxation Code, and to amend Sections 5892, 5963.02, 5963.04, 14005.36, 14005.37, 14007.5, 14007.65, 14007.8, 14016.2, 14019, 14019.6, 14043.26, 14132.100, 14154, 14184.101, 14184.102, 14184.200, 14184.404, 14197.2, and 15926 of, to amend, repeal, and add Sections 14005.62 and 14005.11 of, and to add Sections 4360.5, 5892.2, 14005.365, 14005.69, 14007.12, 14132.14, and 14184.900 to, the Welfare and Institutions Code, relating to health, and making an appropriation therefor, to take effect immediately, bill related to the budget. LEGISLATIVE COUNSEL'S DIGEST AB 164, as amended, Committee on Budget. Budget Act of 2025. Health. (1) Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is in part governed by, and funded pursuant to, federal Medicaid program provisions. Existing federal law, H.R. 1 (Public Law 119-21), enacted in 2025, sets forth various Medicaid eligibility changes for implementation at different stages of a certain timeline, including changes applied to beneficiaries between 19 and 64 years of age, inclusive, with income up to 138% of the federal poverty level, commonly known as Medicaid expansion adults. Federal H.R. 1 generally requires a Medicaid expansion adult to undergo an eligibility redetermination once every 6 months, instead of an annual redetermination. The federal law generally requires a Medicaid expansion adult to demonstrate community engagement through any of certain methods for the corresponding month, including a minimum of 80 hours of work or community service or a minimum of half-time enrollment in an educational program. The federal law reduces the period of retroactive coverage prior to the date of Medicaid application from 3 months to one month for Medicaid expansion adults and to 2 months for other Medicaid beneficiaries. The federal law requires the state to provide for a process to regularly obtain beneficiary address information from reliable data sources, and to utilize a system to prevent an individual from being simultaneously enrolled under Medicaid state plans or waivers of multiple states. This bill would make various changes to related state provisions, or would add new provisions, conforming them to the above-described changes under federal H.R. 1. The bill would require a county to accept specified methods of signatures for renewal forms. Federal H.R. 1 restricts the scope of certain categories of immigrants who qualify for Medicaid eligibility. This bill would make conforming changes to related state provisions. The bill would also modify provisions regarding individuals with certain immigration statuses, so that they would be eligible for the full scope of Medi-Cal state-funded benefits, subject to certain service limitations. Existing law requires an individual without satisfactory immigration status, as specified, who is eligible for full-scope Medi-Cal to enroll in a Medi-Cal managed care plan. This bill would instead specify that an individual without satisfactory immigration status who is eligible for the Medi-Cal program is eligible for services in the Medi-Cal fee-for-service delivery system. The bill would make conforming changes to related provisions. Existing law requires the department to develop an application for insurance affordability programs, including Medi-Cal, for use by all entities authorized to make an eligibility determination for those programs. Existing law authorizes the department to develop and require use of supplemental forms to collect additional information needed to determine eligibility. This bill would make various changes to those provisions, relating to user testing, accuracy, readability, and the work or community engagement requirements under federal H.R. 1. The bill would require the department to undertake efforts to conduct outreach regarding the changes made under federal H.R. 1, and to establish a data dashboard. Under the bill, beneficiary outreach and education would be coordinated across public social services programs to help minimize barriers to administrative disenrollments. The bill would incorporate federal H.R. 1 requirements into county outreach efforts, as specified. By creating new duties for counties regarding Medi-Cal eligibility determinations, procedures, and outreach, the bill would impose a state-mandated local program. (2) Existing law, beginning no sooner than July 1, 2027, requires certain individuals who do not have satisfactory immigration status to pay a monthly premium of $30 as a condition of eligibility for the full scope of Medi-Cal benefits, subject to certain exceptions. This bill would require, no sooner than May 14, 2027, the Governor’s 2027–28 May Revision to include the level of the monthly premiums, to be set at no less than $30 and no greater than $50 per beneficiary. Under existing law, no sooner than July 1, 2026, the above-described individuals who are 19 years of age or older are not eligible for dental services under the Medi-Cal program, except as specified. This bill would delay the ineligibility for dental services to a period no sooner than July 1, 2027. (3) Under existing law, to the extent that federal financial participation is available, federally qualified health center (FQHC) services and rural health clinic (RHC) services are covered Medi-Cal benefits. Under existing law, FQHC and RHC services are reimbursed on a per-visit basis, as defined. Under existing law, commencing on July 1, 2026, that reimbursement is conditioned on the services being eligible for federal financial participation. This bill would instead apply that condition commencing on July 1, 2027. (4) Existing law, the California Advancing and Innovating Medi-Cal (CalAIM) Act, subject to receipt of any necessary federal approvals, establishes the CalAIM initiative in order to, among other things, improve quality outcomes, reduce health disparities, and transition and transform the Medi-Cal program to a more consistent and seamless system by reducing complexity and increasing flexibility. Under existing law, the CalAIM initiative ends on December 31, 2026. Existing law appropriates to the department certain amounts of federal financial participation that the department is authorized to claim for expenditures associated with the designated state health programs identified in the CalAIM Terms and Conditions. Existing law appropriates to the Health Care Deposit Fund, a continuously appropriated fund, an amount of General Fund moneys equal to the federal financial participation for use by the department for CalAIM implementation purposes. Existing law also continuously appropriates moneys from the Medi-Cal County Behavioral Health Fund to the department for purposes of implementing certain behavioral health provisions within CalAIM. This bill, subject to receipt of any necessary federal approvals, would extend the CalAIM initiative to December 31, 2031, thereby making an appropriation. The bill would require the department to seek federal approval for implementation of Employment Supports and BridgeCare, the latter of which is to provide home- and community-based services and caregiver supports to individuals enrolled in the federal Medicare Program who meet the near dual eligibility criteria, as specified. Existing law requires an individual county, or counties acting jointly, to provide and administer covered behavioral health Medi-Cal benefits under a single Medi-Cal behavioral health delivery system contract, in accordance with the CalAIM Terms and Conditions. This bill would require the county or counties, if participating in the Drug Medi-Cal organized delivery system, to deliver the behavioral health benefits through a single Prepaid Inpatient Health Plan. (5) Existing law sets forth various requirements and procedures for the enrollment of providers in the Medi-Cal program. This bill, for the period beginning on July 1, 2026, and ending on June 30, 2027, would prohibit the granting of provisional or preferred provisional enrollment status in the Medi-Cal program to an applicant or provider as a result of the department’s failure to act within any of specified timeframes. Under those circumstances, the bill would require that the application remain pending unless and until the department issues a written determination consistent with all applicable state and federal Medicaid screening requirements. (6) Existing law prohibits the use of an assets or resources test for individuals whose income eligibility for Medi-Cal is determined based on the application of a modified adjusted gross income (MAGI). Existing federal law authorizes a state to establish a non-MAGI standard for determining the eligibility of certain populations. Existing law, subject to receipt of any necessary federal approvals, implements a disregard of $130,000 in nonexempt property for a case with one member and $65,000 for each additional household member, up to a maximum of 10 members, as specified. This bill, beginning July 1, 2027, would instead implement a resource limit of $21,000 in nonexempt property for a household with one member, $31,000 for a household with 2 members, and $1,550 for each additional household member, up to a maximum of 10 members, as specified. The bill would make conforming changes to related provisions. By creating new duties for counties relating to the consideration of resources for determining Medi-Cal eligibility, the bill would impose a state-mandated local program. (7) Existing law requires a Medi-Cal managed care plan to comply with a minimum 85% medical loss ratio consistent with certain federal regulations. Under existing law, after the department returns the requisite federal share amounts associated with any remittance funds collected in any applicable fiscal year to the federal Centers for Medicare and Medicaid Services, the remaining amounts remitted by a Medi-Cal managed care plan under these provisions are transferred to the Medi-Cal Loan Repayment Program Special Fund for purposes of the Medi-Cal Physicians and Dentists Loan Repayment Program. This bill instead would deposit the remaining amounts remitted by a Medi-Cal managed care plan into the General Fund. The bill would remove an inoperative provision. (8) Existing law requires the department to establish and maintain a plan, known as the County Administrative Cost Control Plan, whereby costs for county administration of the determination of eligibility for Medi-Cal benefits are effectively controlled within the amounts annually appropriated for that administration. Existing law makes legislative findings that, in order for counties to do the work that is expected of them, it is necessary that they receive adequate funding, including adjustments for reasonable annual cost-of-doing-business increases. Existing law expresses the intent of the Legislature to not appropriate funds for cost-of-doing-business adjustments for the 2024–25 to 2027–28, inclusive, fiscal years, among certain other previous fiscal years. This bill would remove the 2026–27 and 2027–28 fiscal years from the above-described statement of intent regarding the lack of appropriation of funds for the cost-of-doing-business adjustments. (9) Existing law provides for the licensure and regulation of health facilities, including general acute care hospitals and skilled nursing facilities, by the State Department of Public Health. A violation of these provisions is generally a crime. Existing law sets forth various provisions relating to distinct parts of acute care hospitals, including those operating skilled nursing facilities. Existing regulations define “distinct part” as an identifiable unit accommodating beds, including, but not limited to, contiguous rooms, a wing, floor, or building that is approved by the department for a specific purpose. This bill would require a general acute care hospital seeking to provide skilled nursing services in a distinct part, as defined, to submit an application and documentation to the department. If the distinct part meets certain criteria, the bill would authorize the department to approve a hospital’s application for a distinct part on a case-by-case basis. The bill would require a skilled nursing distinct part to meet specified conditions, including, among others, being wholly owned by the hospital and being subject to the bylaws and operating decisions of the hospital’s governing body. The bill would require a general acute care hospital seeking to add a composite distinct part to its license to submit a proposal to the department, as specified. Under the bill, “composite distinct part” would be defined as a distinct part consisting of 2 or more noncontiguous components that are not located within the same campus. If the department determines that the composite distinct part may improve access to care and address a specific unmet need in the geographical area served by the hospital, the bill would authorize the hospital to submit an application for approval of a composite distinct part. The bill would require a freestanding component of a composite distinct part to independently meet all of the licensing requirements applicable to a freestanding skilled nursing facility, including staffing requirements and ratios. The bill would prohibit a hospital from using composite distinct parts to segregate residents by payment source or on a basis [Text truncated for display. 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