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, including federally qualified health center (FQHC) services as described by federal law. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.
This bill would require each FQHC to have an annual mission spend ratio, as defined, of no less than 90% and would provide a methodology for calculation of that ratio, as specified, until the State Department of Public Health (department) has adopted a methodology for this purpose. The bill would require the department to adopt that methodology, as specified, sufficient for implementation by January 1, 2027. By June 30, 2026, and annually thereafter by June 30, the bill would require each FQHC or its parent corporation to report to the department total revenues collected in a form to be determined by the department. The bill would require each report to include, among other things, the FQHC or parent corporation's filed Internal Revenue Service (IRS) Form 990, 990-PF, 990-EZ, or 1120, from the most recent taxable year, as specified. The bill would require each FQHC to submit an annual registration fee in an amount to be determined by the department and adjusted as necessary to fund these provisions. The bill would require the department to calculate and prepare a report of each FQHC's mission spend ratio no later than 90 days after the deadline for receipt of each FQHC's submission, and transmit the report to the State Department of Health Care Services. The bill would require the department to conduct an audit of the financial information reported by FQHCs every 3 years, in a manner and form prescribed by the department, as specified.
This bill would prescribe various fines for failure of an FQHC to comply with the above-described reporting and mission spend ratio requirements, including an administrative fine imposed by the department of $5,000 for a first violation and $10,000 for each subsequent month that an FQHC fails to submit an annual report. The bill would require those penalties to be deposited into the Mission Spend Ratio Penalty Account, which is subject to appropriation by the Legislature, within the Special Deposit Fund. If an FQHC disputes a determination or assessment, the bill would require the FQHC to simultaneously submit a request for appeal to both the department and the State Department of Health Care Services within 30 days of the FQHC's receipt of the determination or assessment, as specified. The bill would require the department to submit, among other things, its responsive arguments to the FQHC and the State Department of Health Care Services within 30 days of the department's receipt of the FQHC's request for appeal. The bill would require the State Department of Health Care Services to hear a timely appeal and issue a decision, as prescribed.
This bill would authorize an FQHC to apply to the department for a waiver, for a term of one year from the date of issuance, to provide a temporary pause of the above-described reporting and mission spend ratio requirements or for an alternative mission spend ratio requirement on the basis of unexpected or exceptional circumstances or the FQHC's economic condition. The bill would prescribe various types of information to be reported by an FQHC to obtain a waiver. The bill would authorize an FQHC to apply to renew a waiver at any time no fewer than 180 days before the expiration of the existing waiver.
This bill would exempt an FQHC participating in a bona fide labor-management cooperation committee from the above-described requirements. The bill would require the department to adopt all regulations necessary to implement these provisions and would authorize the department to implement, interpret, or make specific these provisions, in whole or in part, by means of information notices, all-county letters, or other similar instructions without taking regulatory action. The bill would define various terms for purposes of these provisions.

Statutes affected:
AB 1113: 131021 HSC
02/20/25 - Introduced: 131021 HSC
04/10/25 - Amended Assembly: 131021 HSC