Health

The budget law sets statewide standards and oversight for 988 services while changing Medi-Cal eligibility, provider enforcement, and selected health-system operations. It also protects health-data privacy and funds substance-use programs.

What the law does ​

• Creates Department of Health Care Services approval, quality, audit, corrective-action, and public-reporting requirements for designated 988 centers, with approval required for funding after December 31, 2029.
• Requires statewide 988–911 interoperability by December 31, 2029, voluntary call-transfer protocols by January 1, 2028, 988 public-awareness work, and cross-agency governance through 2029.
• Allows a California LGBTQ+ 988 press-3 routing option and specialized provider contracts if the federal government does not operate an adequate specialized hotline and federal approval and funding conditions are met.
• Strengthens Medi-Cal provider screening, suspensions, enrollment moratoria, and anti-fraud enforcement, including scrutiny of risky affiliations and immediate suspension notices.
• Changes Medi-Cal coverage beginning October 2026 for specified noncitizen groups, preserves medically necessary maintenance dialysis for restricted-scope beneficiaries, and exempts pregnant and postpartum beneficiaries from specified dental limits.
• Authorizes Palomar Health District to transfer assets to the Palomar UC San Diego Health Authority under public-hearing, valuation, service-continuity, and reporting conditions.
• Makes personal information held by the Center for Data Insights and Innovation confidential and limits its use in individual care, eligibility, or coverage decisions.
• Extends a nurse-staffing penalty exemption to acute psychiatric hospitals, directs review of Community-Based Adult Services center closures, and appropriates federal funds for opioid-response and substance-use grants.

Who it affects ​

• People calling 988, 911 dispatchers, mobile crisis teams, crisis centers, and behavioral-health providers.
• Medi-Cal beneficiaries, especially certain noncitizens, people needing dialysis, and people who are pregnant or postpartum.
• Medi-Cal providers and applicants subject to enrollment screening, site checks, fraud investigations, suspensions, or moratoria.
• Palomar Health District patients, workers, and communities in northern San Diego County.
• Acute psychiatric hospitals, Community-Based Adult Services providers, and people receiving HIV-related housing support.

Context ​

The law takes effect immediately as a budget-related measure.

Breakdown ​

Stronger Medi-Cal Provider Oversight ​

This part of AB 173 expands the Department of Health Care Services’ authority to screen, suspend, deny, and terminate Medi-Cal providers when fraud, waste, or abuse risks are identified. It allows action based on risky affiliations, broadens investigation-based suspensions, makes suspensions effective immediately when notice is sent, and expands the department’s ability to pause provider enrollment.

Key takeaways

• The department may deny or terminate a provider’s Medi-Cal enrollment when the provider reports a recent affiliation with a person or entity involved in a defined disclosable event and the department finds an undue risk of fraud, waste, or abuse.
• The department must use specified federal factors when deciding whether an affiliation creates an undue risk, and may act even without a provider disclosure if it finds that risk.
• Rules for ending provisional provider status also apply to providers with preferred provisional or full-enrollment status, with revised and additional compliance standards and grounds for denial, suspension, or termination.
• A provider may be temporarily suspended when under investigation for fraud or abuse by any local, state, or federal program, rather than only by a law enforcement agency.
• Temporary suspensions and provider-number deactivations take effect when the department sends notice, instead of 15 days after notice.
• The department may place a moratorium on enrollment of all provider types, including types previously exempted, and must notify the Joint Legislative Budget Committee every 180 days while the moratorium remains in effect.

Assisted Living Benefit Instructions ​

The bill lets the Department of Health Care Services put the Medi-Cal assisted living benefit test program into effect through all-county letters or similar guidance. The department does not have to adopt additional regulations before doing so.

Key takeaways

• The change applies to the Medi-Cal program that tests an assisted living benefit under a federal waiver.
• The Department of Health Care Services may use all-county letters or similar instructions to implement the program.
• The department does not need to take further regulatory action to implement these provisions.

Community-Based Adult Services Closures ​

The bill requires the Department of Health Care Services and the California Department of Aging to work with specified organizations to understand why Community-Based Adult Services centers close. By March 1, 2029, the department must report to the Legislature and the Legislative Analyst’s Office on these closures as required by the bill.

Key takeaways

• Community-Based Adult Services will continue to be a covered Medi-Cal managed care benefit for eligible beneficiaries.
• The Department of Health Care Services and the California Department of Aging must collaborate with specified entities to examine Community-Based Adult Services center closures.
• The department must provide an update on Community-Based Adult Services center closures by March 1, 2029.
• The update must be provided to both the Legislature and the Legislative Analyst’s Office.

Medi-Cal Eligibility and Dialysis Coverage ​

Starting October 1, 2026, the bill reorganizes Medi-Cal eligibility rules for certain noncitizens and limits full-scope Medi-Cal eligibility to people who meet specified criteria. It preserves state-funded full-scope coverage through June 30, 2027 for certain people not covered by specified federal rules, and it removes dental-service limits for pregnant and postpartum patients. It also expands restricted-scope Medi-Cal coverage for medically necessary maintenance dialysis and directs the state to provide implementation guidance.

Key takeaways

• Beginning October 1, 2026, certain noncitizens may receive full-scope Medi-Cal benefits only if they meet one of the bill’s specified criteria.
• From October 1, 2026 through June 30, 2027, certain individuals who are not covered by specified federal provisions may receive full-scope state-funded Medi-Cal benefits.
• Pregnant individuals and people entitled to postpartum medical assistance are exempt from the dental-care limits that otherwise apply to this state-funded coverage.
• Starting October 1, 2026, restricted-scope Medi-Cal must cover medically necessary maintenance dialysis for chronic dialysis and end-stage renal disease even when it does not qualify as emergency treatment.
• If federal funding is unavailable for this dialysis coverage, the Department of Health Care Services must fund it if the Legislature provides an appropriation.
• The department must issue guidance to Medi-Cal fee-for-service providers, and the bill may create new county duties for Medi-Cal eligibility.

Nurse Staffing Penalty Exemption ​

AB 173 extends a staffing-related penalty exemption to acute psychiatric hospitals. An acute psychiatric hospital may avoid an administrative penalty for violating nurse-to-patient ratio rules if it meets the same specified conditions that can exempt general acute care hospitals, including making prompt efforts to maintain required staffing levels.

Key takeaways

• The bill applies an existing nurse-to-patient ratio penalty exemption to acute psychiatric hospitals.
• Acute psychiatric hospitals may qualify for the exemption by meeting the required conditions.
• One required condition is making prompt efforts to maintain required staffing levels.
• The bill does not eliminate nurse-to-patient ratio requirements or the department's authority to assess penalties.

HIV Housing Support Eligibility ​

AB 173 clarifies the eligibility standard for a housing-support use of AIDS Drug Assistance Program rebate funds. The support is for California residents with HIV whose eligibility is based on income and HIV status, when funding is available.

Key takeaways

• The bill clarifies that eligibility for this housing-support category is based on both income and HIV status.
• The change applies to housing support funded through the AIDS Drug Assistance Program Rebate Fund.
• The housing support remains available only to current California residents.
• Funding for this housing support remains subject to available funds.

Confidentiality for Center Data ​

This part makes all personal information held by the Center for Data Insights and Innovation confidential. It generally shields personal information the center receives from other state agencies from public-records requests and bars using the information to make decisions about an individual’s care, treatment, eligibility, or coverage.

Key takeaways

• All personal information obtained or maintained by the Center for Data Insights and Innovation must be kept confidential.
• Personal information the center collects from other state entities would generally not have to be disclosed under the California Public Records Act.
• Information collected or obtained by the center cannot be used to decide an individual patient’s care or treatment.
• The information also cannot be used to make individual eligibility, coverage, or similar decisions.

Palomar Health Asset Transfer ​

The bill lets Palomar Health District transfer assets to the Palomar UC San Diego Health Authority under a special set of rules. The district board must approve the necessary agreements, and the agreements must require the authority to keep providing health care services through the transferred assets for at least 10 years. The authorization can cover certain board-approved transfers dating back to January 1, 2025, but expires if no agreement is executed by December 31, 2028.

Key takeaways

• Palomar Health District may transfer assets to the Palomar UC San Diego Health Authority if the required conditions are met.
• A majority of the district’s board must approve the agreements needed for the transfer.
• The transfer agreements must require the authority to operate and maintain the transferred assets for health care services for at least 10 years.
• The authorization applies retroactively to qualifying transfers approved by the district board on or after January 1, 2025.
• The authority cannot transfer, sell, lease, or otherwise convey all or substantially all transferred assets without prior approval from the district board.
• Before transferring all or substantially all of those assets, the authority must hold at least two public hearings at least 30 days beforehand, and the district must report the transfer to the Attorney General within 30 days.

California’s 988 Crisis System ​

This part of AB 173 extends and expands California’s work to build the 988 Suicide & Crisis Lifeline system through 2029. It sets responsibilities for state agencies, requires coordination between 988 and 911, creates oversight standards for 988 centers, and updates funding, reporting, public-awareness, and LGBTQ+ crisis-service provisions.

Key takeaways

• The 988 advisory group and the State 988 Technical Advisory Board must continue meeting at least quarterly through December 31, 2029, and the agencies may disband or reconvene them afterward.
• Subject to funding, the California Health and Human Services Agency must maintain a 988 System Governance Board through January 1, 2030, while DHCS oversees 988 centers and the Emergency Medical Services Authority sets statewide training and protocol standards for specified personnel.
• The Office of Emergency Services must obtain and implement a system that allows 988, 911, and behavioral health crisis services to work together by December 31, 2029, and statewide voluntary call-transfer protocols must be adopted by January 1, 2028.
• DHCS must create approval, quality, oversight, and public-reporting requirements for designated 988 centers, and existing 988 centers must obtain designation by December 31, 2029, to continue receiving funds.
• The bill updates 988 funding rules by adding designated 988 centers to eligible uses through 2029, requiring statewide funding estimates and stronger reporting review, and requiring recommendations on funding mobile crisis teams.
• The state must support public awareness of 988 and may establish a California press-3 routing option to specialized LGBTQ+ suicide-prevention services if federal approval is obtained.

Public Access Findings ​

This part of AB 173 makes the legislative findings required for a law that may limit public access to government meetings or records. The findings state that the limitation serves an identified interest and that protecting that interest is necessary.

Key takeaways

• The bill includes legislative findings addressing constitutional requirements for limits on public access to government meetings or records.
• The findings are intended to demonstrate the interest protected by the limitation and the need to protect that interest.
• This part does not itself describe the specific access limitation involved.

Federal Funding for Substance Use Programs ​

The bill gives the State Department of Health Care Services authority to use specified federal funds through June 30, 2027. The money supports State Opioid Response Grant activities and Substance Abuse Prevention and Treatment Block Grant activities.

Key takeaways

• The bill appropriates $105.611 million, $5.975 million, and $1.229 million from the Federal Trust Fund.
• The funds are provided to the State Department of Health Care Services.
• The department may encumber or spend the money through June 30, 2027.
• The appropriations are for specified State Opioid Response Grant funds and Substance Abuse Prevention and Treatment Block Grant funds.