The Weekly Articles

The California Department of Consumer Affairs (“DCA”) recently implemented a registration process to permit service members and their spouses who currently hold a valid license in good standing in another state to practice in California within the same profession or vocation, if they are required to relocate to California because of military orders. This registration process will allow healthcare providers whose professions are regulated by a DCA board or bureau to lawfully practice in California with an out-of-state license.

On Thursday, the California Hospital Association, the California Federation of Labor Unions, AFL-CIO, and Service Employees International Union-United Healthcare Workers West (“SEIU-UHW”) reached an agreement to remove the following two initiatives from the November ballot:

• The Health Care Executive Compensation Act of 2026
• The Health Care Transparency, Accountability & Union Member Right to Vote Act

The Health Care Executive Compensation Act of 2026 (“Compensation Act”), which SEIU-UHW had qualified for the November ballot, would have imposed a $450,000 annual limit on total compensation for executives and managers of hospitals (including hospitals owned or operated by a health care district), physician groups with 25 or more employees, and integrated health care delivery systems. The limit on total annual compensation would have included wages, salary, paid time off, bonuses, incentive payments, cash payments, fair market value of loans, cash value of housing, company cars, use of corporate aircraft, scholarships, fellowships, cash value of dependent care or adoption assistance, cash value of stock options or awards, and severance payments.

Under Compensation Act, the limit on total annual compensation would have been subject to an annual adjustment. Specifically, the compensation limit would have been adjusted annually by 3.5% or the year-over-year rate of change in the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W), whichever is lower.

Sponsored by the California Hospital Association, the Health Care Transparency, Accountability & Union Member Right to Vote Act (“Transparency Act”) would have required a qualifying health care labor organization to obtain written consent from a majority of its members before making certain contributions or expenditures to support or oppose the qualification of any single state or local measure during a calendar year. The Transparency Act also would have required a qualifying health care labor organization to provide written notice to its members of the total amount spent on political activities during the preceding calendar year.

Both the Compensation Act and the Transparency Act would have authorized the imposition of fines for noncompliance with their respective obligations.

Thursday, July 16, 2026 from 12:00-1:00pm PST

The No Surprises Act, in effect since 2022, continues to reshape how payors and providers handle out-of-network emergency claims. It’s also led to ongoing legal challenges and debate, especially around the independent dispute resolution process.

Join us for a practical update on where things stand and what it means for providers and payors today.

Eric Chan is a litigation partner at Athene Law, based in Culver City, California. He represents a wide range of healthcare provider clients, including hospitals, medical groups, and ancillary providers. He is a frequent speaker and writer on the topic of the No Surprises Act and has been involved in various forms of litigation related to the law.

This webinar offers 1 hour of MCLE credit and is free for CSHA members. Registration for non-members is $50. 

Register now. Non-members: email csha@csha.info to register.

Enforcement of Enrollment Mandate for Medi-Cal Prescribers, Including for Pharmacy Claims

Beginning June 26, 2026, the Department of Health Care Services (DHCS) will deny pharmacy claims and prior authorizations if the prescribing provider is not enrolled in Medi-Cal Fee-For-Service (FFS) under their individual Type 1 NPI, regardless of the provider’s participation in managed care or Medicare. Pharmacies will not be paid for dispensing medication to Medi-Cal members if the prescriber is not properly enrolled.

Prior practice allowed providers to enroll in Medi-Cal individually only if they planned to directly bill Medi-Cal for services. As part of the Affordable Care Act, in 2013, federal and state law required all providers who order, refer, or prescribe services for Medi-Cal beneficiaries to be enrolled in the Medi-Cal program, even when they did not submit direct claims themselves. However, the DHCS has not consistently enforced the rule for pharmacy claims. 

The enforcement change aligns with DHCS’s overall enrollment mandate. This mandate, effective July 23, 2026, requires all providers who are currently enrolled in Medicare and order, refer, or prescribe services to Medi-Cal members to be separately enrolled in Medi-Cal. DHCS has clearly stated that enrollment in Medicare alone in not enough for participation in California’s Medi-Cal program for the sole purpose of ordering, referring, or prescribing, and that compliance with federal and state requirements are expected moving forward. For more information, see DHCS notice “Updated Medi-Cal Requirements for Ordering/Referring/Prescribing Provider Forms and Procedures” at https://www.dhcs.ca.gov/updated-medi-cal-requirements-for-ordering-referring-prescribing-provider-forms-and-procedures/.

DMHC Complaint Lookback Period Reduced from Four Years to 30 Months

Effective July 1, 2026, the Department of Managed Health Care (DMHC) will decrease the lookback period for provider complaints from four (4) years to 30 months. Complaints for older disputed claims must be filed before June 30, 2026, to preserve eligibility. Beginning July 1, 2026, claims with a last date of service older than 30 months will not be accepted by the DMHC online submission portal.

On May 12, 2026, California Secretary of State Shirley N. Weber announced that Initiative 1985, titled “Limits Compensation for Health Care Executives, Managers, and Administrators. Initiative Statute,” became eligible for the November 3, 2026 general election ballot. If adopted, the measure would prohibit certain hospitals and medical entities from paying executives, managers, and administrators more than $450,000 annually in total compensation or severance, subject to annual increases of up to 3.5 percent based on the Consumer Price Index. The Secretary of State has stated that the measure will be certified as qualified on June 25, 2026, unless it is withdrawn before then.

The initiative would apply to private hospitals and physician groups, as well as public hospitals owned by special districts, while exempting other public hospitals such as county-run facilities. Physician groups with fewer than 25 employees would also be excluded. Beyond the compensation cap itself, the measure would impose annual reporting requirements for executives, managers, and administrators receiving compensation or severance above the limit, and would authorize enforcement by the Attorney General or through taxpayer litigation. Available penalties include fines, revocation of tax-exempt status, and appointment of an Attorney General representative to the board of directors of nonprofit corporations. The Legislative Analyst’s Office estimates that state enforcement could cost as much as several million dollars annually, mostly covered by fees charged to affected entities.

Supporters led by SEIU-UHW have described the initiative as a way to direct more health care dollars toward patient care rather than high executive compensation. Opponents, including the California Medical Association and California Hospital Association, contend that the measure could make it more difficult to recruit and retain experienced health care leadership and could further strain already challenged delivery systems. For California health care attorneys, the proposal is worth watching not only as a ballot measure, but also for its potential effects on executive compensation structures, severance arrangements, nonprofit governance, and compliance obligations if voters approve it.

On June 4, 2026, the California Department of Public Health (CDPH) issued a 5-day Notice of Proposed Emergency Regulatory Action pursuant to Government Code section 11346.1, subdivision (a)(2) regulating hospice agencies operating in California pursuant to Health & Safety Code sections 1751.70 (moratorium on new licenses) and 1753.1 (authorizing emergency regulations). CDPH also issued an All Facilities Letter, AFL 26-18, to all of California’s hospice agencies informing them of its intent to submit the proposed emergency regulations to the Office of Administrative Law (OAL) on June 11, 2026. 

CDPH proposes regulating hospice agency patient care and business practice standards, much like it regulates skilled nursing facilities. CDPH states these emergency regulations will improve patient care and safety, establish standards of care, create consistency, and enhance CDPH’s surveying process. Specifically, CDPH noted six areas raised by a recent California State Auditor report that the rules address:

(1) Some hospice agencies employ management personnel responsible for more hospices than they can realistically oversee. One administrator managed 27 agencies. Others used names and personal information of individuals who were not actually employed.

(2) Multiple hospice agencies shared the same business address or operated in adjacent buildings without signage or capacity for operations.

(3) Agencies moved or sold their businesses without notifying the Department. Some obtained licensure and then immediately advertised their agencies for sale as “brand new, never billed” hospice solely for profit.

(4) Agencies seemingly hired management personnel with no experience or training in hospice care.

(5) Geographic service areas were often too large to reasonably provide timely and high-quality care.

(6) Lack of patient care standards to encourage accountability and to ensure sufficient nursing staff.

5-Day Notice of Proposed Emergency Regulatory Action, June 1, 2026, at p. 4 (numbers added).

CDPH claims the proposals will clarify licensing standards, adopt comprehensive application requirements to systemize screening, prevent identify theft, avoid oversaturation of geographic regions, require qualified personnel, protect hospice patients, combat fraud, and align requirements with federal rules and industry standards.  Comments on the proposal must be submitted by June 10, 2026, by mail: 300 Capitol Mall, Suite 1250, Sacramento, California 95814; fax: (916) 323-6826; or email: staff@OAL.ca.gov.

In Thakur v. Trump, No. 25‑4249, --- F. 4th ---, 2026 WL 1466303 (9th Cir. May 26, 2026), the Ninth Circuit affirmed in part and reversed in part a preliminary injunction requiring several federal agencies – including the Environmental Protection Agency (EPA), National Science Foundation (NSF), and National Endowment for the Humanities (NEH) – to reinstate University of California (UC) research grants terminated pursuant to executive orders aimed at eliminating diversity, equity, and inclusion (DEI) initiatives and reducing federal spending.

The district court had provisionally certified two classes of UC researchers: a Form Termination Class, whose grants were terminated through standardized form letters without grant‑specific explanations, and a DEI Termination Class, whose grants were allegedly terminated because they promoted DEI, DEIA, or environmental justice concepts.

The Ninth Circuit initially held that both classes of UC researchers had Article III standing, finding that the loss of grant funding and related harms – including disruption of research projects, reputational injury, and the need to seek alternative funding – constituted concrete injury.

The court then reversed the preliminary injunction as to the Form Termination Class, concluding that the district court likely lacked jurisdiction over their Administrative Procedure Act claims. Relying on the Supreme Court’s decision in National Institutes of Health v. American Public Health Association (NIH), --- U.S. ---, 145 S. Ct. 2658 (2025), the panel held that challenges seeking reinstatement of terminated research grants are, in substance, contractual claims governed by the Tucker Act, which places jurisdiction in the Court of Federal Claims rather than federal district court. 28 U.S.C. § 1491(a)(1).

The court affirmed the injunction as to the DEI Termination Class, concluding that the plaintiffs were likely to succeed on their First Amendment viewpoint discrimination claim. The panel determined that the agencies did not merely restructure or eliminate funding programs but instead targeted individual grants within existing programs based on recipients’ perceived DEI‑related viewpoints, including through keyword searches identifying terms such as “equity,” “diversity,” and “justice.” Because the terminations were aimed at suppressing disfavored viewpoints, the court held they likely violated the First Amendment and upheld the district court’s order requiring reinstatement of those grants while the litigation proceeds. The case has been remanded for further proceedings.

On May 15, 2026, the Office of Health Care Affordability (“OHCA”) released proposed regulations to implement the changes to its material change transaction notice and cost and market impact review (“CMIR”) requirements enacted by AB 1415, which took effect on January 1, 2026. The proposed regulations extend the notice framework to “noticing entities” (private equity groups, hedge funds, and newly created business entities) and management services organizations (“MSOs”), and significantly expand the circumstances that trigger a notice filing and the disclosure requirements for submitters.

Among the most notable aspects of the proposed regulations are the new material change transaction notice circumstances for private equity and MSO transactions. Proposed § 97435(c)(9) designates a transaction as a material change transaction if it involves a private equity group or hedge fund and results in the entity holding as little as 5% of the assets, equity, debt, or liabilities of a qualifying health care entity or MSO, or if it results in the acquisition of assets, equity, debts, or liabilities through arrangements granting broad categories of operational control. Proposed § 97435(c)(10) designates a transaction as a material change transaction if it involves an MSO that begins providing management and administrative services to a health care entity with at least $25 million in annual revenue or California assets, or provides services to two or more providers that collectively generate $10 million annually from California patients. The proposed regulations also define “management services organization” more narrowly than the statute, adding criteria that could exclude smaller or independent MSOs from the regulatory definition.

The proposed regulations also substantially expand the disclosure and documentation requirements for notice filings. Private equity groups and hedge funds must now identify all health care entities and MSOs in their portfolios and provide documentation showing debt ratios and post-recapitalization debt for any acquired entity. All submitters also face expanded organizational chart requirements, including identification of all entities or persons with 5% or more ownership, as well as new disclosures regarding post-transaction changes to governance, voting rights, and real estate arrangements. On the procedural side, the proposed regulations add a new CMIR factor for transactions involving real estate investment trusts and grant the HCAI Director new authority to remand a CMIR determination for up to 30 additional days of review.

Several aspects of the proposed regulations are likely to generate significant industry comment, including:

• The regulatory narrowing of the MSO definition from the statutory definition;
• The 5% ownership threshold for private equity and hedge fund transactions;
• The broad scope of the new noticing entity and MSO material change transaction circumstances; and
• The enhanced disclosure requirements for private equity and hedge funds (including debt ratios and portfolio company identification).

The proposed regulations will be discussed at the OHCA Board meeting on June 24th. OHCA is accepting comments until June 11, 2026, at CMIR@HCAI.CA.GOV.

Effective July 1, 2026, AB 583 will authorize nurse practitioners (NPs) to complete and sign death certificates and fetal death records, and will require NPs to notify the coroner under certain circumstances. The bill was signed into law October 2025, and amends Health and Safety Code sections 102795, 102800, 102825, 102850, 102875, 102975, and 103300. 

In California, the death registration process begins with the authorized practitioner last in attendance (or in certain circumstances, the coroner), who is responsible for completing the medical and health section data of the decedent’s death certificate. The funeral director then completes the demographic information and files the certificate with the local registrar, who reviews and approves the record. Certified copies of the death certificate can be used to obtain death benefits, claim insurance proceeds, and notify social security.

AB 583 makes four substantive changes to the laws governing the death certificate and registration process:

1. The bill will authorize NPs last in attendance to complete and sign the medical and health section data of a death certificate. This role was generally limited to the physician last in attendance, with certain physician assistants authorized in the case of patients in a skilled nursing or intermediate care facility. Pursuant to AB 583, the NP last in attendance will also be permitted to complete and sign a death certificate in all settings. NPs will be subject to the same statutory requirements as physicians, including completing the certificate within 15 hours of death and certifying the cause(s) of death. (Health & Saf. Code, §§ 102795, 102800,102825.)
2. The bill will add NPs to the list of individuals required to immediately notify the coroner under certain circumstances following a patient's death, such as if suicide is suspected, or following an injury or accident. The current list includes physicians, physician assistants, funeral directors, and “other persons.” Notably, failure to notify the coroner as required under this section constitutes a misdemeanor. (Health & Saf. Code, § 102850.
3. The bill will authorize the NPs in attendance of the delivery to complete and sign the medical and health section data of a fetal death record, which was previously limited to the physician in attendance. (Health & Saf. Code, § 102975.)
4. Finally, the bill will authorize NPs who signed a record of death, fetal death, or live birth to submit a declaration stating any necessary changes or supplemental information to the record; currently, only the signing physician or coroner is authorized to do so. (Health & Saf. Code, § 103300.)

With the passage of AB 583, California joins 40 other states in allowing NPs to perform tasks related to death registration. More broadly, AB 583 is consistent with the continuing trend in California toward expansion of scope for advanced non-physician practitioners.

The California Legislature and Governor have proposed several measures to address the growing distressed hospital crisis in the state. Most recently, Governor Gavin Newsom signed Assembly Bill 108, which established a limited-term distressed hospital grant program administered by the California Department of Health Care Access and Information (HCAI). The measure appropriates $25 million in one-time funding for grants to eligible distressed hospitals. To qualify for funding under AB 108, a hospital must satisfy the following criteria:

1. The hospital must be a not-for-profit hospital or a public hospital.  
2. The hospital must have less than ten (10) days’ cash on hand, inclusive of investments and liquid assets available for operations, based on internally prepared financial statements for the most recently closed month and supported by the most recent audited financial statements.
3. The hospital must demonstrate that it used best efforts to exhaust other financial options, including seeking forgiveness or deferral of short- and long-term debt obligations.
4. At least 50 percent of the hospital payor mix must consist of government payers and uninsured patients.  
5. The hospital must satisfy any additional criteria established by HCAI in consultation with the Department of Finance.

Eligible hospitals were required to submit a completed application to HCAI yesterday, Monday May 18th.  

Senator John Laird, the Chair of the Senate Budget and Fiscal Review Committee, publicly noted during budget discussions that Watsonville Community Hospital could potentially benefit from the program. However, legislators from both parties expressed concern during budget hearings that the eligibility criteria are narrowly tailored and may exclude many financially struggling hospitals.

The $25 million grant program is not the only form of hospital relief currently under consideration. In the Governor’s 2026-27 May Revision, Governor Newsom proposed an additional $50 million in distressed hospital grant funding, utilizing substantially similar eligibility criteria as those established under AB 108. However, the Governor’s proposal remains significantly lower than the funding level proposed in Assembly Bill 1923, authored by Assemblymember Esmeralda Soria and sponsored by the California Hospital Association.

Under existing law, California’s Distressed Hospital Loan Program provides interest-free loans to nonprofit and public hospitals experiencing significant financial distress in order to prevent hospital closures or facilitate hospital reopenings. Cal. Health & Safety Code Section 129380.  AB 1923 would substantially expand the scope of Distressed Hospital Loan Program by permitting hospitals of any ownership type or system affiliation to qualify for state assistance if HCAI and the California Health Facilities Financing Authority determine that the hospital is experiencing financial distress. Among other provisions, AB 1923 would:

1. Expand the definition of “financial distress” to include both prior and projected financial performance metrics, including credit ratings and debt capacity. The bill contemplates consideration of impacts associated with federal and state policy changes affecting reimbursement and coverage.
2. Require applicant hospitals to submit financial reports and consolidated financial statements from associated entities, where applicable, for HCAI review.
3. Limit eligibility for hospitals with associated entities unless those associated entities are determined to lack the financial capacity necessary to resolve the hospital’s distress.
4. Impose additional limitations on loans to hospitals with associated entities, including reducing loan amounts by amounts distributed to investors, shareholders, or management companies during the preceding three years.
5. Define “associated entities” broadly to include affiliates, subsidiaries, and other entities exercising financial or governance control over the hospital, whether foreign or domestic.
6. Require HCAI to consider imposing conditions on loans, including maintaining labor and delivery services, Medi-Cal participation, Medi-Cal managed care participation, county contracts, and community benefit or charity care obligations.
7. Appropriate $300,000,000 from the General Fund to the Distressed Hospital Loan Program Fund to support additional rounds of hospital stabilization funding.

Since the creation of the Distressed Hospital Loan Program, the program has assisted fourteen hospitals in remaining operational and facilitated the reopening of one hospital. With the Governor now proposing an additional $50 million in distressed hospital grant funding, the Legislature may consider whether additional appropriations are justified as part of ongoing budget negotiations. The Legislature must pass the state budget by June 15, 2026.