California’s Medi-Cal program is facing a period of fiscal tightening that we have not seen since the enactment of the Affordable Care Act back in 2010. Driven by both state-level budget constraints and federal policy proposals, cuts will be real and painful.

With the Medi-Cal program’s costs projected to exceed $194 billion by FY 2025-26, Governor Newsom’s May Revise proposes to pause enrollment for undocumented adults beginning in 2026, reinstate asset testing for long-term care recipients, and introduce premium payments for certain enrollees. Meanwhile, there are Federal proposals to reduce the federal matching rate for states offering benefits to undocumented immigrants, which poses a potential $3.5 billion loss in federal funding for California and work requirements that could make 3.4 million Medi-Cal beneficiaries their eligibility for the coverage.

These shifts will have profound effect across the healthcare delivery landscape. Health plans face declining enrollment and reduced revenue. In turn, providers, IPAs, and community-based organizations (CBOs) could see contract changes, increased oversight, and tighter access to funding.

To prepare, organizations should take immediate steps to strengthen their infrastructure and position themselves as high-value partners. First, understanding and tracking member eligibility redetermination is critical. Organizations should train staff on pending eligibility changes and provide proactive support to help members maintain coverage.
Second, strong documentation and compliance practices will become increasingly important. As oversight increases, organizations that can clearly demonstrate service delivery, impact, and adherence to state and plan requirements will be in a stronger position. Whether billing for care coordination, clinical services, or community-based support, maintaining standardized records and audit-ready documentation is essential.

Most importantly, aligning with value-based care (VBC) principles offers a path forward. Health plans are moving toward outcomes-driven payment models, and organizations that can show measurable impacts, such as reduced hospitalizations, improved chronic disease management, and closed care gaps, will be more likely to sustain funding and even receive incentive payments. CHWs, ECM teams, and cross-functional care models are well suited to support VBC goals when paired with strong data and documentation.

Finally, building financial resilience beyond Medi-Cal reimbursement is essential. This may include pursuing diversification of coverage types (more Medicare Advantage – especially Duals), local grants, forming new partnerships, or expanding into cross-sector service areas such as maternal health, behavioral health, or housing navigation. A diversified model helps reduce risk in a changing policy environment.

In summary, while upcoming Medi-Cal changes pose serious challenges, they also create an opportunity for innovative, mission-driven organizations to lead.

As Medi-Cal continues to evolve, organizations need experienced partners who can provide the strategy, training, and operational support to stay compliant and competitive. COPE Health Solutions specializes in helping providers, IPAs, and community-based organizations navigate state and plan-level changes, optimize service delivery, and align with value-based care models.

Contact us at info@copehealthsolutions.com and explore our flexible options that support your organization in adapting to these changes and thriving in California’s dynamic Medi-Cal environment.