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California Legislature Introduces Health Omnibus Bill

On June 24, 2025, the California Legislature introduced its health omnibus “trailer bill” (AB 116/SB 116) in both the Assembly and the Senate. If enacted, the legislation will revise certain statutes affecting health programs consistent with the recently passed Budget Act of 2025.

Infertility Coverage Delayed

For many months, health plans have been told that there was a possibility that the effective date of California’s landmark infertility coverage mandate legislation would be delayed, in accordance with Governor Newsom’s bill signing message. With days left until SB 729 was set to go into effect, the legislature included a delay provision in the health omnibus trailer bill. If enacted, AB 116/SB 116 will delay the effective date of California’s infertility coverage mandate for fully insured large group health plans from July 1, 2025 until January 1, 2026, and direct the California Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI) to issue guidance regarding the implementation of SB 729.

PBM Licensure and Regulation

Also included in the health omnibus trailer is a provision that will subject pharmacy benefit managers (PBMs) contracting with fully-insured California health plans to obtain licensure from the DMHC, and to provide certain data to the California Department of Health Care Access and Information (HCAI).

Medi-Cal Changes

The bill would also implement certain changes in California’s Medicaid program, “Medi-Cal.” Among the changes, the bill would:

• Impose utilization management and prior authorization requirements for outpatient hospice services in the Medi-Cal program;
• Impose utilization management requirements for COVID-19 services provided in the Medi-Cal program;
• Impose a freeze on enrollment in full-scope Medi-Cal coverage for undocumented individuals, age 19 and older;
• Impose premiums of $30 per beneficiary on individuals in full-scope Medi-Cal coverage with unsatisfactory immigration status, ages 19 to 59;
• Eliminate dental coverage in full-scope Medi-Cal for individuals with unsatisfactory immigration status;
• Reinstate the Medi-Cal asset limit at $130,000 for individuals, and $65,000 for each additional household member, when determining eligibility for Medi-Cal coverage; and,
• Impose prior authorization requirements on MediCal coverage of drugs that have been removed from the contracted drug list, and require a 60-day notice to beneficiaries and stakeholders that a drug is no longer on the contracted drug list, rather than a public hearing.

Backfill of AIDS Prevention Funding

The bill would also provide $75 million from the AIDS Drug Assistance Program Rebate Fund to support the loss of federal funding for HIV prevention programs.

Process

AB 116 is being heard on June 25, 2025 in the Senate Budget and Fiscal Review Committee and has been sent to the Assembly Budget Committee. It is expected that the health omnibus bill will be part of the budget package that goes to Governor Newsom for signature in advance of the July 1, 2025 beginning of the fiscal year.