California APL 26-002: COVID-19 Testing Guidance for Insurers

On January 15, 2026, the California Department of Managed Health Care (DMHC) issued All-Plan Letter (APL) 26-002, offering detailed guidance on reimbursement responsibilities for healthcare service plans, including Medi-Cal managed care, regarding COVID-19 testing and vaccinations. This directive aligns with California Senate Bill 510, enacted in 2021, which mandates that health plans and insurers cover costs for COVID-19-related services without transferring financial risk to providers unless a new contract is in place.

The DMHC clarified that the prohibition against financial risk transfer, as specified in SB 510, includes limited risk-sharing arrangements such as single case agreements and care rate agreements. Health plans must negotiate with healthcare providers prior to any risk delegation related to COVID-19 services. Furthermore, the APL emphasizes adherence to SB 510 by Medi-Cal managed care plans, updated by SB 1473 (2022), for services prior to June 30, 2025.

Industry Impact and Compliance

This clarification follows concerns from the California Medical Association (CMA) about some health plans, including Medi-Cal managed care, denying COVID-19 testing reimbursements based on existing case rate agreements. The APL underscores that such agreements do not allow financial responsibility delegation under SB 510. It also confirms the non-retroactive status of the Medi-Cal exemption in Health and Safety Code section 1342.2(h)(6) introduced by Assembly Bill 116 (2025).

Physicians facing claim denials under these agreements can seek assistance from the CMA's Center for Economic Services. This guidance is crucial for insurance carriers as it reaffirms the financial obligations required from health plans under state law, influencing regulatory compliance requirements and contractual negotiations within the healthcare industry.