CMS Approves California's HQAF Program, Enhancing Medi-Cal Support

Insurance industry stakeholders should note that the Centers for Medicare & Medicaid Services (CMS) has approved California’s proposal for the ninth iteration of the Hospital Quality Assurance Fee (HQAF) Program. Announced by Congressman David Valadao, this decision aims to deliver approximately $5.9 billion in net benefits to hospitals across the state.

The HQAF Program plays a vital role in California’s healthcare funding strategy, utilizing a provider fee to secure federal Medicaid matching funds. These funds are used to enhance Medi-Cal payments to hospitals that support vulnerable populations. With the approval of HQAF 9, financial support is restructured to help hospitals manage rising costs related to labor, supplies, and infrastructure—crucial for many California hospitals to sustain operations amid financial challenges. Covering nearly 15 million residents, Medi-Cal ensures the continuity of high-quality care and access to essential services.

In addition, CMS has approved California's state-directed payment (SDP) proposal under Medicaid managed care, offering further financial reinforcement to healthcare facilities statewide. This approval underpins the operational sustainability of hospitals serving significant Medi-Cal populations, especially throughout the Central Valley.