AB-173 Health

What happened

AB 173 became Chapter 252 on September 18 as a health budget measure with an immediate-effect clause. Its Medi-Cal enrollment provisions direct DHCS to deny an application or terminate enrollment when a disclosed affiliation within the preceding five years involves a person or entity with a disclosable event and DHCS determines that the affiliation poses an undue risk of fraud, waste, or abuse. The statute uses the federal definitions of affiliation and disclosable event and the risk factors in 42 CFR 455.107(f). An affiliation alone does not establish the required risk determination.

Welfare and Institutions Code 14043.2 also permits action up to denial or termination despite full and timely disclosure when the affiliation poses that undue risk. Legally protected health care activity cannot constitute fraud, waste, or abuse by virtue of the nature of that activity alone. Although the budget act takes effect immediately, implementation of this section requires all necessary federal approvals and availability of federal financial participation without jeopardizing that funding. The section preserves provider-agreement and ownership/control disclosure requirements, consequences for missing or false information, and proceedings under Section 14043.65. These conditions distinguish enactment from proof that every enrollment change was already operational.

Why it matters

Medi-Cal enrollment teams need to distinguish affiliation disclosure from DHCS’s risk finding and confirm the federal implementation conditions before changing enrollment decisions.

Sources

• AB-173 Health, bill historyOfficial · California Legislature · 2026-09-08 · Source review 2026-09-10
• AB 173 Health, Chapter 252, September 18, 2026 chaptered textOfficial · California Legislature · 2026-09-21 · Source review 2026-10-15
• Official retained source documentOfficial · Official issuing agency · Source review 2026-10-16