Medi-Cal: managed care organization provider tax.

Imposes an MCO provider tax of $8.85 per countable enrollee per month for the 2027, 2028, and 2029 calendar years on licensed health care service plans and managed care plans contracted with the Department of Health Care Services.

Creates the Medi-Cal Stability Fund in the State Treasury. Revenues are continuously appropriated (without regard to fiscal year) for: department administrative costs (capped at $4 million annually), the nonfederal share of increased capitation payments to managed care plans, the nonfederal share of payments under Section 14105.201, and the nonfederal share of Medi-Cal managed care rates for children, adults, seniors, persons with disabilities, and dually eligible individuals (at least $2 billion annually).

Changes the vote requirement from majority to two-thirds of each house (due to the tax increase triggering Proposition 13 requirements) and changes the appropriation designation from 'no' to 'yes.'

The department cannot collect the tax until either the Director certifies in writing that it meets federal broad-based and uniformity requirements, or the department receives written federal approval from CMS. The tax becomes effective January 1, 2027, or upon federal approval if later.

The department may impose an alternative tax amount if projected revenues are lower or materially higher than needed to meet legislative goals. The alternative may not deviate more than 10 percent from $8.85 for the 2027 tax period and no more than 25 percent for subsequent periods. The department may also establish taxing tiers based on ranges of countable enrollees.

Interest of 10 percent per annum accrues on late tax payments. If a payment is more than 60 days overdue, a penalty equal to the total accrued interest is assessed for each additional month. The Director may waive interest or penalties in cases of undue financial hardship, conditioned on an alternative payment schedule.

The new Article 7.2 becomes operative July 1, 2026 (or when chaptered, if later). All sections except the Medi-Cal Stability Fund provision become inoperative January 1, 2031 and are repealed January 1, 2032. The tax automatically ceases to be operative if the Director determines it was rejected by CMS or found noncompliant with federal law and modification is not feasible.

Defines key terms including 'countable enrollee' (excluding Medicare plan enrollees, plan-to-plan enrollees, and FEHBA enrollees), 'base year' (either 2024 or 2025, at the department's election), 'base data source,' 'health plan,' 'plan-to-plan enrollee,' and 'tax period.'

Amends Section 14105.201 to change the effective date trigger for reimbursement rate increases from a fixed January 1, 2024 date to 'no sooner than January 1, 2024, or on the effective date of any necessary federal approvals, whichever is later.' Also changes the funding source reference from Article 7.1 to the new Article 7.2.

Removes community health workers as an eligible provider type for the reimbursement rate increases under Section 14105.201, making that provision inoperative if Proposition 35 (the Protect Access to Health Care Act of 2024) was approved by voters.

Adds new directed payment methodology provisions requiring the department to direct managed care plans to use methodologies under 42 CFR 438.6(c) to reimburse eligible providers, with an option to discontinue those methodologies once capitation rates reflect the increased reimbursement levels. Also adds merger/acquisition provisions transferring tax responsibility to successor entities.

Deleted the provision making community health workers an eligible provider type for Medi-Cal rate increases under Section 14105.201, including the requirement that their rates be set at 100 percent of the lowest Medicare maximum allowance and the sunset clause tied to Proposition 35 approval.

Changed the funding source reference in Section 14105.201 from Article 7.1 (Section 14199.80, the expiring MCO provider tax) to Article 7.2 (Section 14199.90, the new continuation tax), aligning the rate provisions with the new tax structure.

Removed 'relating to the Budget Act of 2025' from the bill title and renumbered subdivisions in Section 14105.201 after deleting the community health worker provision (old subdivision (d) removed, subsequent letters shifted up).

Removed the definition of 'Community health workers' from Section 14105.201 and updated the methodology provision to reference only subdivisions (a) and (b) instead of (a), (b), and (d).

Header changed from enrolled bill format (showing Senate passage June 18, 2026 and Assembly passage June 15, 2026) to chaptered law format with 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' banner, Chapter 24 designation, and approval date of June 29, 2026.

Page headers changed from 'SB 125' to 'Ch. 24' throughout the document, and page numbering was resequenced (from pages 2-13 to pages 2-9).