Bill > AB1113

This bill requires Federally Qualified Health Centers (FQHCs), which are clinics providing primary and preventive care to low-income and underserved populations, to spend at least 90% of their annual revenue on "mission-directed expenses" – costs directly related to patient services and not on administrative overhead, fundraising, or profit. Initially, this ratio will be calculated using specific lines from IRS Form 990, with the State Department of Public Health (department) developing its own methodology by 2028. FQHCs must report their revenues and mission-directed expenses annually to the department, which will then calculate and publish their mission spend ratio and conduct audits every three years. Failure to comply can result in administrative fines, with a first violation costing $5,000 and subsequent monthly failures costing $10,000, with these penalties going into a dedicated account. The bill also outlines an appeal process for FQHCs disputing assessments and allows for a two-year period to "abate" or correct violations, potentially avoiding penalties if the FQHC agrees to spend the penalty amount on mission-directed expenses and complies with an agreed-upon plan. FQHCs can apply for a one-year waiver or an alternative mission spend ratio under exceptional circumstances or due to economic hardship, and the department can also adjust the ratio for planned capital improvements. These provisions do not apply to FQHCs owned by political subdivisions, tribes, or tribal organizations, or those participating in a bona fide labor-management cooperation committee (LMCC), which are partnerships aimed at improving worker training and retention.

Budget and Finance, Health and Social Services, Military Affairs and Security

https://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=202520260AB1113