Medi-Cal in the 2026–27 May Revision:
What California Oncologists Need to Know

Governor Gavin Newsom has released his May Revision budget proposal for 2026–27, which proposes a number of changes to the Medi-Cal program while making investments to hospitals and balancing current and projected fiscal conditions. For oncology practices, the proposal extends payment support powered by the Managed Care Organization (MCO) tax and proposes changes to eligibility for the Medi-Cal program as well covered benefits. The Legislature must pass a budget by the 15^th of June, per the California Constitution.

Proposed Policy Changes in the May Revision for Patients in the Medi-Cal Program:

Eligibility and Coverage

• Eligibility: Reinstate Medi-Cal Asset Test Limit

• • Proposal: Reintroduces an asset test for certain Medi-Cal eligibility groups that previously benefited from asset test elimination. The proposal would limit individuals to $2000 and couples to $3000. As a result, many individuals currently enrolled in Medi-Cal would lose coverage for having assets, such as money in a bank account that exceeds the above amounts.

  • Oncology impact: Reinstating an asset test can increase churn for adults in active treatment if resources push them over the threshold, even when income remains low.

  • What to do if the proposal passes: If the proposal passes, practices that serve the Medi-Cal population should strengthen coverage‑navigation workflows and flag patients on active chemo/radiation whose renewals land in the next 90 days to start outreach and coordinate with plan case managers.

• Coverage: Eliminate Optional Adult Acupuncture Benefit

• • Proposal: Discontinues the optional Medi-Cal acupuncture benefit for adults.

  • Oncology impact: A subset of patients use acupuncture for chemotherapy‑induced nausea/vomiting, neuropathy, arthralgias, and cancer‑related fatigue. Eliminating coverage may shift patients to self‑pay, reduce utilization, or increase demand for covered alternatives (e.g., pharmacologic antiemetics, pain management, behavioral interventions).

  • What to do if the proposal passes: If passed, practices should be ready to counsel patients on covered options and document medical necessity for substitute therapies.

Big-picture Medi-Cal funding and the MCO tax

• The Department of Health Care Services budget remains substantial, anchored by multi‑year MCO tax revenues of $4.5 billion in 2025-2026 and $2.5 billion in 2026-2027 used to offset costs and fund payment enhancements into 2027. The existing MCO tax expires on December 31, 2026, because it is not in compliance with recently passed federal law, HR 1. The May Revision proposes to seek a new MCO tax effective January 1, 2027, to bring the tax in compliance with HR 1.

• Why it matters: The MCO tax remains the primary lever to sustain rates and directed payments inside Medi-Cal managed care.

Payment enhancements tied to the MCO tax continue into 2026–27. Oncology effects typically flow through plan‑negotiated rates, directed payments, and shared‑savings or pay‑for‑performance models.

What’s still evolving

• The Legislature will set final agreed-upon solutions in budget bills and budget trailer bills that will pass by June 15^th and then begin the process of negotiating with the Governor on the final budget, which is usually passed prior to the beginning of the new fiscal year- July 1.

What ANCO and MOASC members can do next?  If there are specific proposals that you would like ANCO and MOASC to oppose or support, please reach out to our contract counsel (Cher Gonzalez, Esq.) via email at cher@gonzalezconsult.com.