CalOptima Health Invests Nearly One BILLION to Support Providers Impacted by HR1 Cuts
by: James Chisum
Published: June 9, 2026
ORANGE... The CalOptima Health Board of Directors has approved using $429.6 million from reserves to increase rates for hospitals and specialists over the next 30 months, which will improve access to care for members and support hospitals in the wake of federal and state Medi-Cal changes. With this funding, the health plan has invested nearly $1 billion in provider rate increases since 2024.
Recent policy changes have led to the loss of Medi-Cal coverage for thousands of Californians, including many Orange County residents. This is predicted to hit hospitals particularly hard, as they will be forced to provide uncompensated care to individuals who are no longer covered, resulting in reduced financial margins and a strain on the local health care safety net. Facilities serving large numbers of former Medi-Cal recipients will see a reduction in funding, which is often used to cover operating costs.
In making this significant move, Board members stated that increasing specialty provider rates keeps CalOptima Health competitive, helps retain existing doctors and entices others in difficult-to-recruit specialties to contract with the health plan. This, in turn, means greater access to care for CalOptima Health members, more geographic coverage by contracted specialists and stronger regulatory compliance. The new rates take effect July 1, 2026, and will run through December 31, 2028.
“As a Board, we made a concerted effort to increase our reserves in anticipation of growing pressures on our health care system, knowing we would need the flexibility to support the providers and hospitals who serve CalOptima Health members every day,” said Vicente Sarmiento, CalOptima Health Board Chair and Orange County Supervisor. “This investment reflects our commitment to our medical partners and our confidence in their vital role in serving our communities. I know this won’t solve all the issues they are facing, but it will offset some of the reductions, impacts and challenges affecting the health care industry right now.”
Few Medi-Cal health plans in the state are in a financial position to boost provider rates in this manner. CalOptima Health has exercised careful fiscal stewardship over the past several years, planning for this unprecedented time when additional resources are needed, according to the organization’s executive leaders. Approved in June 2024, a prior large-scale rate increase of $526.2 million boosted funding for health networks, hospitals, physicians, community clinics, behavioral health providers and ancillary services providers for a 30-month period from July 2024 to December 2026. These two investments combined represent a historic level of nearly $1 billion in funding to promote the financial stability of Orange County’s provider community.
“Nearly half of the Orange County hospitals were operating at a financial loss even before recent Medicaid cuts and coverage losses,” said Sara May, Regional Vice President of the Hospital Association of Southern California. “We thank CalOptima Health for taking action that supports hospitals and protects access to emergency and specialty care for Orange County residents.”