The proposed California budget would require prior authorizations for hospice care within the state’s Medicaid program.

Currently, Medicaid managed care plans who provide coverage through the state’s Medicaid system, Medi-Cal, may not perform prior authorizations for hospice. California’s Department of Health Care Services (DHCS) indicated in a 2025-2026 budget revision that this could save $25 million over the next two years and more than $50 million in the long term.

“DHCS’ budget builds upon the Administration’s previous investments, within a responsible budgetary structure, and enables DHCS to continue to transform Medi-Cal to create a more coordinated, person-centered, and equitable health system that works for its millions of members and California as a whole,” the agency indicated in an emailed stakeholder update.

If enacted, this would make California the first state in the nation to implement such a rule, according to the California Hospice & Palliative Care Association (CHAPCA). The association contends that the anticipated $25 million in cost savings is “speculative and fails to account for the downstream costs and systemic burdens this proposal would create,” according to a position paper shared with Hospice News.

Requiring prior authorization could result in delays in care, higher downstream costs, administrative overload for payers and providers and destabilization of hospice networks, CHAPCA indicated in the paper. For example, community-based hospices, already affected by the licensure moratorium and workforce shortages, may stop accepting Medi-Cal patients rather than risk delayed payments or denials — especially in rural and underserved areas.

Delays in care, in addition to the impact on families, could result in higher health care costs if a patient enters an emergency department or remains in a skilled nursing facility for additional days while waiting for a hospice authorization, according to CHAPCA. This could cost thousands of dollars per day.

CHAPCA recommended to the state government three alternative approaches:

• Apply CMS Quality-Reporting Penalty: Federal rules allow states to reduce a hospice’s Medi-Cal reimbursement by up to 4% if it fails to submit required quality data. This approach rewards transparency, avoids delays and is already built into CMS rate files, no waiver or new bureaucracy required.
• Extend the Hospice Licensing Moratorium: Current law freezes new licenses through Jan. 1, 2027 or one year after [California Department of Public Health] finalizes regulations, whichever is sooner. Extend the moratorium until one year after final regulations to prevent entry and churn-and-burn of scam operators.
• Enforce [All Plan Letter] 25-008 (May 5, 2025): This directive already strengthens oversight by requiring plans to arrange in-network hospice within 24 hours, assigns financial liability for late election forms to providers and allows for pre-payment review, without the care delays inherent in prior authorization.

“Prior authorization for hospice is a high-risk, low-yield policy that undermines timely care and increases system-wide costs,” CHAPCA said in the position paper.