Health Commission adopts FY24�26FY26 patient-rate ordinance to extend and modestly raise DPH rates

The Health Commission voted to adopt a patient-rate ordinance on May 7 that authorizes DPH rate changes for fiscal years 202425 and 202526 and extends authorization for inpatient emergency and trauma-related services through fiscal 202526. The ordinance was presented by Matt Sir, DPH reimbursement director, who said the department27s rate setting aims to sustain revenue from Medicare, Medi-Cal and commercial payers and to align with market and controller guidance.

Sir described two objectives: annual rate increases to keep revenue aligned with costs and an extension of rate authorization for inpatient emergency and trauma-related services one year past the current authorization. For community behavioral health services, the proposed increase is 3.08% in both FY 202425 and FY 202526; for other physical health services the department proposed a 3.67% increase in FY 2425 and 3.01% in FY 2526. Sir also noted the department will perform a market-rate study (the prior Deloitte study was 2019) to better align future rates with peer providers.

Commissioner Toronto moved to adopt the ordinance and the motion was seconded. The commission approved the ordinance by voice vote (all "aye"). President Green announced that the ordinance is approved by the Health Commission.

Commissioners and staff discussed the relationship between fee schedules and commercial payer markups, concern about statewide cost-control efforts, and the plan for a future market study to refine rate-setting.