Senate Bill 246, introduced by Senator Shannon Grove (R-Bakersfield), has been signed into law by Governor Gavin Newsom. The new law is designed to address the shortage of healthcare providers in rural and underserved areas of California by expanding Graduate Medical Education (GME) programs.
Senator Grove highlighted the challenges faced by district hospitals, noting, “Two-thirds of California’s district hospitals serve rural and underserved communities, and many are struggling financially. The passage of SB 246 is a critical step toward ensuring these hospitals can sustain their Graduate Medical Education programs, which are vital for training the next generation of healthcare providers. This bill has the potential to unlock $15-20 million annually in new Medi-Cal funding, securing the future of healthcare access in our most vulnerable communities without additional state costs.”
The legislation authorizes the Department of Health Care Services (DHCS) to set up a new Medi-Cal GME supplemental payment program specifically for Non-Designated Public Hospitals (NDPHs). This initiative aims to provide essential financial support to hospitals serving rural and underserved populations.
SB 246 follows the model of an existing GME program that supports Designated Public Hospitals (DPHs). Under this new law, NDPHs can contribute to the nonfederal portion of funding through intergovernmental transfers. No money from the state’s General Fund will be required for this purpose. The program also imposes a 5% administrative fee, similar to what is already in place for DPHs.
The law will go into effect on January 1, 2026.
