UHS · 10-Q · 2026Q3 · Full report

California Medicaid Rate Methodology

UNIVERSAL HEALTH SERVICES INC · 2026-11-06 · Importance 33 · Surprise 24 · In source text

California adopted a new reimbursement method for inpatient psychiatric services under its Medicaid prepaid inpatient health plan program, effective December 12, 2023, incorporating a cost-based ceiling on negotiated rates. The change may require renegotiation of county contracts, potentially retroactive to that date, and prospective rates could be materially lower if counties use cost-based rather than market-based rates. UHS is awaiting California guidance on implementation and cannot yet predict the impact, but says the adverse financial impact could be material under some scenarios.

Key facts

• UHS recorded California supplemental program reimbursements of $37 million and $21 million for the three months ended September 30, 2026 and 2025, respectively, and approximately $71 million and $53 million for the nine months ended those dates, respectively. source
• UHS estimates net California supplemental program reimbursements of approximately $91 million for the year ended December 31, 2026. source
• The California methodology change may require UHS hospitals to renegotiate county contracts retroactive to December 12, 2023 and may affect prospective rate negotiations; new rates could be materially lower, and under some scenarios the adverse impact could be material. source
• UHS states that California's new Medicaid reimbursement method for inpatient psychiatric services took effect December 12, 2023 and incorporates a cost-based ceiling to negotiated rates. source
• UHS received $11 million in the three-month period ended September 30, 2026 related to California fiscal year 2024 supplemental payments. source

Impact estimates