Senators Grove and Caballero propose extending Medi-Cal graduate medical education (GME) payments to district and municipal public hospitals (DMPHs), mirroring the existing payment structure for designated public hospitals. The legislation establishes a dedicated funding mechanism through voluntary intergovernmental transfers, with no state General Fund expenditures required.

The bill creates the DMPH GME Special Fund to facilitate these payments, which would support both direct costs of GME programs and increased operational expenses associated with teaching activities. The Department of Health Care Services would oversee fund administration and maintain authority to pursue additional forms of GME payments, including those based on fee-for-service volumes or incentive structures. Federal approval would be required before implementation, which could begin no earlier than January 2026.

Implementation relies on voluntary intergovernmental transfers from DMPHs, their affiliated entities, or other eligible public entities to provide the nonfederal share of payments. The legislation includes provisions for fund recovery within 14 days if federal financial participation becomes unavailable. The department would retain flexibility to modify requirements as needed to maximize federal participation while maintaining program objectives through consultation with affected hospitals.