Navigating California's New Medicaid Prior Authorization Rules: What Healthcare Providers Need to Know
July 9, 2025
As California continues reshaping its healthcare landscape, the rules surrounding Medicaid prior authorization (PA) are shifting dramatically. Two major policy changes define 2025: the reinstatement of stricter prior authorization requirements under Medi-Cal Rx, particularly affecting pediatric patients, and the rollout of SB 306 (the Defending Physicians Decisions Act), which aims to streamline care by eliminating PA requirements for services with historically high approval rates.
For healthcare providers, these simultaneous changes present a complex but navigable landscape. On one hand, tighter restrictions may increase administrative burdens and risk treatment delays. On the other, the new PA exemptions may free up resources and improve operational efficiency—if providers stay informed and adapt their workflows accordingly.
What’s Changed in Medi-Cal Rx Prior Authorization?
Medi-Cal Rx reinstated several PA requirements that had previously been paused, especially for pediatric prescriptions. As of January 31, 2025, new-start prescriptions for patients aged 21 and under now require prior authorization. But the more significant change came on April 25, 2025, when the policy expanded to include continuation-of-therapy claims for these patients as well. This means even medications that were previously approved may now be rejected without new PA documentation.
The state’s bulletin outlines a slew of new utilization management (UM) edits, including:
- Stricter HbA1c documentation thresholds for diabetes-related drugs.
- Cost ceiling-based rejections, which now trigger additional documentation or step therapy.
- Reject codes (75, 76, 78, 80, 83, 606) tied to missing clinical documentation or quantity limits.
Additionally, providers participating in the California Children’s Services (CCS) panel are given broader authority to bypass PA requirements for select medications and durable medical equipment (DME). This reflects California's push to integrate pediatric care more tightly across managed and state-administered systems.
For busy practices, the implications are clear: failing to adapt to these rules could lead to care delays, patient frustration, and payment denials.
The Impact of SB 306 (Effective April 1, 2025)
While Medi-Cal Rx tightens its grip on certain prescription processes, Senate Bill 306 offers relief. Signed into law in 2024 and taking effect on April 1, 2025, SB 306 mandates that any health plan or insurer that approved 90% or more of PA requests for a given service in the prior year must waive PA requirements for that service for the following year.
This law has the potential to significantly reduce administrative overhead for providers, especially in high-volume areas like imaging, lab tests, or routine follow-ups that are almost always approved. Importantly, the law applies to all plans regulated by the Department of Managed Health Care (DMHC) and the Department of Insurance (DOI)—including Medi-Cal managed care plans.
Health plans are required to:
- Review their PA approval history by March 1 each year.
- Publish a list of exempted services and their prior-year approval rates by March 15.
Providers should track these updates closely and begin identifying which services might become exempt in their practice. Doing so will prevent unnecessary documentation and free up staff to focus on more complex, value-added tasks.
What Providers Should Do Now
To thrive amid these shifting regulations, providers must take a proactive, technology-supported approach to prior authorization. Here are the most impactful steps you can take:
A. Stay updated via Medi-Cal Rx and managed care bulletins
Review bulletins monthly and monitor the Contract Drug List (CDL), Approved NDCs, and Rejected Claims Guidance. The rules around medications like GLP-1s, antipsychotics, and pediatric asthma treatments are especially fluid right now. Delay in catching an update could result in dozens of denied claims.
B. Leverage ePA platforms like CoverMyMeds® or Surescripts
Electronic prior authorization tools dramatically reduce turnaround time and improve documentation accuracy. Many can auto-fill formulary-specific fields, upload clinical notes, and trigger alerts when a medication is likely to require PA. If your EHR or pharmacy doesn’t already integrate these tools, consider adoption a top priority in 2025.
C. Strategize around pediatric claims
Given the April 25 expansion to include continuation of therapy for pediatric patients, pediatric providers will need to develop PA templates for their most common medications. Practices that serve high volumes of patients ≤21 years old should also explore joining the CCS panel, which can provide immediate PA flexibility.
D. Monitor SB 306 exemptions
Create an internal log of your most commonly submitted PA requests. If you see approval rates consistently above 90%—and the insurer confirms this on their March 15 listing—you may be able to stop submitting PAs for these services altogether. Train your billing and administrative staff to stay updated on exemption lists from all major payers.
E. Maintain detailed PA data logs
Start recording metrics such as approval/denial rates, turnaround time, and manual resubmissions. This data helps you audit performance, prepare appeals, and identify whether payers are in compliance with SB 306 mandates. Having this data readily available will also support you in contract negotiations with health plans or when preparing for compliance audits.
The Bigger Picture
California’s dual-pronged approach to PA reform mirrors broader trends across the U.S. healthcare system. On one side, there’s a recognition that overuse of prior authorization can delay care, increase provider burnout, and harm patients. On the other, payers still use PA as a cost-control mechanism—particularly for high-cost prescriptions and services with variable medical necessity.
Nationwide, change is on the horizon:
- CMS’s 2026 rule will require Medicare Advantage, Medicaid, and CHIP plans to implement real-time prior authorization APIs and respond to e-PA requests within 72 hours (urgent) or 7 calendar days (standard).
- Commercial insurers such as Kaiser, Anthem, and UnitedHealthcare are piloting programs to automatically waive PA for providers with high approval accuracy—a trend very much aligned with SB 306’s intent.
- Advocacy groups including the California Medical Association (CMA) and California Health Care Foundation (CHCF) continue to push for statewide PA dashboards, real-time transparency, and eventual abolishment of low-value PAs.
Healthcare organizations that get ahead of these reforms will be better positioned to serve patients swiftly, reduce overhead, and build stronger payer relationships.
Key Takeaways for Providers
Medi-Cal Rx Pediatric PA
Prepare for required PA on both new-start and continuation therapies for patients 21 and under. Build workflows to identify affected prescriptions in advance.
Reject Codes & UM Edits
Familiarize yourself with codes 75, 76, 78, 80, 83, and 606. Implement tracking systems to document reasons for denials and responses.
CCS Panel Participation
Joining the CCS panel can unlock PA exemptions for pediatric medications and DME. Explore paneling options if your practice frequently treats Medi-Cal pediatric patients.
SB 306 Waivers
Identify services with high approval rates. After March 15 each year, verify if they are exempt and adjust your PA submission practices accordingly.
Digital Tools for ePA
Adopt or upgrade to real-time electronic PA tools. Train clinical and billing staff to use them effectively.
Data Documentation
Maintain a centralized PA tracking log to support appeals, detect workflow gaps, and measure payer compliance over time.
So What?
California’s evolving Medicaid PA policies are a microcosm of national reform efforts: a mix of added scrutiny and smart streamlining. For providers, this creates both pressure and opportunity. The key to thriving in this new environment is vigilant awareness, process automation, and strategic planning.
At SuperDial, we help providers navigate complex administrative shifts like these. Our AI-powered RCM tools are built to keep pace with changing payer requirements—so you can stay compliant, get paid faster, and spend more time on patient care.