Health Net is terminating its CalAIM assisted living benefit at the end of the year, and provider
contracts start unwinding on October 7. Advocates say the only realistic destinations for most of
those residents are hospitals and skilled nursing facilities — and Rehinged's scoring of every
CMS-certified SNF shows that Health Net's ten-county footprint runs at 91.0% occupancy against a
national average of 80.9%. Separately, CMS left advance care planning alive as a future SNF quality
measure, a quiet signal with a long commercial tail.
Why it matters for vendors: Both stories point at the same buyer conversation.
California operators are about to take in a higher-acuity, dementia-heavy census with almost no
physical slack to absorb it, which raises demand for medication management, fall prevention, and
behavioral programming in a market that is already the highest-need in the country on medication
safety. And the advance care planning signal tells vendors selling documentation workflow and
palliative partnerships that they have roughly one rulemaking cycle to build a pipeline before the
measure becomes a compliance purchase instead of a differentiation purchase.
Market Trends
Reimbursement
Health Net is exiting CalAIM assisted living, and California SNFs have nowhere to put the overflow
What happened
Health Net, one of the largest Medi-Cal insurers in the country, is canceling its assisted living
support benefit for approximately 3,500 members at the end of 2026, according to
termination documents obtained by CalMatters. The benefit is an optional CalAIM service that covers
the bulk of 24-hour care costs at board-and-care homes, memory care facilities, and similar
settings. Provider contracts terminate October 7, though the plan is obligated to continue services
through December 31 where clinically appropriate. CalViva Health and Community Health Plan of
Imperial Valley have also notified the state of their intent to discontinue the benefit.
Most affected members are elderly and many have dementia. Assisted living runs roughly $5,000 to
$7,000 a month; a nursing home runs upward of $10,000. Pauline Shatara of California Advocates for
Nursing Home Reform told CalMatters that for most of these residents, home is not an option, and
the only appropriate alternative settings are nursing homes and hospitals — which "may not be able
to handle the influx." Some facilities have already dropped residents at emergency rooms.
Why it matters
This is a census event with a clinical profile attached. The residents moving into California SNFs
are not the post-acute orthopedic rehab admissions that drive Medicare margin — they are long-stay,
cognitively impaired, polypharmacy-heavy Medi-Cal residents. For vendors, that shifts the demand
mix toward medication reconciliation and pharmacy consulting, fall and elopement prevention,
behavioral health programming, incontinence management, and dementia-specific staff training.
It also creates an unusual timing window. Operators in the affected counties will be making
admissions and capacity decisions between now and October, not in January. Vendors who wait for the
December headlines will be selling into a market that has already made its choices.
Rehinged Intelligence analysis of 14,693 scored facilities shows Health Net's ten Medi-Cal counties
contain 498 skilled nursing facilities holding 50,288 beds. Across the 493 with
reported occupancy, those facilities run at 91.0% occupancy — more than ten points
above the 80.9% national average and nearly two points above California's own 89.2%. This is not a
market with room. It is the tightest large SNF market Rehinged scores, and it is the market being
asked to absorb 3,500 displaced residents.
498
SNFs in the Health Net footprint
91.0%
average occupancy (US: 80.9%)
53
facilities with slack and 3+ stars
Average occupancy — Health Net counties vs. the nation
Health Net ten-county footprint
91.0% occupied
National average
80.9% occupied
Facilities by county — Los Angeles carries three quarters of the footprint
Cross occupancy against quality and the picture narrows sharply. Only 53 facilities
in the ten-county footprint are both below 85% occupied and rated three stars or better, and
together they hold roughly 1,492 open beds — against a displaced population of
about 3,500. The footprint's average overall rating is 2.62 stars, well below
California's statewide 3.17, and Los Angeles County alone averages 2.47 across its 366 facilities.
The clinical fit is worse still: 84.5% of footprint facilities already carry
high medication safety need, versus 73.1% nationally, and 189 of them carry both
high medication safety and high fall prevention need while averaging 2.19 stars and 98.3%
occupancy. Those 189 are effectively full, already struggling, and about to receive residents with
dementia and complex medication regimens. Vendors selling medication management and pharmacy
consulting, fall and wander prevention technology, and dementia care training should be working
Los Angeles County operators first and Sacramento and Fresno second — and should be in those
conversations before October 7, not after.
Watch for: October 7, when Health Net's provider contracts terminate and the gap
between contract end and the December 31 coverage obligation becomes operational. Watch whether
member termination notices go out in late September or early December — advocates say some may
arrive after residents have already been moved. And watch whether CalViva Health and Community
Health Plan of Imperial Valley formalize their withdrawals, which would widen the footprint beyond
these ten counties.
Quality & Ratings
Regulatory
Advance care planning survived the FY 2027 rule as a live candidate — which is how SNF quality measures usually begin
What happened
CMS used the FY 2027 SNF prospective payment system proposed rule to seek comment on adopting an
advance care planning measure in the SNF Quality Reporting Program. In the final rule, the agency
summarized the comments it received but adopted no related policy — leaving advance care planning
as an open candidate for future rulemaking rather than a settled requirement. Completion of advance
directives in skilled nursing settings is typically estimated at around 65%.
Komal Patel Murali, PhD, RN, an assistant professor of nursing at NYU's Rory Meyers College of
Nursing, told McKnight's that advance directives in nursing homes are difficult to complete and
document because staff are caring for medically complex residents who may have dementia or
cognitive impairment limiting decision-making capacity.
Why it matters
Nothing is mandatory yet, and that is precisely the commercial point. A request for information
that draws comment and survives into the next cycle is the standard on-ramp for a QRP measure. The
operators who build advance care planning documentation into their workflow now do it as a quality
improvement project; the ones who wait will do it as a compliance scramble under a reporting
deadline, with less negotiating leverage and less vendor choice.
The addressable categories are specific: advance directive documentation and workflow tooling,
palliative and hospice partnership models, goals-of-care conversation training, and clinical
decision support that surfaces resident preferences at the point of a transfer decision. All of
them sell better against a facility that already has measurable transfer exposure.
Advance care planning is fundamentally about avoiding transfers that residents would not have
chosen. Rehinged scores every CMS-certified SNF on discharge success and on rehospitalization
risk, and the overlap identifies exactly where an ACP measure would bite first.
1,439 facilities — roughly one in ten nationally — score 70 or above on
discharge success, meaning high discharge volume and therefore high exposure to
goals-of-care decisions. Those facilities hold 123,574 beds and average 3.92
stars. Of them, 1,403 also carry elevated rehospitalization risk. In other
words, 97.5% of the highest-throughput facilities in the country already have a measurable
avoidable-transfer problem sitting alongside it.
1,439
SNFs with high discharge-success need
123,574
beds in that group
226
of them rated two stars or below
Where the high discharge-success facilities are — top eight states
The sharpest target list sits at the extreme of the distribution. 171 facilities
nationally score 70 or above on both rehospitalization and readmission risk simultaneously, and
they average 2.83 stars across roughly 114 beds each — small, low-rated, and
transferring residents out at a rate that already draws scrutiny. California leads that group
with 18 facilities, followed by Georgia with 15 and Florida with 14. Separately,
226 of the 1,439 high discharge-success facilities are rated two stars or below,
which is the combination that converts: measurable exposure plus a rating they are already trying
to fix. Vendors selling advance care planning documentation, goals-of-care training, and
palliative partnership models should build the FY 2028 pipeline around California, Florida, and
Ohio, and should lead with the two-star-and-below cohort rather than the four-star flagships —
the flagships will buy after the rule, the strugglers will buy before it.
Watch for: the FY 2028 SNF PPS proposed rule, typically published in April, for
whether advance care planning moves from request for information to proposed measure. Watch the SNF
QRP measure specification updates in the interim, and watch whether CMS pairs an ACP measure with
the value-based purchasing program rather than the reporting program — that would change the
financial stakes considerably.