A previous effort to protect funding for such facilities stalled in an Assembly committee earlier this year, but the proposal was revived and inserted into a separate bill (SB 239) this week.
The measure is expected to be approved by the Legislature on Thursday.
Jan Emmerson-Shea, a spokeswoman for the California Hospital Assn., said the potential loss of funding would have been devastating to nursing facilities and forced patients into more expensive treatment centers.
"The bill is a win-win, both for the state and for hospitals," she said.
Administration officials had expected to save $352.7 million annually from reducing Medi-Cal payments to doctors, pharmacists and other healthcare providers by 10%. The cut, which was blocked for two years by a lawsuit, is being phased in over the next several months even though the state's financial situation has improved.
The exemption for some nursing facilities – specifically, facilities that are part of hospitals but located in separate buildings – is expected to reduce the state's annual savings by about $62 million.
The state had previously agreed to protect funding only for facilities in rural areas, one of several exemptions from the 10% cut. Other exemptions are being made for extensive dental surgery for children and some pricey