January 8, 2016

On December 30, the Department of Health Care Services announced that the Special Terms and Conditions (STCs), the legal document between the state and federal governments, for California’s Medicaid Section 1115 Waiver is complete. The STCs are available on DHCS’ website.

The STCs reflect the high-level agreement that was announced at the end of October, which includes:

• $6.2 billion in federal funds over five years
• Public Hospital Redesign and Incentives in Medi-Cal (PRIME): a successor to the Delivery System Reform Incentive Program that will provide $3.27 billion for designated public hospitals and $466.5 million for district and municipal hospitals. The funding declines in years 4 and 5 of the waiver. Additionally, the STCs include 5% penalties if the state fails to meet alternative payment methodology targets in years 4 and 5. PRIME proposals will be due to DHCS by February 1, 2016 or 30 days after approval of PRIME protocols.
• Global Payment Program: intended to incentivize primary and preventive care to the remaining uninsured through a value-based payment structure. A combination of Disproportionate Share Hospital (DSH) funding and $236 million in federal funding from the prior Safety Net Care Pool. The non-DSH funding in years 2 through 5 will be determined following an independent assessment of uncompensated care due to be completed in the spring of 2016.
• Dental Transformation Initiative: up to $750 million total over five years to improve preventive care and continuity of care. These incentive funds do not have a local match requirement.

The STCs contain significantly more detail about the dental initiative than had previously been available. There is an optional project that would allow counties to receive funds for local collaboration on a dental pilot. A county, a city and county, a consortium of counties, a Tribe, an Indian health program, UC or CSU campus can apply to be a pilot site for the Local Dental Pilot Program. Interested counties should review STC paragraph 109 and Attachment JJ, Project 4. The Local Dental Pilot Program is intended to address one or more of three domains through alternative programs, potentially using strategies focused on rural areas including local case management initiatives and education partnerships. The three domains are pediatric oral disease prevention, caries risk assessment and management, and dental health homes. Lead entities may submit applications to DHCS 60 days after the applicable protocols are approved by CMS (if the protocols are approved by March 1, applications would be due May 1, 2016.).

• Whole Person Care: up to $300 million per year for five years for county-based pilots to target high-risk populations. The goal of the pilots is to coordinate health, behavioral health and social services to improve beneficiary health and well-being. Pilot sites will identify target populations, share data between systems, coordinate care in real time, and evaluate individual and population progress toward better health outcomes. Applications will be due to DHCS by May 15, 2016 or 45 days after DHCS issues the Request for Applications (RFA) for the WPC pilot, whichever is later. For WPC Pilot details, see STC paragraphs 110-126.

DHCS and CMS will be working over the next several weeks to craft attachments to the terms and conditions, which will contain important details and protocols for effectuating the program elements described above. The STCs include 42 attachments, 20 of which need to be completed over the next 60 days. Outstanding attachments include:

• All attachments related to PRIME (Attachments Q, R, S, II)
• All attachments related to Global Payments (Attachments EE, FF)
• All attachments related to WPC Pilots (Attachments GG, HH, MM)

CSAC will provide a more detailed guide to the Medi-Cal 2020 Waiver in the coming weeks. There will also be implementing legislation vetted in the Legislature in 2016.