October 31, 2019

The Department of Health Care Services (DHCS) has released their ambitious proposal to reform the state’s massive Medi-Cal program, which provides health, behavioral health, and oral health care to nearly 13 million beneficiaries – a third of the state’s population. 

Dubbed “California Advancing and Innovating Medi-Cal,” or CalAIM,  the package consists of both federal waivers and state-only proposals to simplify and streamline the Medi-Cal program, including county specialty mental health services, county social services eligibility functions, and initiatives focused on children, foster youth, and those who are homeless or incarcerated. Visit the DHCS CalAIM webpage to read the proposal.

The state has developed CalAIM as a response to the looming renewal of the federal Medicaid Section 1115 and 1915(b) waivers in 2020, and the effort can be divided into four “buckets.” Below is a description of the key considerations for counties and then some details on each of the buckets.

The Department is also kicking off an extensive public stakeholder process through February 2020 to gather input on the proposals. CSAC and a number of county affiliates and county staff will participate in the stakeholder subcommittees to ensure that county needs are communicated and addressed. As always, financing for the proposals remains a top priority.  

CalAIM “Buckets”

1. Behavioral Health Payment Reform
   DHCS proposes moving the county specialty mental health and Drug Medi-Cal systems from a cost-based reimbursement model to an Intergovernmental Transfer (IGT) model, where counties pay for the service as well as provide the non-federal share to the department, and then receive federal matching dollars usually within 30 days. The amount of the IGTs, and potential federal financial participation would be based on rates developed by the department.

Pros:

• Rapid reimbursement structure is far better than the current seven-year final cost reconciliations;
• Opportunity to develop rates that exceed actual costs;
• Relieve administrative burden of cost reports, multiple reconciliations, and reimbursement lag;
• Clearer, more timely picture of overall revenues, which can assist in operation and planning for the mental health plans; 
• Timeliness and frequency of ratesetting is imperative to ensure rates are capturing full costs.

Cons:

• Ratesetting process is opaque and must be approached cautiously;
• Potential for a gap between old cost-based methodology and new IGT reimbursement which may require a state general fund contribution to affected counties’;

• Audits and streamlined cost reporting will still be necessary;
• Requires intensive training and technical assistance for all counties.

1. Benefit Changes & Funding Flexibility (Whole Person Care 2.0)
   DHCS proposes to shift the Whole Person Care (WPC) program to the Medi-Cal managed care plans by creating new “bundles” of special care for patients that include higher rates for this level of care statewide. Bundles could include housing and rental assistance, medically tailored meals, and intensive case management. This could be achieved through Enhanced Care Management (ECM) and In Lieu of Services (ILOS) rates for health plans (not counties).

Pros:

• Could focus on special target populations of mutual concern to counties: homeless, foster kids, those transitioning from jails or institutions;
• Opportunity to contract with plans to continue county WPC services – but this model is unclear and requires close examination.

Cons:

• Plans may pass on contracting with counties to offer these services even though many of the proposed CalAIM services are currently offered by counties under WPC;
• Counties may have to dismantle WPC staffing and infrastructure;
• Offering these services statewide will be difficult, especially for those areas that do not have WPC now;
• DHCS proposed to limit some of these special benefits, like housing assistance, to once-in-a-lifetime. Counties know from our WPC experience that one intervention is not effective;
• Who will outreach to and engage these special populations?;
• How will the special populations be defined?
   

1. Medi-Cal Eligibility and Oversight
   DHCS proposes to increase oversight and accountability for Medi-Cal eligibility functions by county social services. Proposals include mandating Medi-Cal eligibility services in county jails before release, developing new statutory standards and timelines for county eligibility activities, and improving the accuracy and collection of Medi-Cal eligibility data, including contact and demographic information.   

Pros:

• Counties would welcome state funding to develop jail “inreach” activities, along with flexibility;
• Jointly developing or updating statutory requirements for Medi-Cal eligibility activities is an acknowledged need.  

Cons:

• Jail inreach will require intra-county coordination between social services and Sheriff;
• New statutory requirements for eligibility activities could be overly burdensome or unrealistic;
• Improving data collection is acknowledged to be a heavy technical lift and may include significant costs and worktime.
   

1. Behavioral Health Integration
   DHCS proposes to expand the Drug Medi-Cal Organized Delivery System (DMC-ODS) waiver statewide and refine the definition of Medical Necessity for county behavioral health services. The state is also interested in allowing MHPs to work regionally in service delivery or administration, or both.

Pros:

• The DMC-ODS waiver has almost revolutionized drug and alcohol service delivery in participating counties, increasing access to and the continuum of treatment;
• Refining or updating Medical Necessity criteria is a shared goal.

Cons:

• Significant expansion of services if DMC-ODS goes statewide could create potential fiscal concerns;
• Implementation will be slow and difficult for non-DMC-ODS counties/regions;
• If Medical Necessity criteria is loosened/expanded, more people will qualify for county behavioral health services, thereby potentially placing additional fiscal pressure on the system;
• Changes to Medical Necessity should be covered by Prop 30 (changes to service levels or overall costs) – this requires legal review;
• Regional models should be opt-in and developed based on need and costs, not just geographic proximity.

CSAC will continue to update counties as this process moves forward. If you have questions, please contact Farrah McDaid Ting, Legislative Representative for Health and Behavioral Health, at fmcting@counties.org.