CSAC Bulletin Article

State’s Massive Medi-Cal Transformation Project, Called CalAIM, Approved

January 6, 2022

California’s ambitious federal waiver package, titled “California Advancing and Innovating Medi-Cal” (CalAIM) was approved by the Centers for Medicare and Medicaid Services (CMS) on December 29.

The sweeping package consists of two federal waivers (Section 1115 Medicaid demonstration waiver and 1915(b) managed care waiver, which previously authorized the State’s Specialty Mental Health Services delivery system as operated by the counties) and several State Plan Amendments to streamline Medi-Cal rules while also improving care coordination, access to services, and the overall health of the State’s 14 million Medi-Cal enrollees.

The CalAIM initiative is designed to complement the State’s Home Based Community Services (HBCS) spending plan, which was conditionally approved by CMS on January 4, and to assist in drawing down additional federal funding via the American Rescue Plan Act Providing Access and Transforming Health (PATH) component (read more about PATH below).

A few important programs and funding were carried over from the previous Medi-Cal 2020 waiver, including funding for the Global Payments Program for uninsured patients, which many county-owned hospitals rely on, and continuation of the Drug Medi-Cal Organized Delivery System. Other programs, such as the county-led Whole Person Care pilots, are ending but some of the services may be available through managed care plans.

Questions remain about the role of counties under CalAIM. Medi-Cal managed care plans (MCPs) are now tasked with complex case management, access to non-medical services and supports, collaboration and contracting with county and community-based organizations, and population health management, on top of their current role as health care providers. It is unclear how some of the new policy changes will be reimbursed – especially under Proposition 30 – and data sharing remains a complex issue. CSAC continues to advocate for counties to participate in all federal reimbursement and incentive funding as well as maintain a critical role in serving our most vulnerable populations, whether by offering social and behavioral health services, applying public health principles, or managing outreach and engagement in our communities. 

Key components of CalAIM include:

Behavioral Health Payment Reform

From a county perspective, the largest and most difficult changes proposed under CalAIM are aimed squarely at county Specialty Mental Health Services and Drug Medi-Cal. The goal is to reduce the state and federal red tape and bureaucratic delays imposed on counties by transitioning from a cost-based reimbursement model to a rate-based intergovernmental transfer model. This plan should decrease administrative effort, speed up reimbursements, and streamline the auditing process. Additionally, counties are working with the state to streamline documentation requirements, redefine medical necessity to increase access to reimbursable services, and explore regional as well as non-contiguous regional opportunities.

The State has earmarked $21.8 million in Behavioral Health Quality Improvement Program incentive funds to assist counties with all of the above projects. Each county is eligible for an initial $250,000 in startup funds, and then the rest will be allocated based on claims data from 2019-20 with a $100,000 per-year floor for each county that applies.

On another behavioral health note, the State will submit an Institutes of Mental Disease (IMD) waiver to the federal government no sooner than July 1, 2022. If granted, the IMD waiver would substantially increase access to inpatient mental and substance use disorder services throughout the state.  

Enhanced Care Management (ECM)

The successor to the core of Whole Person Care, ECM is a benefit reserved for the highest-need Medi-Cal enrollees to provide intensive care coordination. Plans providing ECM must engage beneficiaries in a variety of settings, including at home or in shelters. Plans may contract with counties, whole person care providers, or other organizations to offer this benefit.

Community Supports

These 14 Supports are designed to be medically appropriate alternatives to traditional medical services and may include assistance with housing supports, caregiver respite, food insecurity, and transitioning from nursing home care to the community. The state promotes Community Supports as the answer to long-term health inequities, especially among those who are unsheltered, but questions remain about MCP capacity and incentives to effectuate this vision.

Providing Access and Transforming Health (PATH)

The PATH component might help counties and other community providers that contract with the MCPs to build the capacity to provide the ECM and Community Supports envisioned under CalAIM. The PATH funding is earmarked for populations and communities that have been historically under-resourced and under-served, as well as for pre-release and post-release services for justice-involved adults and youth. CSAC and county affiliates are strongly advocating for PATH funding for counites and public hospitals. 

Substance Use Disorder Services and Initiatives

These build on the Drug Medi-Cal Organized Delivery System to increase treatment options for individuals with substance use disorder and includes innovations such as using peer support specialists, creating a first-in-the-nation evidence-based contingency management program to reduce the use of stimulants, and increasing access to short-term residential treatment options. Both the peer support and contingency management initiatives are optional for counties who wish to participate.

Supporting Coordination and Integration for Dual Eligibles

A longstanding goal of the State has been to better coordinate coverage programs for the complex health care needs of individuals eligible for both Medi-Cal and Medicare (“dual eligibles”). CalAIM provides a special kind of managed care plan that coordinates all benefits in one plan for eligible enrollees, including managed long-term services and supports.

Improve Medi-Cal Dental Benefits

The improved benefits create a statewide tool to identify risk factors of dental decay for all Medi-Cal children and authorize the use of silver diamine fluoride for children and certain high-risk populations. CalAIM will also include pay-for-performance initiatives to reward dental providers for focusing on preventive services and continuity of care.

Delivery System Transformation and Alignment

This is foundational to CalAIM and seeks to better coordinate the state’s managed care delivery systems, including Medi-Cal Managed Care, Dental Managed Care and the Specialty Mental Health Services and Drug Medi-Cal Organized Delivery Systems run by counties. CalAIM allows the Department of Health Care Services (DHCS) to simplify and align the programs, enhance oversight through independent assessments and comparisons with the private market, and ensure network adequacy across systems.

Two CalAIM components have yet to receive approval, including pre- and post-release services and supports for youth and adults in custody at the county level, as well as reimbursement for traditional healers and natural helpers for American Indians and Alaska Natives receiving services through Indian health care providers. CSAC is closely involved in the justice components and striving to help develop workable policy and implementation pathways in conjunction with Sheriffs, probation, and county health, social, and behavioral health services.  

For more information on all of the CalAIM initiatives and timelines, please visit: https://www.dhcs.ca.gov/CalAIM/Pages/calaim.aspx.

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