California Prepares to Take Medicaid Innovation to Next Level

Nov. 3, 2019
CalAIM proposes series of reforms, including expanding whole-person care approach that targets social determinants

Among efforts to focus healthcare spending on social needs, California’s 25-county Whole Person Care (WPC) pilot has probably drawn the most attention. The WPC pilots are testing whether local initiatives coordinating physical health, behavioral health, and social services can improve health outcomes and reduce medical costs. Up to $1.5 billion in federal funds are available over the five years of the demonstration, matched by $1.5 billion in local funds from the pilots.

 Over the past several years, the California Department of Health Care Services (DHCS) has been aggressive in working to redefine its Medicaid program, Medi-Cal, by piloting care coordination and social service-related initiatives such as Whole Person Care. Now DHCS has released an ambitious roadmap to expand those offerings and others to all Medi-Cal enrollees.

 Called CalAIM (California Advancing and Innovating Medi-Cal), the 120-page proposal seeks to build on the successes of waiver demonstrations such as Whole Person Care, the Coordinated Care Initiative, and public hospital system delivery transformation. CalAIM leverages Medicaid as a tool to help address many of the complex challenges facing California’s most vulnerable residents, such as homelessness, insufficient behavioral health care access, children with complex medical conditions, the growing number of justice-involved populations who have significant clinical needs, and the growing aging population.

Recognizing the social basis of many care needs, the proposal calls for non-clinical interventions focused on a whole-person care approach that target social determinants of health and reduce health disparities and inequities. The hypothesis is that taking a population health, person-centered approach to providing services will improve outcomes and ultimately reduce the per-capita cost over time.

 CalAIM has three primary goals:

• Identify and manage member risk and need through Whole Person Care approaches and addressing social determinants of health;

• Move Medi-Cal to a more consistent and seamless system by reducing complexity and increasing flexibility; and

• Improve quality outcomes and drive delivery system transformation through value-based initiatives, modernization of systems and payment reform.

 DHCS says that Medicaid managed care plans should look at physical and behavioral as well as social determinants of health, with the overarching goals of improving quality of life and reducing the overall costs for the Medi-Cal population. CalAIM proposes to:

• Require plans to submit local population health management plans.

• Implement new statewide enhanced care management benefit.

• Implement in lieu of services (e.g. housing navigation/supporting services, recuperative care, respite, sobering center, etc.).

• Implement incentive payments to drive plans and providers to invest in the necessary infrastructure, build appropriate enhanced care management and in lieu of services capacity statewide.

 California’s Whole Person Care project involves 25 county pilots implemented under the Section 1115 Medicaid Waiver that runs through 2020. They are designed to coordinate medical, behavioral and social services to improve the health and well-being of Medicaid beneficiaries with complex needs. To build upon and transition the work done under the Whole Person Care pilots, DHCS is proposing to implement in lieu of services, which are flexible wrap-around services that a managed care plan will integrate into its population health strategy. These services are provided as a substitute, or to avoid, other services such as a hospital or skilled nursing facility admission or a discharge delay.

 In lieu of services would be integrated with case management or care management for members at high levels of risk and may fill gaps in state plan benefits to address medical or social determinants of health needs. Examples of in lieu of services include but are not limited to: housing transition and sustaining services, recuperative care, respite, home and community- based wrap-around services for beneficiaries to transition or reside safely in their home or community, and sobering centers.

 The use of in lieu of services is voluntary, but the combination of enhanced care management and in lieu of services allows for a number of integration opportunities, including an incentive for building an integrated managed long-term services and supports (MLTSS) managed care program by 2026 and building the necessary clinically linked housing continuum for the state’s homeless population. I

 CalAIM also addresses transitions from incarceration. In an effort to ensure all county inmates receive timely access to Medi-Cal services upon release from incarceration, DHCS proposes that California mandate the county inmate pre-release Medi-Cal application process by January 2022. Additionally, DHCS is proposing to mandate all counties implement warm-handoffs from county jail release to county behavioral health departments when the inmate was receiving behavioral health services while incarcerated to allow for continuation of behavioral health treatment in the community.

Full Integration Plans

 DHCS also plans to test the effectiveness of full integration of physical health, behavioral health, and oral health under one contracted entity. Due to the complexity of the policy considerations around this concept, DHCS will need to conduct extensive stakeholder engagement around eligibility criteria for entities, administrative requirements across delivery systems, provider network requirements, quality and reporting requirements, as well as complex financial considerations due to realignment and Prop 30 implications. Given the complexity of this proposal, DHCS assumes the selected plans would not go live until 2024, as DHCS and its managed care plans and county partners work together to develop the most appropriate delivery systems for this purpose.

Behavioral Health Payment Reform

 DHCS also plans to introduce behavioral health payment reforms, in which it will transition counties from a cost-based reimbursement methodology to a structure more consistent with incentivizing outcomes and quality over volume and cost. The shift is being designed in conjunction with county partners and will enable counties to participate in broader delivery system transformation and engage in value-based payment arrangements with their health plan partners in order to support better coordination and integration between physical and behavioral health.

 DHCS stresses that all these changes and others detailed in the CalAIM proposal are interdependent and build off one another. It says that individual proposals are significantly less likely to be achievable and successful if other key proposals are not pursued. Among other things, it will “build a platform for vastly more integrated systems of care and move toward a level of standardization and streamlined administration required as we explore single-payer principles through the Healthy California for All Commission.”

 Now that the proposal has been made public, DHCS is seeking input from key stakeholders, including through CalAIM workgroups scheduled for November through February. DHCS plans to finalize all proposals for submission to CMS sometime between May and July of 2020 based on the input it receives, but also depending on the funding availability through the state budget process.

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