CHA News Article

CMS Approves California’s Medi-Cal 2020 Demonstration Waiver

The Centers for Medicare & Medicaid Services (CMS) has approved California’s section 1115(a) demonstration waiver, titled “California’s Medi-Cal 2020 Demonstration.” The waiver renewal – effective Dec. 30, 2015 through Dec. 31, 2020 – includes $6.2 billion of initial federal funding to support the state’s Medi-Cal program and its health care coverage of more than 12.8 million individuals. It is designed to build on the successes of the state’s 2010 Bridge to Reform waiver, a critical element of the state’s implementation of the Affordable Care Act (ACA). More than 4 million of the state’s current Medi-Cal members have enrolled since California implemented the ACA in January 2014. This final Medi-Cal 2020 renewal reflects the overall construct announced at the end of October.

DHCS will convene a stakeholder webinar  Jan. 25 from 3 to 4:30 p.m. to provide an overview of the Medi-Cal 2020 waiver and answer questions. Additional information about the webinar is forthcoming, and will be available on the DHCS website.

Key elements of the Medi-Cal 2020 Demonstration include:

  • Public Hospital Redesign and Incentives in Medi-Cal (PRIME) — This program builds on the success of the state’s Delivery System Reform Incentive Program (DSRIP), which was the first such transformation effort in the nation. Under PRIME, designated public hospital (DPH) systems and district municipal public hospitals (DMPHs) have committed to achieve greater outcomes in areas such as physical and behavioral health integration, and outpatient primary and specialty care delivery.  Additionally, PRIME requires DPHs to transition managed care payments to alternative payment methodologies, moving them further toward value-based payment structures over the course of the waiver. PRIME offers incentives for meeting certain performance measures for quality and efficiency. Over the course of the five years, federal funding for PRIME is $3.27 billion for DPHs and $466.5 million for DMPHs. The state has committed that 60 percent of all Medi-Cal managed care beneficiaries will receive all or a portion of their care through systems paid through alternative payment methodologies by the end of the demonstration period in 2020.
  • Global Payment Program (GPP) — This is a new program aimed at improving the way care is delivered to California’s remaining uninsured. GPP transforms traditional hospital funding for DPHs from a system that focuses on hospital-based services and cost-based reimbursement into a value-based payment structure. Under the GPP, DPHs are incentivized to provide ambulatory primary and preventive care to the remaining uninsured through a value-based payment structure that rewards the provision of care in more appropriate settings. This will help to focus on the value, not volume, of care provided to the uninsured, such as the provision of primary and preventive care, and shifting away from avoidable emergency room and hospital utilization. The federal funding for GPP will be a combination of the disproportionate share hospital (DSH) funding for participating DPHs and $236 million in federal funding for the first year from the prior safety net care pool. The non-DSH funding for years two through five will be determined following an independent assessment of uncompensated care due to be completed in the spring of 2016. The waiver renewal includes the potential for additional federal funding of the GPP after the initial year of the waiver.
  • Dental Transformation Initiative (DTI) — California’s waiver also includes a dental pilot project for low income children, offering financial incentives to dental providers for delivering necessary preventative care and treatment. The financial incentives will fall within three domains: early childhood preventative dental screening, cavity risk assessment and treatment, and continuity of care. Over the course of the waiver, up to $750 million in annual funding is available under DTI. The non-federal share for DTI will be funded through State General Fund savings achieved through limited continuation of Designated State Health Program funding.
  • Whole Person Care (WPC) Pilots — California’s waiver renewal also allows for county-based pilots to provide coordinated care for vulnerable, high-utilizing Medicaid recipients. The overarching goal of the WPC pilots is to integrate physical health, behavioral health and social services systems, with the goals of improved beneficiary health and well-being through more efficient and effective use of resources. WPC pilots may also choose to expand access to supportive housing options for these high-risk populations. The waiver renewal authorizes up to $1.5 billion in federal funding over the five years; WPC pilot lead entities will provide the non-federal share.

In addition to these programs, Medi-Cal 2020 continues the Medi-Cal managed care program, community-based adult services, the Coordinated Care Initiative (including Cal MediConnect) and the Drug Medi-Cal Organized Delivery System.

The renewal also contains several independent analyses of the Medi-Cal program and evaluations of the waiver programs, including an assessment of access in the Medi-Cal managed care program and studies of uncompensated care in California hospitals.