CMS Authorizes the Implementation of CalAIM through Approvals of Medicaid Waivers to California



On December 28, 2021, the Centers for Medicare & Medicaid Services (“CMS”) approved requests by the California Department of Health Care Services (“DHCS”) to implement the California Advancing and Innovating Medi-Cal (“CalAIM”) program, through the extensions of the State’s 1115 demonstration project and the 1915(b) waiver. These approvals are effective from January 1, 2022, through December 31, 2026.


Together, these approvals usher in a new era for the Medi-Cal program. Through this program, DHCS seeks to: (1) increase the focus on high-risk, high-cost populations; (2) transform and streamline managed care; (3) rethink the behavioral health service delivery and financing; and (4) extend components of the current 1115 waiver:


Enhanced Care Management (“ECM”).

  • Medi-Cal managed care plans will undertake the responsibility to perform ECM, in a transition away from Whole Person Care and the Health Home Program. The focus of this program is to address the clinical and non-clinical needs of high-need, high-cost Medi-Cal members through systematic coordination of services and comprehensive care management.

  • ECM will begin implementation in January 2022, and will be phased in for seven groups of “populations of focus.”

  • January 2022: Individuals and families experiencing homelessness; adult high utilizers; adults with serious mental illness or substance use disorders

  • January 2023: Incarcerated adults and children transitioning to the community; adults and children at risk for institutionalization and eligible for long-term care (“LTC”); nursing facility residents transitioning to the community

  • July 2023: Other children/youth populations of focus

In Lieu of Services/Community Supports (“CS”).

  • In 2016, CMS allowed Medicaid managed care plans to cover “services or settings that are in lieu of services of settings” covered under Medicaid fee-for-service where: (1) the State determines that the alternate service or setting is a medically appropriate and cost effective substitute for the covered service or setting; (2) the enrollee is not required to use the alternative service or setting; (3) the approved alternate services are authorized and identified in the Medicaid managed care contract with the State and are offered at the option of the plans; and (4) the utilization and actual cost of the alternative services is taken into account in developing capitation rates. (42 C.F.R. § 438.3(e).) DHCS has named these “in lieu of services” in California “Community Supports.”

  • CMS has authorized the following CS:

  • Each Medi-Cal managed care plan has the option of providing one or more CS on a voluntary basis, and the plan does not need to provide the CS statewide or in all counties where the plan operates. Medi-Cal managed care plans can newly offer services or change the CS they offer every six months.

  • Medi-Cal managed care plans will contract with providers to provide CS to their members. Medical and/or behavioral health care must be provided. In other words, the CS cannot be room and board without support services.

  • Provisions of CS cannot be used to reduce, discourage, or jeopardize enrollee access to Medi-Cal-covered services.

  • Enrollees cannot be required to utilize a CS.

  • CS will be subject to authorization.

Medi-Cal Managed Care.

  • Historically, Medi-Cal managed care has been authorized under California’s section 1115 demonstration projects. DHCS has now moved the authority over to the 1915(b) waiver program, which requires a showing that the program is “cost-effective and efficient and not inconsistent with the purposes of the” Medicaid Act.

  • Through this approval, DHCS continues to be able to mandate enrollment into Medi-Cal managed care, and expand the populations required to enroll in Medi-Cal managed care. Essentially, by 2023, all major aid categories will be required to enroll in Medi-Cal managed care.

  • DHCS also seeks to further standardize the benefits across counties in Medi-Cal managed care. For example, Medi-Cal managed care plans will now be required to cover major organ transplants by January 1, 2022 and institutional long-term care services by January 1, 2023. Carved out benefits will be: (1) pharmacy benefits that are billed by a pharmacy on a pharmacy claim (“Medi-Cal Rx”); (2) the Multipurpose Senior Services Program (“MSSP”); and (3) Specialty Mental Health Services (“SMHS”). DHCS anticipates that this will streamline the ratesetting process for capitation to Medi-Cal managed care plans.

  • For dual eligible Medi-Cal/Medicare members in Coordinate Care Initiative (“CCI”) or County Operated Health System (“COHS”) counties, the waiver authorizes the continued required enrollment in Medi-Cal managed care.Institutional long-term care will continue to be a managed care benefit in CCI counties.The State proposes to mandate enrollment in Medi-Cal managed care for nearly all dual eligible in 2023.When this happens, the current CCI program will become integrated into the full Medi-Cal managed care program.

Specialty Mental Health Services (“SMHS”).

  • CMS renewed the 1915(b) waiver for the SMHS program, through which the responsibility for SMHS is delegated to county mental health plans (“MHPs”). However, CMS imposed additional standard terms and conditions, reflecting “ongoing CMS concerns that waiving beneficiary freedom of choice, if it results in mandatory enrollment into underperforming managed care plans, exerts a negative impact on access, equity, and quality of care.” As a result, CMS imposed additional reporting on plan monitoring, public posting of corrective action plans, and a SMHS dashboard that must be readily available to beneficiaries, providers, and other interested stakeholders.

  • CMS approved the establishment of a benefit for peer support specialist services.

  • Of note, DHCS expresses to CMS that “[e]mergency and post-stabilization services as defined [under federal law] are not provided under SMHS. Emergency and post-stabilization services for all Medi-Cal beneficiaries are covered through the capitation payment made to MCPs.” This suggests that DHCS narrowly interprets the federal Medicaid definition of emergency medical conditions to exclude psychiatric conditions, even though EMTALA applies to emergency psychiatric conditions. The waiver request does not explain how this interpretation meets mental health parity, required by the Medicaid Act, nor how hospitals should be reimbursed by either Medi-Cal managed care plans or MHPs for extended emergency visits that result from the MHP’s failure to identify a placement for a patient.

  • DHCS represented to CMS that it requires MHPs to maintain and monitor a network of appropriate providers to meet the needs of their eligible populations. It confirms that County MHPs “are required to provide beneficiaries access to out-of-network providers if an in-network provider is not available within the time and distance standards….”

In addition, CMS approved the continuation of the following:

  • Dental Medi-Cal managed care in Sacramento and Los Angeles counties

  • The option for counties to participate in the Drug Medi-Cal Organized Delivery System for substance use disorder treatment services

  • The former foster care youth program

  • Community-Based Adult Services, the successor program to the Adult Day Health Care program

  • Reimbursement of Tribal payments for chiropractic services

  • The Global Payment Program for public health care systems

For more information on CalAIM and its impact on providers, please contact Felicia Y Sze. #healthlaw #healthcarelaw #athenelaw #californiahealthcarelaw

#mediCal #CalMedicare #CMS #athenelaw #athenelawblog

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