Analysis of §1115 Waiver Renewal: Managed Care Expansion and Demonstrations Continuation

February 1, 2016

This is part of an ITUP series on the Medi-Cal 2020 §1115 waiver renewal.

The Medi-Cal program has grown from a caseload of 7.9 million beneficiaries in 2012-13 to a projected 13.5 million in 2016-17. About 10 million are currently enrolled in a managed care plan. The plans are reimbursed on capitated, per-member per-month (PMPM) basis and provide enrollees with most Medi-Cal benefits including hospital care, physician services, and drugs.   In the early 1990s, California began shifting families with children into managed care, while Medi-Cal eligible seniors and persons with disabilities (SPDs) continued to be served on a fee-for-service (FFS) basis. Low-income childless adults or medically indigent adults (MIA’s) were ineligible for Medi-Cal and were primarily served by county indigent health programs and through charity care.

The passage of the Affordable Care Act extended eligibility for Medi-Cal to these childless adults, and that prompted the state to seek the 2010 “Bridge to Reform” Waiver to help expedite the transition of these eligible beneficiaries into Medi-Cal. For the SPD population that had previously been primarily served on a fee-for-service basis, the authorizing statute for the waiver (Chapter 714, 2010 Statutes) required mandatory enrollment into managed care. The Bridge to Reform waiver also authorized pilot programs to test the benefits of using managed care to serve beneficiaries who were dually eligible for both Medi-Cal and Medicare, and children enrolled in the California Children Services (CCS) Program.

The shift toward increasing reliance on managed care to serve the Medi-Cal population continued in 2012. As part of that year’s budget trailer legislation, the expansion of mandatory managed care was required in rural counties. In addition, Healthy Families Program, which served children in families with incomes between 138% and 250% of Federal Poverty Level, was eliminated, and the eligible children it served were transferred into Medi-Cal. The budget trailer bill legislation also established the Community-Based Adult Services (CBAS) program to replace Adult Day Health Centers and incorporate the services that had been provided into Medi-Cal managed care.

The managed care expansions are primarily a continuation of mandatory managed care for children and families, for seniors and persons with disabilities, for low income pregnant women, and for those newly eligible under the Affordable Care Act (the medically indigent adults or MIAs). The Department of Health Care Services (DHCS) is required to contract for an independent assessment of access and network adequacy in its managed care plans and the establishment of an Access Advisory Committee to provide feedback. In addition, there are a variety of reports on network adequacy, monitoring, grievance procedures and safeguards to assure that the MCOs fulfill their mission of improving care and outcomes for these high cost, vulnerable populations. The waiver continues the following managed care demonstration projects: the Community- Based Adult Services (CBAS) program, California Children’s Services (CCS) pilots; and the Coordinated Care Initiative (CCI) serving dual-eligibles.

Read the full analysis: §1115 Waiver Analysis Part 1: Managed Care Expansion and Demonstrations Continuation