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On October 28,2019 the California Department of Health Care Services (the “Department”) released the Medi-Cal Healthier California for All (formerly known as CalAIM) initiative. Recently, in support of the Department’s initiative, Governor Newsom released his proposed 2020-21 state budget which includes a large investment in the initiative. In particular, the proposed budget includes $695 million (including federal funds) in 2020-21 for the initiative, growing to $1.4 billion per year in 2021-22.1

The Medi-Cal Healthier California for All initiative seeks to implement broad delivery system, program and payment reform across the Medi-Cal program. This initiative reflects the Newsom Administration’s desire to use Medi-Cal to address a variety of issues facing California’s most vulnerable residents, such as homelessness, children with complex medical conditions, the increasing need for access to behavioral health care services and for services for formerly incarcerated individuals, and to address the growing age populations. The initiative also provides the framework for upcoming waiver renewals and program and payment reforms across the Medi-Cal program. In short, Medi-Cal Healthier California for All reflects the future of the Medi-Cal delivery system and will have broad ranging impacts for Medi-Cal providers and California’s 13.5 million Medi-Cal beneficiaries.

Medi-Cal Healthier California for All’s Overarching Goals and Proposals

The proposed plan under this initiative includes a number reforms affecting Medi-Cal managed care, long-term care, behavioral health, and other county programs and services. The Department’s nearly 180 page Medi-Cal Healthier California for All Proposal sets forth three overarching goals and specific proposals to achieve these goals.2

Goal 1: Identify and manage member risk and need through Whole Person Care approaches and addressing the Social Determinants of Health. Related proposals include:

• Medi-Cal managed care plan (“MCP”) incentive payments linked to investment in Enhanced Care Management and In Lieu-of Services (“ILOS”) infrastructure. MCPs would need to partner and share the incentive payments with providers.
• MCP coverage of a statewide Enhanced Care Management benefit to address clinical and non-clinical needs of beneficiaries.
• MCP coverage of ILOS, which are flexible wrap-around services provided as a substitute to other Medi-Cal covered services such as ER utilization through integration with Care Management.
• Transition the current Health Homes Program and Whole Person Care pilots to a statewide benefit.

Goal 2: Move the Medi-Cal program to a more consistent and seamless system by reducing complexity and increasing flexibility. Related proposals include:

• Full integration plans, which \would cover physical health, behavioral health, and oral health under one contracted entity.
• Standardization the benefits that are provided and the populations enrolled through MCPs statewide.
• Regional Rates for MCPs.
• Transition to Statewide Managed Long Term Services and Supports (MLTSS).
• Behavioral Health proposals, including administrative integration of specialty mental health and substance use disorder services into one behavioral health managed care program.

Goal 3: Improve quality outcomes and drive delivery system transformation through value-based initiatives, modernization of systems, and payment reform. Many of the proposals incorporated throughout the initiative relate to this goal to improve quality outcomes.

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Hooper, Lundy & Bookman, P.C. (HLB) wants to make hospitals aware of current adjustments being imposed by certain MACs denying pass-through treatment of allied health program costs, including nursing, pharmacy and pastoral care. The denial of pass-through treatment is based on the view of some MACs that any administrative involvement by a home office means that the hospital does not appropriately incur the costs of the allied health program and do not, as a result, comply with 42 C.F.R §413.85(f).  We expect that this improper practice could spread to other MACs.

This is improper because nearly all hospital chains use a home office to perform administrative functions for their hospitals, such as processing payroll, and these costs are allocated to each of the hospitals in the chain.  Such functions, and the allocation of various administrative costs, does not mean that a hospital does not operate, control, or incur the costs of its allied health programs.  The denial of pass-through treatment of allied health programs also is improper because it reverses long-standing agency policy that has been in place since at least 1984, without appropriate authority. Read More ›

A number of our clients have provided medical care to patients covered by the now-defunct Riverstone Capital LLC multiple employer welfare arrangement (the “Riverstone MEWA”) and have still not been paid.

On May 9, 2019, the federal judge handling liquidation proceedings for the Riverstone MEWA issued his final order approving the Independent Fiduciary’s Plan of Liquidation.

Healthcare providers now have until May 28, 2019 to submit all reimbursement claims to the appropriate Third Party Administrators (TPAs) (Hawaii Mainland Administrators and S&S Healthcare Strategies). Read More ›

California’s Department of Managed Health Care (“DMHC”) recently finalized regulations that significantly expand what it means to take on “global risk,” which triggers the requirement to obtain a Knox-Keene license or an exemption. Historically, the requirement to obtain a Knox-Keene license has been reserved for health maintenance organizations (“HMOs”) or other organizations that are paid on a capitated basis in exchange for providing or arranging health care services.

The new regulation will disrupt this status quo by sweeping in a range of value-based payment arrangements – potentially including independent practice association (“IPA”) participation in hospital risk pools and some accountable care organizations (“ACOs”) – that providers have historically entered into without needing to be licensed as a Knox-Keene plan. California-based providers that engage in these types of payment arrangements should therefore pay special attention to these new rules as they are implemented. Read More ›

On Thursday, the President held a White House event to discuss surprise medical bills, calling on Congress to pass bipartisan legislation to increase price transparency and limit patients’ out-of-pocket medical costs.  During his remarks, President Trump outlined the following policy principles to guide Congress in developing potential legislation: Read More ›

For media assistance, please contact Maura Fisher at 202-580-7714.