Following the passage of the federal Affordable Care Act (ACA), California was among the first states to embrace health reform and immediately begin work on implementation. In November 2010, the federal Centers for Medicare and Medicaid Services approved a California proposal to make several major changes to Medi-Cal and to expand county-based coverage programs for low-income, uninsured residents. The landmark Bridge to Reform waiver gives state officials the authority to pursue fundamental program changes intended to improve health outcomes and curb spending growth while simultaneously preparing the state for the sizeable expansion of Medi-Cal expected in 2014 under the ACA.

Based on federal, state, and county documents and on interviews with key stakeholders, the report authors analyzed the four major components of the Bridge to Reform waiver: the Low Income Health Program, the Delivery System Reform Incentive Pool, the expansion of mandatory managed care for Medi-Cal-only Seniors and Persons with Disabilities, and the care pilots for children enrolled in California Children's Services. They also identified key challenges that face California as it expands coverage under the waiver:

• Providing appropriate resources for enrollment processes, to ensure smooth transitions and facilitate continuity of care for individuals with established provider relationships
• Educating beneficiaries and providers about options and rights under managed care, and providing stronger oversight of plans
• Establishing clear benchmarks for quality that allow policymakers to closely monitor the impact of incentives granted to plans and providers to improve care
• Developing an improved administrative and data infrastructure to support claims for federal funds, to improve communication between the state and health plans, and to foster continuity of care
• Setting accurate payment rates for coverage of beneficiaries being transferred from fee-for-service to managed care plans

The California experience provides important lessons for federal and state policymakers and Medicaid administrators as they implement the ACA.