California is nearing the end of a five-year federal waiver that has provided essential funding and flexibility to help modernize the state’s $95 billion Medicaid program, Medi-Cal. In many ways, California’s waiver has sparked crucial changes.

Among these changes are:

• In 2010, 7.4 million people were covered by Medi-Cal. Today, 11.9 million people — nearly one in three Californians — are enrolled in the program.
• In 2010, many Medi-Cal enrollees were in a fee-for-service program that lacked accountability. Today, nearly all are enrolled in managed care plans that must meet specific performance requirements for access to care, quality of care, and cost.
• In 2010, mild-to-moderate mental health conditions were not covered. Today, Medi-Cal does cover care for these conditions.

Equally important is the change underway at the state’s 21 public health care systems, for which the current $10 billion Medi-Cal waiver includes federal incentive payments tied to key goals. The goals include infrastructure development, innovation, and redesign; population-focused improvement; and urgent upgrades in care. The success of these billions of dollars in incentive payments was highlighted at a recent CHCF forum on Delivery System Reform Incentive Payment (DSRIP).

Despite these achievements, it is widely acknowledged that the task of transforming Medi-Cal is far from complete. Systemwide transformation takes time, so state officials are feverishly working to design the next Medicaid waiver to build on what’s been started. They have proposed several goals and created advisory groups to examine options in several areas, including using payment incentives to improve the performance of health plans and providers, using Medicaid funds to provide shelter or housing to enrollees at-risk for hospitalization or admission to a nursing home, and expanding the workforce providing care to Medi-Cal enrollees.

CHCF, together with The California Endowment and the Blue Shield of California Foundation, is supporting a stakeholder process and technical assistance from local and national experts to support the California Department of Health Care Services as it develops the state’s waiver proposal to the US Centers for Medicare & Medicaid Services (CMS).

As state officials consider their options, three goals should rise to the top:

1. Improve access to primary and specialty care. Surveys of Californians conducted before coverage expansion under the Affordable Care Act (ACA) consistently showed a wide gap between Medi-Cal enrollees and other insured populations with respect to access to care. For example, in surveys conducted in 2011 for CHCF and the California Department of Health Care Services, Medi-Cal enrollees were nearly twice as likely as other insured Californians to report difficulty getting appointments with primary care physicians (26% versus 15%) and specialists (42% versus 24%). There is good reason to believe the problem has gotten worse since then. If Medi-Cal is to close this gap, it must depart from old rules that constrain how care is provided and paid for. Health plans and providers should have the flexibility and incentive to expand access through better use of technology, workforce innovations, and other means.
2. Manage care better for high-cost populations. In Medi-Cal, as with private insurance, a relatively small share of enrollees accounts for a disproportionately large share of the cost of care. In Medi-Cal, however, many of these high-cost populations include beneficiaries whose care is divided between two or more systems and payers. They include elderly and disabled Medi-Cal beneficiaries whose primary source of coverage is Medicare; children with special health care needs whose specialty care is carved out of Medi-Cal managed care; and enrollees with severe mental illness whose care is the responsibility of county mental health departments. Some progress has been made to better integrate care across these separate silos, but it has been slow and mostly superficial. The next Medi-Cal waiver must provide a powerful catalyst to jump-start these efforts.
3. Demand better performance on access and quality measures from program partners. The difference between high-performing health plans and providers and low-performing ones is astounding, often with grave consequences for people’s health. For example, women age 21 to 64 in one Medi-Cal health plan were twice as likely to be screened for cervical cancer in the previous three years as women in another Medi-Cal health plan (85% and 43%, respectively). The next Medicaid waiver should be used to encourage better performance among health plans, providers, and county partners. The better ones should be rewarded for their performance and encouraged to expand their reach; those at the bottom should be expected to improve — and be given technical assistance and/or other support to do so. Because public health care systems provide only a fraction of the care Medi-Cal beneficiaries receive, Medi-Cal investments and incentive payments for delivery system reform must reach a broader group of providers, including health centers and medical groups serving large populations of Medi-Cal enrollees.

The Takeaway

The next federal waiver is an enormous opportunity to sustain California’s early momentum toward transforming and improving care in Medi-Cal, a program that touches many millions of lives. We must rise to the occasion and forge a compelling vision for a 21st-century Medi-Cal that is ambitious, creative, and data-driven.

Christopher Perrone

Christopher Perrone is director of CHCF’s Improving Access team, which works to improve access to coverage and care for Californians with low incomes. Read More

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