California’s Medicaid program, Medi-Cal, currently operates separate managed care delivery systems for behavioral and physical health services under federal Medicaid waiver authorities. Medi-Cal excludes most mental health and substance use disorder services from its contracts with Medi-Cal managed care plans and instead makes those services available through county-operated mental health plans and Drug Medi-Cal program contracts. These separate delivery systems operate under distinct statutory and regulatory authorities, and the contractors and their network providers are subject to differential standards developed over decades in the context of separate programs. The programs are also reimbursed and financed differently, with the Medi-Cal managed care plans placed at risk for the cost of services, and the county programs reimbursed through cost-based structures.

The separateness of the delivery systems creates challenges to achieving administrative and financial integration of physical and behavioral health services in Medi-Cal. In February 2019, CHCF and Well Being Trust published Behavioral Health Integration in Medi-Cal: A Blueprint for California, which addressed the benefits of assigning responsibility for Medi-Cal’s behavioral and physical health services to a single accountable entity, thereby creating opportunities for integration of care. To help identify potential paths forward, CHCF supported the research and publication of Voluntary Behavioral Health Integration in Medi-Cal: What Can Be Achieved Under Current Law. This paper, prepared by two attorneys who have extensive experience in structuring Medicaid financing for safety-net providers, explores different contracting structures through which a county could lead efforts to create such an accountable entity.