California Healthline Daily Edition

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Medi-Cal To Revamp Substance Use Treatment Under Federal Waiver

Starting next year, California will begin revamping Medi-Cal's substance use treatment system under a new federal waiver, Kaiser Health New/Sacramento Bee reports.

Medi-Cal is California's Medicaid program.


Nationally, about 14% of Medicaid beneficiaries likely have a substance use disorder, according to the National Survey on Drug Use and Health.

However, just a fraction of Medi-Cal beneficiaries with substance use disorders receive treatment, in large part because of restrictions placed on the types of services for which Medicaid will reimburse, KHN/Bee reports.

For example, federal rules:

  • Limit drug treatment centers' ability to be reimbursed under Medicaid;
  • Make intensive outpatient and residential care available only to pregnant and post-partum women; and
  • Essentially prevent clinics with more than 16 beds from getting paid.

Details of Waiver

California's waiver, which was approved by CMS in August, marks the first time a state has received federal permission to restructure drug and alcohol misuse treatment for Medicaid beneficiaries.

Under the waiver, California plans to expand treatment services to include:

  • Additional medication;
  • Case management;
  • Inpatient care; and
  • Recovery services.

In addition, the waiver will allow California to drop the federal restriction on Medicaid reimbursements for clinics with more than 16 beds.

Further, if a provider deems it medically necessary, Medi-Cal beneficiaries will have access to up to two 90-day residential stays annually, with a potential 30-day extension. Certain populations in the state, such as those in the criminal justice system, can be approved for longer stays.

John Connolly -- deputy director of substance abuse prevention and control at the Los Angeles County Department of Public Health -- said the waiver also is designed to better coordinate physical, mental health and substance misuse services.

According to KHN/Bee, the CMS-approved five-year pilot program will be phased in next year, starting in Bay Area counties and then expanded to Los Angeles and Orange counties.

While Medi-Cal's existing drug treatment program costs about $180 million annually, there is not yet a cost estimate for the new system.

However, officials expect the changes to lower health care costs by helping residents stay healthy and out of jails, hospitals and treatment centers. 


Brandon Fernandez -- a development specialist at CRI-Help, which provides care in Los Angeles County -- said, "This is going to radically transform the way the most marginalized people in California ... can access treatment services."

However some stakeholders have raised concerns.

For example, Albert Senella, president of the California Association of Alcohol and Drug Program Executives, said, "There is a cost to raising the bar on treatment," adding, "If the rates aren't adequate ... we are not going to be able to effectively meet the (new requirements) and the needs of the population" (Gorman, Kaiser Health News/Sacramento Bee, 12/21).

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