Feds OK California’s $6.2 Billion Waiver

CMS last week officially approved a five-year, $6.2 billion federal 1115 waiver for California, also known as Medi-Cal 2020.

The waiver approval means California can move forward on four reform fronts over the next five years. The approved proposal includes:

• Up to $3.27 billion in performance incentives for the state’s public hospitals. The plan is called PRIME — Public Hospital Redesign and Incentives in Medi-Cal — and it’s the next step beyond the previous waiver’s DSRIP (Delivery System Reform Incentive Program) allowance;
• $1.5 billion over five years for the Whole Person Care pilot program targeting heavy utilizers of services, particularly emergency services;
• $1.4 billion for the Global Payment Program Pilot. It combines money from the Safety Net Care Pool and Medicaid Disproportionate Share Hospital funding and aims to incentivize cost-effective primary care rather than financially rewarding hospital-based care; and 
• Funding for dental system reforms in the Dental Transformation Incentive Program.

The waiver also continues several high-profile state health programs, including Community-Based Adult Services for seniors and the disabled, the Coordinated Care Initiative and CalMediConnect for those Californians dually eligible for Medi-Cal and Medicare, the Drug Medi-Cal Organized Delivery System and the state’s shift toward Medi-Cal managed care.

The new waiver also calls for independent analyses of the Medi-Cal program and waiver programs, including an evaluation of access within Medi-Cal managed care.

Jennifer Kent, director of the Department of Health Care Services, said the new waiver opens up possibilities for raising quality and improving efficiency in Medi-Cal.

“We are pleased about the waiver renewal and the opportunity it provides us to further drive changes in the Medi-Cal delivery system and implement new approaches to improving the health care services provided to Californians through our Medi-Cal program,” Kent said in a prepared statement.

Anthony Wright, executive director of Health Access California, said the planned reforms could help many of the 12.8 million Californians on Medi-Cal, as well as the remaining uninsured in the state.

“Medi-Cal is a central pillar of the health system that we all rely on, and we need to use to this waiver to spur innovation across the state on health care delivery, on dental care, on safety-net services for the remaining uninsured and on integrating health with other human services,” Wright said in a statement. “The waiver also brings new accountability for Medi-Cal on the question of access to care, and of paying for value rather than volume.”

Federal officials sent their approval letter Dec. 30, 2015, and the waiver went into effect Jan. 1.

The approval was granted in principle on Oct. 31, 2015, and it became official with the Dec. 30, 2015, letter outlining the special terms and conditions of the waiver. The new 1115 waiver approval runs through Dec. 31, 2020.

The state originally asked for $17 billion in programmatic funding, then it revised that waiver request down to about $7.25 billion before federal officials finally agreed to the $6.2 billion number.