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California Launches Medicaid Innovation With New MCO and Technology Requirements

Analysis  |  By Laura Beerman  
   January 20, 2022

'The entire country is going to be watching CalAIM,' says one California Medicaid MCO executive.

Medi-Cal, California's Medicaid program, is on a five-year path to innovating what it can offer and how, who will be involved, and what it will expect of its managed care plans. In December 2021, CMS approved the state's CalAIM proposal to make Medi-Cal "integrate more seamlessly with other social services … especially for those with the most complex needs."

This includes non-medical benefits, delivered with the help of community-based organizations (CBO) and in a way that makes navigation to the right care easier. Technology and infrastructure support will not only be needed but required as MCOs are charged with balancing population health and new levels of individualized care.

CalAIM key components

CalAIM's allows the state to offer expanded non-medical services, integrated with clinical care, through Enhanced Care Management (ECM). The objective is to help plans be more proactive, deliver a "no wrong door" approach, and offer more outcome-based reimbursements.

Services linked to social determinants of health (SDOH) will include housing, meal, and peer supports as well as medical respite and personal care. CalAIM applies to all Medi-Cal members but seeks to help those most in need:

  • Individuals who need care for serious persistent mental illness and/or substance abuse
  • Seniors and those living with disabilities
  • Special populations with complex physical and/or mental health conditions, including children and people who are homeless or returning to the community after jail time
  • Young people in foster care.

Supporting vulnerable populations in new ways will require new types of partnership and accountability, and the technology to scale them both.

Converting patchwork to whole cloth

The California Health Care Foundation (CHCF) highlights the CalAIM goal of "bringing consistency to the current patchwork of programs that vary by county." Some of this patchwork is endemic to Medi-Cal. The program includes multiple managed care models that vary by county, each one with its own unique needs in a state that is home to massive urban centers and small agrarian communities.

But this patchwork is marked by other factors as well.

“For years, local plans have initiated pilot programs and community-based initiatives that marry social supports with Medi-Cal’s robust health and medical benefits." This from Linnea Koopmans, CEO of Local Health Plans of California (LHPC), which represents the state's 16 nonprofit local health plans. "CalAIM allows us to bring those to scale and offer more comprehensive care to enrollees. We believe through CalAIM we can address long-standing disparities to support equity and better health for all."

For examples and discussion of this pilot-to-programmatic transition, see HealthLeaders' interview with CalOptima.

MCO opportunities and requirements

"Health plans in California have been looking for the flexibility that CalAIM will provide for a long time," says Yunkyung Kim, COO of Orange County Medicaid MCO CalOptima.

But with new flexibility, and funding, come new mandates—nearly all of which will need enhanced infrastructure and technology supports. CalAIM will require that Medi-Cal MCOs:

  • standardize select benefit and population offerings
  • create and submit population health management strategies
  • expand data-sharing, including with CBOs
  • become NCQA-accredited (National Committee for Quality Assurance)

Technology as the tie that binds

A word that appears repeatedly in conjunction with CalAIM is scale, which the state hopes to achieve through CalAIM's PATH component (Providing Access and Transforming Health). PATH acknowledges that many of the CBOs that are vital to CalAIM may have "never contracted with managed care plans … or interacted with the Medi-Cal program." In addition to contracting, data-sharing is a big first step—and for all stakeholders.

The CalAIM plan is focused on interoperability to support overall reform, an objective many of the nation's providers and health plans are still struggling to achieve. The state's Medicaid administrator, the Department of Health Care Services (DHCS), says: "An overarching goal … [is to ensure] that relevant data (including clinical and non-clinical) can be captured, analyzed, and shared to support provider integration of behavioral health and medical services, case management oversight and transitional planning, value-based payment models, and care delivery redesign."

"We really have to figure out how to share data and it's not easy," adds CalOptima Interim CEO Michael Hunn.

CalAIM includes several CBO data-sharing prerequisites for Medi-Cal plans, including privacy-compliant protocols for behavioral health, claims, pharmacy, advance directives, and care plan and management information. Hunn agrees that data sharing will be vital to CalAIM's ECM component.

"We know that some of our members with complex physical health and behavioral health needs traverse the healthcare system and fall in and out of Medi-Cal. CalAIM provides the opportunity to better track them and their individual needs throughout the healthcare system."

Hunn reports that his plan is "currently building out the CalAIM connect system so everyone on an individual’s care team may communicate together immediately, and that is just to start."

In the end, Hunn adds that there must be demonstrated outcomes.

"We must have metrics of success. One of the questions for CalOptima and other plans would include: 'What [has to be] done over the past 12 months for you to say I had a successful year?' "

Technology requirements for population health and later-stage outcomes

In addition to ECM and CBOs, the CalAIM platform will support "aggregate use by plans" and the new requirement that they develop "comprehensive population health management programs." Specific details include:

  • equitable assessment of member risk
  • services—clinical and non-clinical—that address SDOH factors
  • service coordination that remains intact at care transitions

Another significant CalAIM objective is the state's plan to "test the effectiveness of full integration of physical health, behavioral health, and oral health under one contracted managed care entity." Under the current delivery system, MCOs manage physical and up-to-moderate mental health benefits while separate entities oversee serious mental health and substance abuse (MH/SA) and dental care.

This plan is represented by a single "X" in the last year of the CalAIM implementation calendar. By 2027, the state hopes to achieve this full integration as well as the consolidation of its serious MH/SA disorder programs and a transition from county-based to statewide administration of long-term services and supports.

Data sharing and interoperability will be a vital component—a long-term goal that will be achieved one day at a time. Hunn reports that this work has already begun.

"There is a daily CalAIM-related standup," says Hunn. "Administrators from many different entities are participating and working to improve navigation through the system."

“We believe through CalAIM we can address long-standing disparities to support equity and better health for all.”

Laura Beerman is a contributing writer for HealthLeaders.


CalAIM, California's new five-year Medicaid demonstration, launched January 2022 with a focus on integrating clinical and non-clinical care.

Data-sharing for more coordinated, individualized care and population health management are among the goals and represent new MCO requirements.

Initiatives like CalAIM are an example of systemic innovation to address systemic challenges.

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