Why mental health providers say Medi-Cal’s latest reform may force them to cut services

Cynthia Garcia Williams was 30 years old and six months sober when the state let her bring her three kids home from foster care. She had been addicted to drugs on-and-off for 17 years and didn’t know how to begin caring for her children, Garcia Williams said.

“The last I had the kids, I was totally in my addiction. When they came home I didn’t know what to do. I felt like these little kids were looking at me like ‘do something,’” Garcia Williams said. “I had lost all of my skills.”

That was seven years ago. Today, Garcia Williams works as a peer support specialist in Los Angeles County who helps other parents and kids navigate the state’s byzantine social services and health care system as they work through their own challenges with addiction, mental illness or family separation. But she wouldn’t have made it this far without her own parent partner to teach her “everything it is to be human” and champion her cause.

The state has touted the success of investing more Medi-Cal dollars into programs like the peer support one Garcia Williams works for as well as other non-traditional medical services as part of its multi-year plan to overhaul the Medi-Cal system, known as CalAIM. Medi-Cal is the state’s health insurance program for very low-income Californians. One of the goals of CalAIM is to use Medi-Cal money to address issues like housing instability, food insecurity or addiction. Patients with those issues often have the most complex health needs and cost the state the most money — roughly half of the system’s total budget. In the long term, the state says CalAim will save tax dollars.

The latest CalAIM reform, which went into effect July 1, is a revamp of the way behavioral health providers — those who treat people who struggle with mental illness or substance abuse — are paid. In a written statement, the Department of Health Care Services said the changes will “better enable counties and providers to deliver value-based care that improves quality of life for Medi-Cal members.” But on-the-ground providers across the state say the changes are making it too expensive to keep people like Garcia Williams and others on board. Some say they will be forced to cut services.

Garcia William said the lessons she learned from her own informal peer support specialist were invaluable to getting back on her feet and staying sober.

“This woman nurtured me in those first several months and years. She taught me what to do when the kids come home from school. She taught me what a bedtime routine looks like,” Garcia Williams said. “She helped me deal with questions of guilt and shame and would the kids be better with a foster family because we were so poor.”

Sycamores, the Southern California-based behavioral health program Garcia Williams works for, estimates it will lose $2.5 million over the next year as a result of the changes CalAIM is making, said President and CEO Debbie Manners. About half of the organization’s 5,200 clients require intensive community-based services where a therapist or case worker might visit them multiple times a week in their home or someone like Garcia Williams “holds their hand” through the process.

Julie A Hotz

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CalMatters

The Sycamores El Nido Campus in Altadena on June 30, 2023.

The new system pays more for behavioral health providers with advanced degrees or certifications. The goal, like much of CalAIM’s changes, is to incentivize providers to produce better outcomes at a lower cost. But community providers contend that the resulting system undervalues the lived experience of someone like Garcia Williams.

“What was disheartening is the rate for someone with lived experience is significantly lower than someone with other roles,” Manners said. “Many times it is the person with lived experience that keeps the family engaged. They are the ones who listen and who have walked in their shoes.”

The new payment rates vary widely from county to county. Although the state asked counties to provide evidence of what local competitive rates look like to help determine reimbursement, counties can keep a portion of the money to offset administrative costs — and there’s no oversight on how much each county keeps before paying providers.

For example, Ventura County is offering providers more than $1,300 per hour for a psychiatrist while Napa County is offering less than $320, according to data collected by the California Alliance of Children and Family Services whose members provide behavioral health services across the state. Likewise, providers in Alameda County will be reimbursed more than $380 per hour for a mental health rehab specialist while providers in Shasta County will be reimbursed just below $35 per hour.

The Department of Health Care Services said in a written statement that it’s up to counties to ensure provider networks remain adequate and that the department believes “the rates developed by (the state) and paid to counties are sufficient to meet those goals.” The statement also said it is industry standard for people with more education to be paid a higher rate. Providers argue that’s not how it works in the real world, particularly in an industry suffering a severe workforce shortage. Health Care Services refused to make anyone available for an interview and only responded to written questions.

“Many times it is the person with lived experience that keeps the family engaged. They are the ones who listen and who have walked in their shoes.”

DEBBIE MANNERS, SYCAMORES PRESIDENT AND CEO

Aldea Children and Family Services in Napa County uses certified drug and alcohol counselors to run its substance abuse treatment program, said CEO Kerry Ahearn. Under the new system, the state reimburses nearly $50 less per hour for a counselor than for someone with a master’s degree.

“It’s incentivizing people to use a higher credentialed person,” Ahearn said, but that comes with higher costs and those candidates are more difficult to recruit.

Ahearn also said Aldea runs a psychiatric medication management program for the county. The new rates pay roughly half as much for a psychiatric nurse practitioner than for a psychiatrist, where previously payment would have been equal based on treatment provided. That results in providers getting less money for offering the same service as before.

“We cannot continue that service if we’re only getting paid $5 per minute,” Ahearn said.

The payment differential between counties is also likely to exacerbate a workforce shortage fueled by burnout and unprecedented demand during the COVID-19 pandemic, some providers say.

Kent Dunlap, president and CEO of Stars Behavioral Health Group, said he expects counties with higher rates to begin siphoning workers away from their neighbors.

“You’re not paying that much less for a clinician in Riverside County compared to Santa Clara County,” Dunlap said. “When we get different rates, we’re really compromised in our ability to pay market salaries.”

Dunlap, who runs programs in 10 counties, said most of the counties he works with understand the problems that have been created by the recent CalAIM changes but have limited resources to address them.

Julie A Hotz

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CalMatters

A mural in the recreation room at Sycamores El Nido campus in Altadena on June 30, 2023.

Another challenge is time and money lost to travel. Most counties run brick-and-mortar behavioral health clinics where patients must come in for services. They contract out the more intensive services that require home visits, school check-ins and, at times, finding patients at homeless encampments. The new payment system doesn’t reimburse for travel, which in a state as large as California is a big problem, providers say.

Barriers to treatment

Tina Binda oversees community-based programs for Star View Behavioral Health in Los Angeles County. Each client is assigned a team that includes a case manager, therapist, behavioral therapist, psychiatrist, and parent partner with lived experience. They do “whatever it takes” to keep families stable, including bringing medical and social services to their homes.

“We’re seeing the family four times a week, minimum. To ask a family to come into the office four times a week? No way, that would never happen,” Binda said.

Recently, Star View began providing services to a child who was placed in a foster home in Lancaster. The team is based in Torrance, roughly 80 miles away, an hour-and-a-half drive without traffic. The foster parent called the team out three times in one day, Binda said.

“Now we can’t bill for that. We can only bill for the hour where we’re doing intervention,” she said.

The Department of Health Care Services said the rates account for travel time and counties can pay providers more if they see a need. Providers say the state doesn’t understand how much travel is required for high-intensity services, like the ones CalAIM provides. Los Angeles County is exploring offering a supplementary travel rate to providers, but it’s one of the only ones to do so.

Binda said her staff are nervous. If they have to, they’ll buy all of their clients tablets and internet service to transition them to telehealth, but they already know families don’t want telehealth. In preparation for the transition, Star View conducted a survey to find out how they prefer to get treatment. The majority said they prefer in-person services, Binda said.

“Some responses we got were ‘Sometimes I just need to cry and have someone hold my hand.’ Or ‘I’m about to be homeless and I need someone to sit with me and figure it out,’” Binda said.

A recent report published by the California Health Care Foundation examining similar payment reforms that have happened in other states found that adequate research “does not exist” to assess whether these policy changes actually improve quality of care and patient outcomes.

“The lack is striking given the enthusiastic embrace of value-based arrangements to finance Medicaid services in recent years,” the report says.

State says Medi-Cal rates ‘are sufficient’

Though the authors concluded that the changes will eventually reduce an administrative burden, low rates run the risk of reducing the number of providers in the state.

“If the rates paid by (the state) to the counties do not cover the costs of maintaining an appropriate network of providers, plans may sustain significant losses with no guarantee of future state rate adjustments or compensatory payments,” the report says.

“What you don’t want is providers saying ‘We can’t do this. We’re closing our doors or we can’t do this program anymore — and that will happen.’”

DEBBIE MANNERS, SYCAMORES PRESIDENT AND CEO

In its statement to CalMatters, the Department of Health Care Services said it would reassess rates if too many providers leave the Medi-Cal network, but that it currently “believes these rates are sufficient for counties to maintain an adequate network of providers, including peer support specialists and clinical therapist trainees, to meet the behavioral health needs of Medi-Cal members.”

In the meantime, programs across the state are searching for creative solutions. Garcia Williams is studying to get a peer specialist certification from the state to comply with CalAIM’s changes. Manners with Sycamores said the organization is considering rehousing its homeless youth into one building so that staff don’t have to travel as much. They’re also reassigning cases to staff members who live closest to each client. Sycamores is looking for every way to adapt services to their new reality, but Manners said smaller organizations probably won’t be able to sustain multi-million dollar losses in the long term.

“What you don’t want is providers saying ‘We can’t do this. We’re closing our doors or we can’t do this program anymore — and that will happen,’” Manners said. “The evidence says community based is what works so why are we doing this.”

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.

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