Insights

This week, our In Focus section reviews the California amendment to the Section 1115 Waiver Demonstration titled, “California Advancing and Innovating Medi-Cal (CalAIM),” approved by the Centers for Medicare & Medicaid Services (CMS) on January 26, 2023. The amendment will provide targeted Medi-Cal services to individuals in state prisons, county jails, and youth correctional facilities for up to 90 days prior to release. This marks the first time in the nation that Medicaid will pay for a limited set of health care services provided to justice-involved individuals before they are released. The approval is effective through the end of the CalAIM demonstration, ending December 31, 2026, unless extended or amended.

The justice-involved initiative is part of the broader CalAIM demonstration, approved December 29, 2021. For more information on CalAIM, please see HMA’s write up from March 2021.

Background

California was one of the first of 11 states – Arizona, California, Kentucky, Massachusetts, Montana, New Jersey, New York, Oregon, Utah, Vermont, and Washington – to propose a demonstration to provide Medicaid-covered healthcare services to justice-involved populations before release. CMS plans to issue guidance on the Reentry Demonstration Opportunity to support community reentry and improvement in care transitions for individuals up to 30 days prior to their scheduled release.

California’s reentry demonstration initiative aims to address the needs of incarcerated beneficiaries as they near the end of their incarceration and reenter the community by improving connections and coordination between the correctional, health care, and social service systems. Currently, Medi-Cal services are only available after release from incarceration.

In California, more than one million adults and youth enter or are released from prisons and jails annually, with at least 80 percent eligible for Medi-Cal. The justice-involved individuals are disproportionately people of color, compared to the state population. Formerly incarcerated individuals are also more likely to experience poor health outcomes and face disproportionately higher rates of physical and behavioral health diagnoses. These individuals are at higher risk for injury and death as a result of violence, overdose, and suicide compared to people who have never been incarcerated.

Demonstration

California will be required to submit for CMS approval a Reentry Initiative Implementation Plan and Reinvestment Plan documenting how the state will operationalize coverage and provision of pre-release services and how existing state funding for carceral health services will continue to support access to necessary care and achievement of positive health outcomes for the justice-involved population.

The goals of the demonstration are to:

• “Increase coverage, continuity of coverage, and appropriate service uptake through assessment of eligibility and availability of coverage for benefits in carceral settings just prior to release;
• Improve access to services prior to release and improve transitions and continuity of care into the community upon release;
• Improve coordination and communication between correctional systems, Medicaid and CHIP systems, managed care plans, and community-based providers;
• Increase additional investments in health care and related services, aimed at improving the quality of care for beneficiaries in carceral settings and in the community to maximize successful reentry post-release;
• Improve connections between carceral settings and community services upon release to address physical health, behavioral health, and health-related social needs;
• Provide intervention for certain behavioral health conditions and using stabilizing medications like long-acting injectable anti-psychotics and medications for addiction treatment for SUDs, with the goal of reducing decompensation, suicide-related deaths, overdoses, and overdose-related deaths in the near-term post-release; and
• Reduce post-release acute care utilizations such as emergency department (ED) visits and inpatient hospitalizations and all-cause deaths among recently incarcerated Medicaid beneficiaries and individuals otherwise eligible for CHIP if not for their incarceration status through robust pre-release identification, stabilization, and management of certain serious physical and behavioral health conditions that may respond to ambulatory care and treatment (e.g., diabetes, heart failure, hypertension, schizophrenia, SUDs) as well as increased receipt of preventive and routine physical and behavioral health care.”

Eligible individuals under the demonstration will be assigned a care manager while they are incarcerated, as well as a community-based care manager upon their release. Pre-release services will be anchored in comprehensive care management and include physical and behavioral clinical consultation, lab and radiology, Medication Assisted Treatment (MAT), community health worker services, and medications and durable medical equipment. These services will be available for up to 90 days immediately prior to the individual’s expected release date. California expects that it will be able to reduce decompensation, suicide-related death, overdose, and overdose-related deaths in the near-term post-release.

As a condition of approval of this demonstration amendment, CMS is also requiring California to make pre-release outreach, along with eligibility and enrollment support, available to all individuals incarcerated in the facilities in which the demonstration is functioning. Effective January 1, 2023, state statute directs all counties implementing Medi-Cal application processes in county jails and youth correctional facilities to “suspend” their status while an individual is in jail or prison, and easily “turn on” when they enter the community so they can access essential health care services upon release.

The demonstration is expected to begin in April 2024. Correctional facilities can choose their launch date within 24 months of the go-live date and will be subject to a readiness review process before they can launch.

Additional Requirements

Under the amendment, CMS approved the state’s Designated State Health Program (DSHP) financing plan. Under this DSHP, California will receive federal matching funds to support the Providing Access and Transforming Health (PATH) program. As a condition of receiving this funding and as part of the approval, CMS requires California to increase and sustain Medicaid fee-for-service provider payment rates and Medicaid managed care payment rates for obstetrics, primary care, and behavioral health services. According to the U.S. Department of Health and Human Services (HHS), “in obstetrics alone, this represents the potential for $60 million to be invested in the health of pregnant and postpartum women by increasing access to providers and therein improving health outcomes for pregnant women.” The rate increase will close the gap between Medicaid and Medicare rates by at least 2 percentage points, should the state’s average Medicaid to Medicare provider rate ratio be below 80 percent in any of these categories.

Under this amendment, CMS is also updating the budget neutrality methodology for two previously approved community supports, short-term post-hospitalization services and recuperative care, that address health-related social needs.

Link to Waiver Amendment