Overview of Special Terms and Conditions

Medi-Cal 2020 1115 Medicaid Demonstration Waiver

January 5, 2016



On December 31, 2015, CMS and DHCS reached an agreement on the special terms and conditions (STC) governing California’s next 1115 Medicaid Demonstration Waiver, Medi-Cal 2020.  While much smaller than the state’s initial $17 billion ask, the $6.2 billion in federal funding approved Waiver includes four major programs as well as a variety of reporting and assessment requirements.  An overview of the programs included in the final waiver are below.  For questions, please contact Meaghan McCamman at mmccamman@cpca.org or (916) 440-8170.


  1. Public Hospital Redesign and Incentives in Medi-Cal (PRIME)
    Up to $7.464 billion in combined state and federal shares over 5 years


The PRIME program builds off of California’s Bridge to Reform Waiver’s Delivery System and Reform Incentive Program (DSRIP), but is meant to move the delivery system to alternative payment methodologies and value-based care rather than simply focusing on quality metrics.  Designated public hospitals are eligible to access up to $1.4 billion annually, while District/Municipal hospitals may access up to $200 million annually, for the first three years.  A list of hospitals eligible to participate is available in the “resources” section of this memo.  The PRIME program will phase down by 10% in the 4th year of the waiver, and an additional 15% in the 5th year.


One of the key measures of success for the PRIME program will be assessing progress in shifting PRIME hospitals to full-risk alternative payment systems through Medi-Cal managed care plans. 50% of all Medi-Cal managed care beneficiaries assigned to PRIME hospitals must receive all or a portion of their services under alternative payment by January 2018, 55% by January 2019, and 60% by the end of the waiver in 2020.  Eligible alternative payment methodologies may include primary care capitation, partial-plus capitation (PC + some specialty); global capitation, and additional methodologies approved by CMS.   All of the alternative payment methodologies must allow hospitals to become self-sustaining not reliant on PRIME funds beyond 2020.


To implement the PRIME program, DHCS will amend their managed care plan contracts to include language that explicitly allows and provides guidance for alternative payment methodologies.  Medi-Cal plans will be required to include this alternative payment language in any provider contract that delegates quality improvement functions.  DHCS will also issue a policy letter than encourages managed care plans to adopt alternative payment methodologies for network providers more generally.


                What does this mean for CCHCs?

In the Waiver DHCS has committed to providing explicit guidance to Medi-Cal managed care plans around alternative payment methodologies, even for network providers not participating in the PRIME program.  This signals DHCS’ and CMS’ determination to push the Medi-Cal program toward value-based payment.  This strong move toward alternative payment will likely impact health centers both within CPCA’s Payment Reform pilot and those not participating, as plans work to meet their own requirements around value-based reimbursement to all network providers. 


  1. Dental Transformation Initiative

Up to $148 million per year over 5 years – totaling $740 million

The dental transformation initiative (DTI) will be available for new and existing Medi-Cal pediatric dental providers in fee for service and managed dental programs, including explicitly safety net clinics, FQHCs, RHCs, and tribal health centers. There are three separate incentive programs available under the DTI:

  1. Increasing Preventive Services Utilization for Children:

The state will seek to increase utilization of preventive dental services statewide by at least 10% over the term of the 5 year waiver.  Providers who render a number of preventive services that meets or exceeds their baseline target will receive incentives.  DHCS may earn additional demonstration authority up to a maximum of $10 million to be added to the DTI pool for use for incentives by achieving even higher performance improvement than their 10% goal. 

  1. Caries Risk Assessment and Disease Management Pilot

This pilot will take place only in counties that elect and are selected by DHCS to participate.  DHCS may seek to implement statewide if the pilot is successful after year 2 of the Waiver. Dentists voluntarily participating in this domain will receive incentives for performing pre-identified treatment plans for children based upon risk level as determined by the caries risk assessment (CRA).  DHCS will generate treatment plans based on three levels of risk. 

  1. Continuity of Care

Incentives paid to dental office locations who have maintained continuity of care through providing examinations for their enrolled child beneficiaries for two, three, four, five, and six year continuous periods.  The incentive will be a flat payment for providing continuity of care to the beneficiary and will be paid annually.


Finally, the STCs offer an alternative dental option called the Local Dental Pilot Program.  In order to qualify for incentive funding, local dental projects must address one or more of the three domains listed above through alternative programs, and the potential for rural participation was specifically called out.  Only counties, tribes, Indian health programs, UC or CSU campuses can serve as the lead entity responsible for the program  


                What does this mean for CCHCs?

Safety-net clinics including FQHCs, RHCs, and tribal health centers are specifically eligible to participate in the DTI.  CCHCs should be preparing to increase their preventive pediatric services and begin tracking how often they see pediatric dental patients for preventive care.  CCHCs can ask their counties about participation in the Caries Risk Assessment pilot or a local dental pilot program.   


  1. Whole Person Care Pilots

$300 million in federal financial participation over 5 years.  No more than $3 billion total may be spent over 5 years.

The goal of the Whole Person Care (WPC) pilots is the coordination of health care, behavioral health, and social services.   Under this pilot, a county, a city and county, a health or hospital authority, or a consortium of the above entities serving a county or multi-county region can receive support to integrate care for a particularly vulnerable group of Medi-Cal beneficiaries who have been identified as high users of multiple systems, but continue to have poor health outcomes.  In order to identify a target population, a collaborative data approach must be used to identify common patients across systems who frequently access urgent and emergent services.  Non Medi-Cal beneficiaries can be served under this pilot but those costs would not be eligible for federal financial participation. 


The WPC pilot funds can be used to support:

  • Infrastructure to integrate services among local entities that serve the target population (for instance, data exchange);
  • Services not otherwise covered or directly reimbursed by Medi-Cal to improve care for the target population (an example is housing); and
  • Other strategies to improve integration, reduce unnecessary utilization, and improve health outcomes. 


In order to qualify for a pilot, an application must include at least:

  • At least one Medi-Cal managed care plan;
  • Both the health services agency and specialty mental health agency
  • At least one other public agency, like county alcohol/SUD, human services, public health, criminal justice/probation, or housing authorities
  • At least 2 other community partners that have significant experience serving the target population, including clinics, hospitals, and other CBOs.


Applications will be due May 15, 2016, or 45 days after DHCS issues the RFA. 


What does this mean for CCHCs?

CCHCs should reach out to their counties right away to determine if there is interest in applying to participate in the pilot. Because the point of the pilot is to create a broad, whole-person, multiservice health home for high-cost Medi-Cal enrollees, in many counties CCHCs are ideal partners and could help the lead county-based agency meet their requirement to include at least 2 community partners in the pilot. 


  1. Global Payment Program

$1.4 billion over 5 years, a combination of Safety Net Care Pool and Medicaid Disproportionate Share Hospital funding

The Global Payment program is meant to promote cost effective and high value care to the remaining uninsured, which is defined in the STCs as rewarding the provision of care in appropriate venues, rather than in the emergency department or inpatient care. 

Public health care systems eligible to participate are listed in Attachment C in the resources section below.


What does this mean for CCHCs?

The Global Payment incentivizes public hospitals to provide more care and care coordination in less costly outpatient settings. Public hospitals in some counties have approached CCHCs to work with them in ensuring that the remaining uninsured are able to access high quality outpatient care to keep them out of the hospital and lower costs to the healthcare system. CCHCs in public hospital counties listed in Attachment C might consider reaching out to their local public hospitals to learn how they can partner in serving the remaining uninsured.


  1. Other Elements of the Waiver

Prior-approved elements of California’s 1115 Waiver will continue and are included in the STCs.  These include CBAS, CSS, CCI, the Drug Medi-Cal Organized Delivery System, and others. 


  VI.  Resources

  • Attachment D: hospitals eligible for the PRIME program
  • Attachment C: hospitals eligible for the Global Payment program




CPCA convenes an 1115 Waiver Workgroup chaired by Marty Lynch and staffed by Meaghan McCamman (mmccamman@cpca.org).  The Workgroup meets by conference call on the fourth Wednesday of each month from 3-4pm to discuss the various elements of the 1115 Waiver and the progress/challenges of the various programs.  To be added to this Workgroup, please contact Daisy Po'oi at dpooi@cpca.org.



If you have any questions, or need more information, please contact Meaghan McCamman, Assistant Director of Policy, at mmccamman@cpca.org.


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