In 2010, the leadership of the mental health and substance abuse treatment fields, both public and private, successfully advocated to include mental health and substance use disorder services as one of Ten Essential Benefits in the Patient Protection and Affordable Care Act (PPACA). In 2014, the California Department of Health Care Services applied for an 1115 Medicaid Waiver to initiate a Drug Medi-Cal Organized Delivery System in California. This demonstration project is one earlier step in the larger health care system changes that includes California Medi-Cal 2020. So what does this mean Eventually, the SUD field in California will be transformed to the Medicaid Managed Care Model – not simply transported to a larger number of services based on the current configuration of programs and practices.
Approved by CMS in 2015, the DMC-ODS Waiver will operate within the current state- county realignment structure, allowing counties to opt in or out of participation. The Waiver expands SUD services reimbursable under the Drug Medi-Cal program; supports coordination and integration across pubic delivery systems; strengthens the county oversight of network capacity; standardizes delivery using evidenced based practices, and improves consumer access to services. The waiver implementation in each opt-in county will ensure a full continuum of SUD services modeled on the levels of care defined by the American Society of Addiction Medicine. Those counties that do not opt in will be required to operate DMC services as currently defined in the Medi-Cal State Plan. The DMC-ODS counties will operate under the Terms and Conditions of the Waiver. Counties may implement a regional model with other counties and contract with providers in other counties in order to provide the continuum of services. It is important to note that the counties opting out will be required to pay for services delivered to beneficiaries who opt to secure services outside of their county of eligibility from their Realignment Behavioral Health Subaccount.
Most importantly, all Medi-Cal beneficiaries will have access to a continuum of substance use disorder treatment services never before available to them (Table I).
Table I: Benefits
Early Intervention (through Managed Care Plans)
Outpatient Services and Intensive Outpatient
Residential (not restricted by IMD exclusion (ASAM Designation required))
Narcotic Treatment Program
Withdrawal Management (at least one level)
Medication Assisted Treatment
Optional: Partial Hospitalization
With the expansion of Medi-Cal enrollment, there are more beneficiaries than ever, now also including childless adults and those undocumented children and youth under 18 years of age. The DMC-ODS will be administered by each County’s Behavioral Health or Substance Abuse Authority in the new role of Specialty Managed Care Organizations. The DMC MCO will be responsible for designing and implementing a DHCS /CMS approved Implementation and Fiscal Plans over a five -year period. Each County must design a network of services that guarantees a full continuum of evidence-based practices to address the immediate and long-term substance abuse prevention and treatment needs of beneficiaries. In order to create this system of care the counties will assess the current block grant funding configuration of services, and over time create access to services based on demand and utilization of appropriate levels of care. The counties will implement selective provider contracting creating a provider network that will meet the standards outlined in the waiver.
The waiver is designed to test a new paradigm for the organized delivery of services for Medi-Cal beneficiaries with a substance abuse disorder and improve outcomes while decreasing other system health care costs.
The new Specialty Managed Care Organization administrators will manage access and utilization vs. the distribution of scarce block grant resources. Budgeting, rate setting, and billing structures based on costs or volume of transactions will be changed, initially to fee-for-service and case rates and in the future to value-based performance contracts. The county will be responsible for a beneficiary access hotline; authorization for residential services; care coordination with Primary Health Managed Care Plans and the Specialty Mental Health Systems; quality improvement activities; and all utilization management including authorization for residential services.
With the implementation of the DMC-ODS plan, each county will use Drug Medi-Cal (DMC) as the primary payor for beneficiaries. Other funding sources including the Substance Abuse Prevention and Treatment Block Grant will be used to cover services not reimbursable by DMC and for those seeking services who are not eligible for Medi-Cal enrollment.
For providers, new and enhanced competencies in assessment and diagnosis; treatment, discharge, and transition planning; engagement; and evidence-based practices, including medication assisted treatment will be required – all documented to meet Medicaid standards of medical necessity. Licensed Practitioners of the Healing Arts (LPHA) will be integrated in the service delivery system in new defined roles. AOD Certification will be required of counselors performing specific clinical tasks. The provision of culturally relevant and competent services, including translation services as needed, will be required of all programs.
The immediate challenge ahead is building the administration; contract management; revenue and billing structures; program design utilizing evidence-based practices; and workforce capacity, at the system as well as the provider level. The future challenge is organization redesign and/or partnerships to achieve whole-person care coordination and service integration, utilizing population health management approaches to achieve improved client outcomes.
The DMC-ODS is the pathway created for the SUD field to begin participation in the Triple Aim Goals of the PPACA. For a while, we will continue to use familiar approaches and methods of administration, delivery and practice, but eventually we will move to a system of shared outcomes, incentives, financial risks, and successes. As with any transformation, planning and managing must be flexible and decisive at the same time. The innovators are moving ahead and testing new methods and practices. With months, if not years, of planning and development already committed to the redesign, the early innovators will provide significant support to others as they proceed along the pathway to the DMC-ODS. One thing is known for sure in this transformation – whether government agency or community-based provider, the system as we know it will be a new world. All systems are go!