The Bridge: Medi-Cal Reform to Health Reform

Guest blogger Meredith King Ledford is a Charlotte-based health policy consultant affiliated with Harbage Consulting.  Guest blogger Peter Harbage is President of that firm, a national health policy consultancy with offices in Washington DC, Sacramento, and Los Angeles.
The implementation of California’s “Bridge to Reform” 1115 Medi-Cal Waiver (adopted in November 2010) will have a significant and lasting impact on California’s coverage rates and quality of care. Building on the county-based system that is fundamental to Medi-Cal, California’s Medicaid program, the waiver has given counties significant flexibility to prepare their safety net systems for the changes coming with health reform in 2014. Under the waiver, leaders at the local level have been given the discretion to make several decisions across a range of areas, including coverage and service delivery.
More evolutionary than revolutionary in policy, the waiver has three fundamental components:

• Expanding Coverage. Through the Low Income Health Program (LIHP), the waiver allows all California counties to get a head start on expanding coverage to non-elderly adults, who are U.S. citizens or qualified documented immigrants. Previously, non-elderly adults without children did not qualify for Medi-Cal. The LIHP is comprised of two programs:

o   Medicaid Coverage Expansion (MCE): Designed for adults with family incomes at or below 133 percent of the Federal Poverty Level (FPL) ($14,484 for an individual in 2011), this program mirrors Medi-Cal in benefits and cost-sharing.
o   Health Care Coverage Initiative (HCCI): For adults with family incomes between 133 percent FPL ($14,484 for an individual in 2011) and 200 percent FPL ($21,780 for an individual in 2011), this program gives counties more flexibility to design their own coverage programs.

• Leveraging a Coordinated System of Care. With a managed care penetration rate of about 50 percent, California has lagged behind other states in percentage of managed care enrollment. Under the waiver, non-Medicare enrolled Seniors and People with Disabilities (SPD) are required to choose a managed care plan in specific counties or be default enrolled. Numerous safeguards are built into the system to protect beneficiary rights and access to care as managed care in California is expanded. SPD enrollment was over 129,000 at the end of October.

• Promoting System Reform and Quality Improvement. The waiver establishes the Delivery System Reform Incentive Pool (DSRIP) to support California’s safety net hospitals in their effort to promote quality care and contain costs. Under the waiver, hospitals will be held accountable for achieving developments in infrastructure, innovations in care delivery models, improvements in population health, and advances in hospital-specific care interventions. Plans addressing these issues have been developed and submitted; in the event that a benchmark in one of these areas is missed, the hospital will not receive incentive payments.

The 21 public hospitals participating in DSRIP met 100 percent of their first year milestones, drawing down all of the available funding. Stakeholders are encouraged by these findings and the improvements the program will allow in population health and the safety-net infrastructure.
After the first year, the waiver looks to be a success. California is well on its way toward preparing its Medicaid program and its safety net providers for 2014. Implementation has not been perfect, and it will offer lessons to other states and the federal government. We plan to share some of these lessons through an evaluation commissioned by the California HealthCare Foundation this spring. We look forward to sharing this study on State Refor(u)m and in doing so, help other states learn about this bridge to health reform.
In the meantime, State Refor(u)m is interested in learning from similar Medicaid reforms that other states are working to implement, with or without an 1115 Medicaid waiver. Let us know what your state is working on in the blog comments below!