Stepping Stones: California’s Advancing and Innovating Medi-Cal (CalAIM) Proposal Will Lead To Big Changes for Skilled Nursing Facility Diversion/Transition

By Jason Bloome

On October 29, 2019, the California Department of Health Care Services (DHCS) introduced a proposal called California Advancing and Innovating Medi-Cal (CalAIM), a framework for broad reforms in payment delivery, consolidation and waiver renewals for Medi-Cal. 

CalAIM proposes to address several of California’s complex health challenges including homelessness, children with complex health needs, behavioral health access and the growing number of justice-involved (e.g. court related) populations who have significant clinical needs.

CalAIM will also address the challenges of paying for health care for the growing number of seniors in the state who rely on Medi-Cal.  Seniors are the fastest growing demographic group in the state and the Public Policy Institute of California estimates by 2030 more than one million seniors will need help with self-care.  Many of these seniors will be low income and rely on help from long term support and services (LTSS) programs including In Home Support and Services (IHSS) and skilled nursing facilities (SNFs). 

Some components of CalAIM which will impact the elderly include:

Managed Care

DHCS proposes by January 2021 requiring all non-dual eligible Medi-Cal beneficiaries and by January 2023 requiring all dual-eligible beneficiaries statewide to have mandatory enrollment with a Medi-Cal Managed Care Organizations (MCOs), with the exception for those for whom Medi-Cal managed care enrollment does not make sense (e.g. due to limited scope of services or limited time enrolled).

Standardized Managed Care Benefit

DHCS proposes by January 2021 to standardize all managed care benefits so that all Medi-Cal MCOs offer the same benefit package to all of their members.  Some of the benefits include carving into the plans institutional long term care programs (e.g. skilled nursing facilities).

Transition to Statewide Managed Long Term Support and Services

In order to achieve standardized care for all populations statewide, DCHS proposes discontinuing the California Coordinated Care Initiative (CCI) pilot program by January 2023.  All Medi-Cal recipients (CCI and non-CCI participants) will be transitioned to Medi-Cal MCOs that offer standardized benefits to both populations.  The eventual goal is for all Medi-Cal recipients to be enrolled in Managed Long Term Support and Services (MLTSS) programs. The phasing out of CCI and the phasing in of enrollment into statewide Medi-Cal MCOs will have the following time table:

January 2021: CCI will continue as it is today but the Multipurpose Senior Service Program (MSSP) will be carved out of CCI and all institutional long term care services will be carved into manage care for all populations currently enrolled with CCI.  CCI will also implement voluntary in lieu of services programs.

January 2023: The full transition of CCI to mandatory managed care enrollment of dual-eligibles for all counties/plan models. In addition, MCOs will be required to offer Medicare Dual-Special Need Plans to give members the choice of having their Medicare and Medi-Cal benefits managed by the same MCO. 

In Lieu of Services

CalAIM will allow Medi-Cal MCOs to use in lieu of services options to pay for care services.  In lieu of services are fiscal arrangements between states and MCOs that allow Medi-Cal payments for services currently not covered by state waivers which could be used “in lieu of service” to reduce the cost for expensive state services including premature SNF placements or expensive hospital stays.  

In lieu of services are covered if: 1) the State determines it is medically-appropriate and is a cost-effective substitute or setting for the State plan service, 2) beneficiaries are not required to use the in lieu of services, and 3) the in lieu of services is authorized and identified in the Medi-Cal managed care plan contracts. 

Fiscal Incentives for Adopting in Lieu of Services Programs

CalAIM intends to promote the use of in lieu of services by giving fiscal bonuses to Medi-Cal MCOs that develop health care programs that provide quality care while also saving Medi-Cal dollars. 

Nursing Home Diversion/Transition

According to the AARP/SCAN LTSS report card at least 10,000 SNF patients in California could be adequately cared for in lower level community-based care settings, such as assisted living homes (aka residential care facilities for the elderly- RCFEs).  Every year the state needlessly spends millions of Medi-Cal dollars for expensive SNF when thousands of seniors could reside in more affordable RCFEs.  

California has only one program, the Assisted Living Waiver (ALW), which allows Medi-Cal to pay for RCFEs.  ALW has many intractable problems: a 1-2 year waitlist, limited quality control measures, a 90-day minimum SNF stay in order to be eligible for SNF transition, ineligibility by Medi-Cal recipients with share of cost expenses, more than 90% of program participants reside in large (50-100+ bed) RCFEs that frequently have 1 staff to 20-30 residents and program constraints which limit the participation by small 4-6 bed providers with high staff to resident ratios.  Also, since ALW is currently carved out of CCI, MCOs have no fiscal incentives to promote SNF diversion/transition to RCFEs. 

ALW will end when the state carves long term care waiver programs into MLTSS.  While some components of ALW may be useful many Medi-Cal MCOs will use in lieu of services to develop their own SNF diversion/transition to RCFE programs.        

The CalAIM proposal has eligibility requirements for SNF diversion/transition candidates.   Eligibility requirements for SNF diversion include: 1) having an interest in remaining in the community, 2) choosing to reside in a RCFE with the appropriate care and cost-effective support, 3) currently receiving SNF level of care services or meeting the minimum criteria to receive SNF level of care services in lieu of going into a SNF and 4) being able to safely reside in a RCFE with cost effective supports. Eligibility requirements for SNF transition include: 1) residing in a SNF for at least 60 days, 2) a willingness to live in a RCFE as an alternative to a SNF and 3) being able to safely reside in a RCFE with cost effective supports.  

Sensible SNF Diversion/Transition to RCFE Components

When Medi-Cal MCOs develop their own SNF diversion/transition to RCFE programs they should include the following sensible components: 1) pay a fair market rate to encourage the participation of a large network of RCFEs, 2) quality control measures (e.g. checking community care licensing violation reports, follow-up calls with families, etc.) that ensure provider networks consist only of high quality RCFEs, 3) ample participation of small 4-6 bed RCFEs with high staff to resident ratios and 4) the participation of seniors who have Medi-Cal shared of costs.  Paying Medi-Cal MCOs the SNF rate for a full year when patients choose to transfer from high cost SNFs to more affordable RCFEs is a fiscal incentive that would bolster SNF transition initiatives.

Adding a RCFE rate category to CCI Paves the Way for SNF Diversion/Transition

CalAIM promises big changes in the future but seniors stuck in SNFs should not have to wait until 2023 for a path to community-based care settings; and the state cannot afford to needlessly spend millions of Medi-Cal dollars each year.  Since CCI is a pilot program there is no reason why its framework cannot be adjusted to incorporate new beneficial components including adding a RCFE rate category to the CCI MLTSS rate tables.  CCI is nonsensical without this change when a beneficiary who requires too much care to remain at home is classified as “healthy” when he/she chooses to reside in a RCFE.  The “healthy” rate is insufficient to cover RCFE expenses and CCI MCOs have no fiscal incentive to promote SNF diversion/transition to RCFE programs.  A new RCFE rate category would allow CCI MCOs to develop SNF diversion/transition to RCFE pilot programs: the first few critical stepping stones for a path on which one day tens of thousands of seniors will travel as they migrate from SNFs to community-based care settings.    

Jason Bloome is owner of Connections–Care Home Referrals, an information and referral agency for care homes for the elderly in Southern California. More information can be found at

CalAIM Executive Summary

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