California Moves to Transform Behavioral Health Delivery System – Are Payers and Providers Ready? | Blogs | The Health Care Act Today

This is the first article in a series addressing key changes in California’s health care market, focusing on changes in California’s behavioral health delivery systems. Upcoming articles in the series will address other California initiatives, including new tools to provide whole-person care and address the social determinants of health, and new efforts to contain health care costs.

The State of California has announced major new initiatives that will significantly change California’s health care market and the legal environment for patients, payers, providers and other stakeholders. This article examines some of the extensive new behavioral health initiatives available to Californians that include new opportunities to receive both mental health services and substance use disorder treatment.

The state’s focus on behavioral health has multiple goals. Like other states and health care payers, California is committed to slowing the growth of health care costs and has linked the efficient and timely delivery of behavioral health services as part of its strategy to reduce long-term health care costs. California has also seen a significant increase in the need for behavioral health services as a result of the COVID-19 pandemic. Expanding behavioral health services is also an important component of the state’s response to the homelessness crisis.

New mandatory coverage of school-based behavioral health services

Through a new Child and Youth Health Initiative (CYBHI), California aims to improve and redesign behavioral services for children and youth. A central component of the initiative is the expansion of behavioral health services available through schools, which can leverage existing provider networks and delivery systems.

California law, AB 133 (2021), directs the State Department of Health Services (DHCS) to develop a new statewide minimum fee schedule for “school-related” outpatient services for the treatment of mental illness or substance use disorders, for students age 25 or younger. DHCS intends to use this statewide minimum fee schedule to create a sustainable source of funding for school-related behavioral health services, regardless of payer.

Under AB 133, every health plan regulated by the state of California (including Medicaid plans, Knox-Keene plans, and disability insurance policies) would be required to reimburse providers of school-related behavioral health services at least the minimum fee amount , regardless of whether the provider has a contract with the plan. DHCS is directed to “develop and maintain” the network of eligible providers of these school services, but reimbursement will come from payers based on their coverage conditions.

New Opportunities for Virtual Behavioral Health Care for Children and Youth

Also as part of CYBHI, and potentially in conjunction with the school-based services described above, DHCS will bring together stakeholders to develop and select evidence-based interventions and “promising practices” to improve outcomes for children and youth at or at high risk from behavioral health conditions and will provide grants and payments to stimulate investment in these areas.

DHCS will also provide a provider to create and maintain behavioral health services and a supporting virtual platform. Once deployed, this virtual platform will expand access to telebehavioral health services available to millions of California children and youth ages 25 and younger, regardless of payer.

Implementation of new CARE courts

Under a controversial new law, SB 1338, seven California counties (San Francisco, San Diego, Orange, Riverside, Stanislaus, Tuolumne and Glenn) would have to create new Community Assistance, Recovery and Empowerment (CARE) courts specifically to address to the needs of people with untreated severe mental illness by October 1, 2023. The remaining 51 California counties must follow by December 1, 2024. Once established, individuals (including family, friends, hospital directors, first responders, and behavioral health professionals ) will be able to petition the CARE courts on behalf of an individual to show that they are eligible for support. To be eligible, a person must suffer from a serious mental illness, may not be clinically stabilized or undergoing voluntary treatment, and must meet other requirements.

CARE courts are authorized to order a clinical evaluation of the individual and develop a CARE plan, which may include medication and treatment, social services, housing resources, and general assistance. SB 1338 provides some additional funding for counties to help administer CARE courts. It also requires California health plans (including Knox-Keene plans and insurance policies) to cover evaluations and health services required or recommended under a CARE plan, whether provided in-network or out-of-network or with prior authorization.

Clarification and changes to the fragmented Medi-Cal behavioral health delivery system

California operates two separate managed systems for the delivery of behavioral health for its Medicaid beneficiaries. Consistent with their historic mission to serve local poor populations, California counties work with and contract with behavioral health service providers for individuals with severe mental and/or substance use disorders. Additionally, as a result of recent expansions within the Medi-Cal program, Medi-Cal managed care health plans in California cover “mild to moderate” behavioral health services as well as primary care services. Individuals can be enrolled in both plans at the same time.

As part of its broader California Advancing and Innovating Medi-Cal (CalAIM) initiative, the state is required to develop new, standardized screening tools for referral to county behavioral health systems. Additionally, the state implemented a “no wrong door” policy that, effective July 1, 2022, allows providers to bill both counties and Medi-Cal managed care health plans for services provided during a period of assessment or before a diagnosis is made. These changes offer new flexibility for providers when seeking reimbursement for mental health services and are intended to help ensure that beneficiaries can maintain treatment relationships with providers until an appropriate referral is made.

Finally, the state is undertaking a redesign of how counties receive reimbursement for Medi-Cal behavioral health services provided through their networks. Under behavioral health payment reform, counties will no longer be limited to cost-based reimbursement and will no longer be required to submit burdensome cost reports. These changes have the potential to affect how counties negotiate their contracts with Medi-Cal behavioral health network providers, and counties will be encouraged to emphasize value-based components of reimbursement.

Foley is here to help you deal with the short- and long-term legal consequences of disasters on your facility. We have the resources to help you navigate important legal considerations related to business operations and industry-specific issues. Please contact the authors, your Foley affiliate, or our healthcare practice group with any questions.

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