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Current Status in California

California reports that 10 percent of the Medi-Cal fee-for-service beneficiaries consume 76 percent of total fee-for-service dollars.  Among seniors and persons with disabilities (SPD) enrolled in Medi-Cal, 68 percent have more than one chronic condition and 29 percent have a diagnosis for a mental health condition.  Currently, almost half a million Medi-Cal SPD beneficiaries (not counting those who are dually eligible for Medicare) continue to receive services in the fee-for-service program.  This represents over $4.6 billion in state and federal spending on non-long term care services.4

In order to improve the health care of the fee-for-service population and to help reduce program costs, Medi-Cal operates or is in the process of implementing four care management programs.


The Medical Care Management (MCM) program.  This longstanding program provides assistance by Department of Health Care Services (DHCS) nurses in managing the care of people who have had high cost hospital services.  DHCS has had great difficulty in quantifying the benefits of this program.  


Two disease management programs.  The first focuses on six chronic health conditions and started in August, 2007.  The second focuses on AIDS and was implemented in 2009.


Two coordinated care management programs. One program focuses on the chronically ill with severe health care conditions, such as those requiring end of life care, and the other program focuses on the chronically ill with a mental health diagnosis.  


Ten coverage initiatives.  With the funding provided in California’s 2005 Section 1115 waiver, many of these coverage initiatives are now able to provide medical homes for their medically indigent patients who have chronic health conditions.  

While these programs offer a lot of promise, none of these programs provide a medical home for the Medi-Cal SPD beneficiary population.  Many of the coverage initiatives provide medical homes for the non-Medi-Cal medically indigent population.  The first three programs listed above are dependent on enrollees being able to obtain access using the fee-for-service network and providers being willing to provide these services with reimbursement through Medi-Cal rates.  Given current Medi-Cal physician reimbursement rates and the rising rate of the uninsured, it is very difficult for a fee-for-service provider to offer a medical home for Medi-Cal patients.  

Change Options

DHCS has done considerable research into establishing of medical homes in the Medi-Cal program. To successfully establish medical homes for Medi-Cal beneficiaries, California would need to take two steps:  Reform the Medi-Cal reimbursement structure and take steps to

4 Toby Douglas, Deputy Director, California Department of Health Care Services, “Managing the Care and Costs of High Cost Beneficiaries in Medi-Cal FFS,” December 15, 2008 CHCF Conference presentation.

Health Management Associates/Harbage ConsultingPage 16

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