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California's Medi-Cal Plan Struggles to Fix Mental Health Care for Young People

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Two young people wearing gray and black jackets are walking on a sidewalk down the street with their arms around each other's shoulder and back.
CalAIM seeks to improve the availability of mental health care for young people insured by Medi-Cal, but, a year since its rollout, obstacles remain. (Alisha Jucevic/CalMatters)

A year has passed since a massive statewide effort called CalAIM began rolling out. Among several significant changes CalAIM promised: an overhaul of the availability of mental health care for young people insured by Medi-Cal, the public insurance program for lower-income Californians.

Advocates for youth mental health say they remain enthusiastic about CalAIM’s potential, using words like “game-changing” and “transformational.”

But they also say the new framework is being born at a tricky time. Three years into the pandemic, provider burnout and escalating patient need have combined to create a severe mental health workforce shortage. Meanwhile, community-based organizations that provide many of the mental health services outlined under CalAIM say they feel left out of the loop in important conversations about coming payment reforms.

Gov. Gavin Newsom’s budget proposal (PDF) — which would delay certain behavioral health investments to combat a projected $22 billion deficit — also risks hampering progress for CalAIM.

“Our members are really panicked right now,” said Adrienne Shilton, director of public policy for the nonprofit California Alliance of Child and Family Services. In September 2022, hers was one of a dozen organizations that signed a letter to the state Department of Health Care Services expressing concerns about a lack of transparency around the new rate structure.

“Providers must have the ability to plan and prepare alongside their county partners,” it said. Shilton’s organization also co-authored a letter Wednesday to legislators (PDF), decrying the proposed budget delays.

Shilton told CalMatters earlier that other issues CalAIM is meant to address, including alleviating burdensome documentation requirements, have yet to change the on-the-ground reality for many providers.

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CalAIM is about much more than mental health. The initiative, short for California Advancing and Innovating Medi-Cal, is a five-year plan that began rolling out a year ago. It aims to provide children and adults insured by Medi-Cal with better access to a range of health and mental health services. It also strives to use a “whole person care” approach to addressing social issues that affect health, including housing and food insecurity.

It also redesigns the payment system to more seamlessly integrate the county mental health plans and managed care organizations that pay for those services.

The relevance and urgency of addressing children’s mental health is especially clear: Racism. School closures. Online bullying. Climate disaster. A pandemic pocked with grief, loss and fear.

All of these factors have aggravated a youth mental health crisis that’s been raging for more than a decade. Incidence of self-harm for young people, which increased dramatically (PDF) even before the pandemic, has spiked further in the past few years.

CalAIM has not yet significantly shifted the on-the-ground reality for many of these young people, experts say, but a number of important policy changes are officially underway:

  • About 40% of the state’s children and youth are insured by Medi-Cal. They no longer need a formal diagnosis to access specialty mental health services.
  • The state has simplified behavioral health documentation requirements.
  • A “No Wrong Door Policy” should make it easier for children and adults to receive behavioral health care no matter where they enter the system, replacing what can feel like a bureaucratic maze that varies by county.
  • An “enhanced care management” benefit provides services and case management to members of priority populations, including those who are unhoused, experiencing early psychosis or involved with the child welfare or criminal justice systems.

Other efforts, including changing the way mental health services are paid for, also are rolling out this year.

Newsom’s administration, which early on made behavioral health a signature issue, is simultaneously unveiling several other ambitious initiatives, all of which require additional staffing and funding: a statewide program to set up new court systems to address the needs of people with severe mental illness, known as CARE Court; expanded crisis response services through state funding for a 988 hotline; and a major initiative to improve mental health care for children and youth, parts of which will be affected by the proposed budget delays (PDF).

Despite belt-tightening in other areas of the governor’s proposed January budget, CalAIM continues to be funded. Newsom’s proposal would dedicate more than $10 billion to CalAIM implementation, including $6.1 billion over five years to improve local treatment services and pay for short-term stays in treatment facilities for people with serious mental and behavioral health illnesses.

“We’re committed. We’re not touching that,” he said in a press conference earlier this month.

The budget proposal does, however, delay more than $1.1 billion in other behavioral health investments over the next two years, including money intended to increase treatment capacity for adults and kids in crisis, and money for workforce development. These investments were intended in part to shore up CalAIM’s goals (PDF), according to state documents.

“We’re concerned about the delays,” Shilton said. “This is funding outside of CalAIM but … the system is so stressed. Having this additional investment from the state was really beneficial.”

The governor’s office did not respond to questions about the proposed funding delays. He will revise his budget proposal in May, based on actual state revenue, and hammer out a final funding deal with legislators in June.

While CalAIM is an important step toward meeting the mental health needs of vulnerable young people, experts say staffing shortages, especially, are complicating the picture. As a result, some say, it’s not yet clear how and when official policy changes will translate into better mental health treatment for individuals. The proposed budget would delay nearly $400 million for health care workforce training, including some social work and behavioral health pipeline programs.

“Where are the people who are going to be delivering these services?” Shilton said.

Michelle Cabrera, executive director of the County Behavioral Health Directors Association of California, calls CalAIM “an uber-ambitious reform agenda that’s sitting on top of a system that’s really been through the storm.”

Counties are being asked to implement “ambitious, sweeping new reforms on top of the worst workforce crisis we’ve ever seen,” she said.

In an emailed response to CalMatters, the Department of Health Care Services said the Newsom administration is committed to “collaborating closely” with counties, health plans and others to plan, implement and monitor the various “unprecedented and intersecting initiatives.”

Still, community-based organizations that contract with counties and managed care organizations to provide mental health services say they are worried about the payment they will receive for their services and how that could affect their ability to recruit and retain necessary staff.

Jodi Kurata, chief executive officer of the Association of Community Human Service Agencies, which represents nonprofit organizations in Los Angeles, said the groups she works with are too overwhelmed dealing with workforce shortages to focus on the administrative transformation underway.

“The system right now is just so depleted,” she said.

She said she worries that inadequate rates could lead to a further exodus of nonprofit mental health care providers from the Medi-Cal system, a concern others have echoed.

The state says a preliminary draft of revised payment rates has been shared with counties. The Department of Health Care Services said it has committed to publishing a fee schedule in the first few months of this year.

Cabrera, of the County Behavioral Health Directors Association, said CalAIM’s new payment structure marks an important shift in that the state will now allow counties to pay providers without being capped, and will remove many burdensome documentation requirements. She said counties are just now seeing the new rates, and that the administration’s “aggressive” timeline will likely lead to a “bumpy ride this year” before ultimately resulting in a positive change.

When care depends on your county

Other longstanding funding problems remain unaddressed. This past fall, Young Minds Advocacy, a children’s mental health advocacy organization, published a report showing that longstanding variability in the way the state funds county specialty mental health services has translated into disparities (PDF) in the kinds of intensive care offered to young Medi-Cal enrollees.

For decades, said Patrick Gardner, an attorney who founded the advocacy organization, the state has underfunded certain counties, “and their performance has suffered accordingly, sometimes pretty dramatically.”

In his report, Gardner found that counties with significantly lower-than-average state funding generally provided young people with less intensive services than counties with significantly higher-than-average state funding. According to his report, in 2019–20, poorly funded San Joaquin and Madera counties provided just 16% and 17% of the estimated need for care, while the better-funded Santa Clara and Butte counties provided 86%.

While CalAIM is moving “in the right direction,” Gardner said, it fails to address this fundamental issue. (Cabrera contends that the analysis fails to capture the services that counties provide without billing Medi-Cal.)

Despite these concerns, many mental health care advocates say they are witnessing important changes to the way care is delivered under CalAIM.

“We are seeing shifts happening already,” said Leticia Galyean, CEO and president of Seneca Family of Agencies. She said her organization — which serves youth and families in 14 counties — is especially seeing “an immediate benefit” in terms of faster access to specialty mental health care for foster youth, unhoused youth and those involved in the juvenile justice system.

Brian Blalock, senior staff attorney at the Youth Law Center, which advocates for youth in the child welfare and juvenile justice systems, called CalAIM “the most important thing California has done in a long time.”

“​​There’s just tremendous opportunity there,” he said.

Now, he added, “we as a state can go in either direction — either we realize that promise, or we let this pass us by.”

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