California Moves to Transform Behavioral Health Delivery System – Are Payers and Providers Ready? | Foley & Lardner LLP

This is the first article in a series that looks at key changes in California’s health care market and focuses on changes in California’s health care delivery systems. Upcoming articles in the series will explore other California initiatives, including new tools to provide care for the whole person 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 the California healthcare market and legal environment for patients, payers, providers and other stakeholders. This article looks at some of the sweeping new behavioral health initiatives available to Californians that include new options for providing mental health services and substance use disorder treatment.

The state’s focus on behavioral health has several goals. Like other states and health care payers, California is trying to slow 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 identified 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 part of the state’s response to the homelessness crisis.

New Mandatory Coverage of School Behavioral Health Services

Through the new Children and Youth Behavioral Health Initiative (CYBHI), California is working to improve and redesign behavioral health services for children and youth. Central to the initiative is the expansion of behavioral health services available through schools, which may impact existing provider networks and delivery systems.

California bill, AB 133 (2021), directs the state Department of Health Services (DHCS) to develop a new statewide minimum fee plan for “school-related” outpatient mental health or substance use disorder treatment services 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) will be required to pay school-related behavioral health providers at least a minimum fee schedule amount, regardless of whether the provider has a contract with the plan . DHCS is tasked with “developing and maintaining” a network of authorized 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 convene stakeholders to develop and select proven interventions and “promising practices” to improve outcomes for or with children and youth at high behavioral risk. health status and will provide grants and incentive payments to support investment in these areas.

DHCS will also procure contractors to establish and maintain behavioral health services and support the 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 the controversial new bill SB 1338, seven California counties (San Francisco, San Diego, Orange, Riverside, Stanislaus, Tuolumne and Glenn) will be required to establish new Community Assistance, Recovery and Empowerment (CARE) courts specifically to address the needs of people with untreated serious mental illness illness by October 1, 2023. The remaining 51 California counties are scheduled to follow suit by December 1, 2024. Once individuals (including family, friends, hospital directors, paramedics, and behavioral health professionals) will be able to petition the courts on behalf of the individual to demonstrate, that he is entitled to support. To qualify, an individual must be experiencing a serious mental illness, must not be clinically stabilized or undergoing voluntary treatment, and must meet other requirements.

CARE courts are empowered to order a clinical evaluation of an individual and develop a CARE plan, which may include medication and treatment, social services, housing resources, and general assistance. SB 1338 provides certain additional funding to counties to assist in the administration of CARE courts. It also requires California health plans (including Knox-Keene plans and insurance policies) to cover health care evaluations and services required or recommended under a CARE plan, regardless of whether they are provided in-network or out-of-network or whether they have received prior authorization.

Clarifying and changing Medi-Cal’s fragmented behavioral health delivery system

California operates two separate behavioral health managed care delivery systems for its Medicaid beneficiaries. Consistent with their historic mission to serve local indigent populations, California counties operate and contract with behavioral health providers for individuals with serious mental health and/or substance use disorders. In addition, as a result of the recent expansion under the Medi-Cal program, California’s Medi-Cal managed care health plans cover “mild to moderate” behavioral health services as well as primary care services. Individuals may 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 referrals to county behavioral health systems. In addition, the state implemented a “no wrong door” policy that, effective July 1, 2022, allows providers to bill health plans to both counties and Medi-Cal managed care health plans for services provided during the assessment period or prior to diagnosis. These changes offer providers new flexibility in seeking reimbursement for mental health services and are intended to help ensure that beneficiaries can maintain therapeutic relationships with providers until appropriate referrals can be made.

Finally, the state is redesigning the way counties are reimbursed for medical 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 behavioral health network providers, and counties will be encouraged to emphasize value-based components in reimbursement.

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