CMS Approves $6.2 Billion California Medicaid Waiver

BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...

By Laura Mahoney

Jan. 4 — Federal officials gave final approval Dec. 30 to a $6.2 billion, five-year waiver for California's Medicaid program through which the state plans to overhaul payments and care delivery for uninsured and Medicaid patients.

The new Section 1115 waiver will be in place until Dec. 31, 2020, with four key elements, according to a Dec. 30 letter from the Centers for Medicare & Medicaid Services:

• Whole Person Care Pilot through which counties can target high-risk populations such as the homeless or mentally ill using managed care plans, county behavioral health systems, hospitals, social service providers and other community-based organizations, with $1.5 billion in federal funds over five years;
• Global Payment Program to shift separate funding for disproportionate share hospitals and uncompensated care into one payment pool, giving public hospitals and safety-net providers more flexibility in spending the money at the same time they are expected to improve outcomes, with $236 million the first year and amounts in future years to be determined based on a study to be completed in spring 2016;
• payment system changes for public and district hospitals that shift away from Medicaid payments based on cost and volume of care provided and toward incentives based on quality and outcomes, called Public Hospital Redesign and Incentives in Medi-Cal, with $3.2 billion for designated public hospitals and $466.5 million for district municipal public hospitals over the five-year waiver; and
• Dental Transformation Initiative to improve dental care outcomes, with $750 million over five years.


More Money Possible

According to a Dec. 30 announcement from the California Department of Health Care Services, the Medi-Cal 2020 waiver contains the overall construct announced at the end of October (212 HCDR 212, 11/3/15), with $6.2 billion in initial federal funding and the potential for more funding in the global payment program after the initial assessment is completed.

Anthony Wright, executive director of consumer advocacy group Health Access, said the waiver should spur innovation at the local level.

“We expect an explosion of activity locally, as counties take advantage of the funding opportunities and work to revamp their safety-nets and set up pilot projects on integrating human services,” Wright said in a Dec. 30 statement.

California originally asked for $17 billion in federal funds in its waiver application submitted in March, but the total was slashed after the CMS rejected California's request to share savings the state's Medicaid improvements would bring by giving those savings back to the state. Instead, the waiver contains only elements that have state and local funding elements alongside federal spending.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif., at

To contact the editor responsible for this story: Janey Cohen at