The California Department of Health Care Services (DHCS) has released a proposal to modify provider payments to save money in the Medicaid system. The state is seeking to waive existing laws and regulations in order to implement new projects for the state’s next 1115 Section Medicaid Waiver.

California is currently in the final year of its current Section 1115 Waiver, which was approved by the federal government so California could expand Medi-Cal coverage in accordance with the Affordable Care Act in 2010 and implement a variety of delivery reform projects such the duals demonstration project.

Major rules and regulations to be waived include:

Federal-State Shared Savings and Reinvestment
This would authorize the reinvestment of state-designated shared savings toward certain demonstration expenditures. Typically, the state does not share in any federal savings that may arise due to the implementation of a state’s waiver. California would be the first state to share in savings if the Centers for Medicare and Medicaid Services (CMS) grants this request.

Workforce Development Program
This would allow for reimbursement for select workforce development subsidies, incentive payments and related expenditures to or on behalf of targeted health care providers, including providers who have not previously participated in the Medi-Cal program, existing Medi-Cal providers who commit to treat additional Medi-Cal beneficiaries, or nontraditional provider types, to the extent not otherwise allowable.

Plan/Provider/System Incentives
This would allow for reimbursement for select provider, managed care plan, and/or system incentive payments, geared toward performance, quality, system alignment and whole person care coordination principles, to the extent not otherwise considered allowable medical assistance or administrative costs under current law. This may include both fee-for-service and managed care based incentive payments.

The California Medical Association continues to be engaged in the waiver process and will continue to provide comments as it relates to the physician experience in Medi-Cal.

In late summer, DHCS intends to enshrine the proposals in several bills that will be reviewed and approved by the Legislature. The formal, final request from the state goes to CMS after legislative action and CMS then formally approves, by the end of the year. The revised 1115 Medi-Cal waiver would begin in January 2016.

To see the proposal, click here.