The 2021-22 Budget: Behavioral Health: Medi-Cal Student Services Funding Proposal

analysis full gutter The 2021-22 Budget: Behavioral Health: Medi-Cal Student Services Funding Proposal FEBRUARY 2021 This budget series post includes (1) an reflects our understanding of the proposal as overview of the Governor’s budget proposal of February 17, 2021. This budget post is one in the Department of Health Care Services of a series of posts that we are releasing on (DHCS) requesting $200 million General Fund major behavioral health-related proposals of the ($400 million total funds) one time available over Governor. In separate posts, we analyze the three years to provide student behavioral health Governor’s proposals to (1) provide grant funds incentive payments through Medi-Cal managed to counties to acquire and renovate behavioral care, (2) an assessment of the Governor’s health facilities, and (2) establish a demonstration proposal, and (3) key takeaways from our project in which a select number of counties assessment of the proposal that raise issues for would assume responsibility for treating felony Legislative consideration. Budget bill language Incompetent-to-Stand-Trial patients. on this proposal is forthcoming. This analysis Background Children’s Behavioral Health Services with other entities, including county behavioral health departments, to provide behavioral in Medi-Cal health services on-site; or (3) elect to establish Children Can Access Medi-Cal Behavioral a health center or clinic on-site, at which Health Services in Several Ways. In California, behavioral health services may be provided. the delivery of publicly funded behavioral health The various methods through which schools services is very fragmented and complex. offer behavioral health services each provide Accordingly, there are multiple ways that eligible opportunities for reimbursement through children can access behavioral health services Medi-Cal for eligible children. However, through Medi-Cal (California’s state Medicaid the scope of services that are eligible for program). Below, we describe the major ways reimbursement may vary depending on which through which children can access publicly funded method of offering services is used. (We behavioral health services, and Medi-Cal behavioral discuss the financing of Medi-Cal behavioral health services in particular. health services provided in schools later in this post.) • Schools. Schools currently are responsible for • County Behavioral Health. In California, providing mental health services for students counties play a major role in the delivery who receive special education. In addition to of public behavioral health services. For this responsibility, schools also can elect to example, in the Medi-Cal program, counties offer behavioral health services to all of their are responsible for providing a set of mental students. However, the exact method through health services known as Specialty Mental which they elect to do so varies. For example, Health Services (SMHS), which generally are schools can (1) directly hire behavioral health more intensive mental health services for professionals to provide services; (2) contract 2021-22 LAO Budget Series 1 analysis full gutter beneficiaries (including children) with higher SMHS are broad—focusing on whether there is a needs. Accordingly, Medi-Cal eligible children reasonable probability that a child will not progress access SMHS through counties. In addition, developmentally as a result of their condition. outside of the Medi-Cal program, counties This means that children of varying levels of need often provide behavioral health services to may be eligible to receive SMHS depending on children of all levels of need, which may expectations regarding children’s development. include prevention and early intervention Both counties and managed care plans conduct activities. Counties can pay for these services assessments according to a set of criteria to using their own fund sources, without being determine which delivery system a child should reimbursed through Medi-Cal. Counties receive treatment in. (If a managed care plan also are responsible for providing Medi-Cal determines that a child should receive SMHS, it is substance use disorder services in much of responsible for referring that child to counties for the state. treatment.) • Medi-Cal Managed Care Plans. Over EPSDT Service Gaps May Exist Given the 80 percent of Medi-Cal enrollees (including Design of Behavioral Health Services. In spite children) are enrolled in the managed care of the broad mandate under EPSDT to provide a delivery system. In managed care, DHCS comprehensive set of behavioral health services contracts with health insurance plans—known to all Medi-Cal-eligible children, only by accessing as managed care plans—to provide health SMHS are Medi-Cal eligible children guaranteed care coverage for Medi-Cal beneficiaries. In to access all possible services. Consequently, if a the Medi-Cal program, managed care plans child is not determined to require SMHS from the are responsible for providing a more limited county, the child only may have access to a more set of less intensive mental health services limited set of services. However, the rate at which for beneficiaries with more moderate needs, Medi-Cal-eligible children are determined to be including prevention and early intervention ineligible for SMHS is unclear. activities as well (referred to as non-SMHS). Financing Children’s Medi-Cal Student There likely is some overlap between the services provided by managed care plans and Behavioral Health Services the services provided by counties outside of Several Options Exist for Financing Medi-Cal the Medi-Cal program. Behavioral Health Student Services. As Medi-Cal Early and Periodic Screening, discussed earlier, there are multiple ways in which Diagnostic, and Treatment (EPSDT). EPSDT is Medi-Cal-eligible children can access behavioral a federally mandated program that requires states health services through Medi-Cal. For students to provide a broad range of screening, diagnosis, in particular, beneficiaries can access Medi-Cal and medically necessary treatment services— behavioral health services through their schools. including behavioral health services—to Medi-Cal There are several options through which behavioral beneficiaries under age 21. Under EPSDT, the list health services provided in schools can be of Medi-Cal behavioral health services that children reimbursed through Medi-Cal. We describe these are eligible for is more comprehensive than the list options for Medi-Cal reimbursement below. available to adults. In California, counties provide Schools Can Bill for a Limited Set of this comprehensive set of services through SMHS. Medi-Cal Services Directly. Schools can bill Children’s Eligibility for SMHS Determined Medi-Cal directly through the Local Education by Both Counties and Managed Care Plans. Agency Medi-Cal Billing Option Program As discussed earlier, county behavioral health is (LEA-BOP). The behavioral health services eligible responsible for providing SMHS and managed care for reimbursement under the LEA-BOP are less plans are responsible for providing non-SMHS. The intensive (such as counseling) and are not as criteria for determining whether a child requires comprehensive as the services that can generate federal reimbursement through alternative financing 2021-22 LAO Budget Series 2 analysis full gutter arrangements, which we discuss below. Less underway. Both state and local funding is available than half of all school districts participate in the to support these partnership efforts. Counties can LEA-BOP, and the program only covers roughly use their local funds to support these relationships, 6 percent of students statewide. and state grant funding through the Mental Health Schools Can Partner With County Behavioral Student Services Act program also has been made Health. Schools can establish a partnership with available to counties to support these efforts. their county to provide behavioral health services In Concept, Schools Can Partner With on-site. Under these arrangements, counties Managed Care Plans. In concept, schools could typically provide staff resources to schools to establish a relationship with managed care plans provide behavioral health services and handle to provide behavioral health services in schools. claiming Medi-Cal reimbursement for the more Under this arrangement, schools could receive expansive set of services that they provide under reimbursement from managed care plans for the that program. Notably, under this arrangement, behavioral health services they provide for those counties also may provide behavioral health services that managed care plans are responsible services to a broader student population (including for providing for their Medi-Cal beneficiaries. children not eligible for Medi-Cal or for the specific Alternatively, managed care plans could arrange SMHS services that they provide). Currently, for their providers to be located at school sites. there are multiple partnerships between county Overall, partnerships between schools and behavioral health departments and schools that are managed care plans are very rare. Governor’s Proposal One-Time Medi-Cal Managed Care Incentive Managed Care Plans Would Be Eligible to Payment Program to Build Partnerships With Earn Higher Payments for Specific Activities. Schools and County Behavioral Health. The In addition to the activities managed care plans Governor’s budget proposes $200 million General would receive incentive payments for described Fund ($400 million total funds) in one-time funding above, managed care plans also would receive over three years to DHCS to implement an incentive higher incentive payments for a subset of program through Medi-Cal managed care to build specific activities. These activities include, for infrastructure for establishing partnerships with example, (1) establishing three-way partnerships schools and county behavioral health. Even though including schools and county behavioral health, the eligibility for EPSDT extends to beneficiaries and (2) reducing health equity gaps for African under age 21, the Governor’s proposal focuses on American, Native American, Pacific Islander, or K-12 students. The goal is to increase the number LGBTQ students. of students receiving behavioral health services— Methodology for Allocating Incentives to with a particular focus on prevention and early Managed Care Plans Not Yet Determined. intervention services—through Medi-Cal. The specific allocation methodology that would Incentive Payments Would Be Provided for determine how incentive payments would be a Variety of Activities. The incentive payments distributed to managed care plans has not yet been provided under this proposal would be provided to determined. The administration has indicated that managed care plans for a variety of activities. These development of this methodology will begin July 1, activities include, for example, (1) local planning 2021. efforts to identify service gaps, (2) establishing Other Related Governor’s Budget Proposals. contracts with schools to provide behavioral Below, we describe two other Governor’s budget health services on-site, and (3) providing technical proposals that may have a significant interaction assistance to schools to ensure services are with this proposal. reimbursed through Medi-Cal. 2021-22 LAO Budget Series 3 analysis full gutter • $25 Million One Time to Expand • $25 Million Ongoing in County-School Partnership Proposition 98 Matching Funds Grant Program. See our budget for County Children’s Mental post, The 2021-22 Budget: School Health Projects. See our budget Mental Health, for a description of post, The 2021-22 Budget: School this proposal. Mental Health, for a description of this proposal. Assessment and Issues for Legislative Consideration Key Details of Proposal Are Missing. Further (and counties who currently have partnerships key details are necessary to fully evaluate this with schools) may already provide similar services proposal. These details would include specifics as those that managed care plans can provide, about (1) the methodology that will be used to the degree to which they do is unclear. In order determine how incentive payments will be allocated to improve access to such services—given the to managed care plans, (2) the final set of specific fragmented nature of the behavioral health service metrics managed care plans will be required to delivery—increasing partnerships between schools meet to receive incentive payments, and (3) how and managed care plans could have merit. In funding made available by the incentive payments addition, increasing managed care plans’ presence to managed care plans will flow to schools or in schools could provide an additional opportunity county behavioral health. Our understanding is that to access federal funding through Medi-Cal for budget bill language is forthcoming, however trailer students. bill language will not be proposed. …But Administration Needs to Clarify What Lack of Implementing Legislation Raises Service Gaps Managed Care Plans Are Best Concerns and Questions. While this proposal Able to Fill. Although behavioral health service could have merit, budget bill language is insufficient gaps likely exist across the state for students, for establishing a new program of this magnitude the exact nature and extent of this problem is and novelty. Typically, budget bill language has unclear. To assist the Legislature in its evaluation much less specificity than a trailer bill. If the of this proposal, the administration should clearly Legislature wishes to move forward with this articulate what services managed care will be able proposal, we suggest the Legislature adopt trailer to provide to students that cannot currently be bill language to govern the development of key provided by schools directly or provided through structural details of this program and provide more school partnerships with county behavioral health. opportunities for oversight—like through reporting The proposal would be strengthened by including to the Legislature on development of the allocation a clear strategy for avoiding duplicative services methodology for incentive payments. Without being provided by managed care plans, county authorizing legislation, the Legislature’s ability to behavioral health, and schools. effectively oversee the program and hold managed Fragmented Model of Behavioral Health care plans accountable would be significantly Service Delivery Creates Substantial Need for constrained. State Strategy for Coordination and Clarification Increasing Managed Care Presence in of Roles. In summary, the delivery of behavioral Schools May Have Merit… Managed care plans health services is fragmented, due to (1) multiple can provide a broader array behavioral health entities being able to provide services to children, services to students through Medi-Cal than (2) inconsistency in determining which entities are schools who bill Medi-Cal directly, since the set responsible for covering certain behavioral health of services eligible for reimbursement through services for student beneficiaries, (3) multiple the LEA-BOP is more limited. Although schools ways to access reimbursement for services 2021-22 LAO Budget Series 4 analysis full gutter provided through Medi-Cal, and (4) potential analysis the administration conducted that service-level differences due to ambiguity in indicated that this amount would be sufficient to eligibility determinations for SMHS. Therefore, induce the desired behavior from managed care looking beyond this one-time funding proposal, plans. there is a broader need for the development of Coordination With Other Related Governor’s a robust state-level strategy for coordinating the Budget Proposals Is Unclear. As discussed responsibilities between managed care plans, previously, the Governor’s budget includes two county behavioral health, and schools. This could other proposals that relate to student mental include exploring the feasibility of establishing health. One of these proposals provides additional clearer responsibilities for managed care plans and funding to schools for mental health services, while county behavioral health for children’s Medi-Cal the other provides additional funding to counties behavioral health services. We note that our budget for student mental health services. Both of these post, The 2021-22 Budget: School Mental Health, proposals are meant to support partnerships includes a recommendation for a workgroup between counties and schools for student mental that could work toward this strategy for schools health (the two entities that managed care plans specifically. would be required to partner with under this Whether Incentive Payments Will Achieve proposal). How these three efforts collectively Desired Goal Is Unclear. Given that managed will be coordinated with each other is unclear. care plans generally do not have a presence in In addition, why there are such funding-level schools, whether the incentive payments provided differences between the three budget proposals to managed care plans will actually induce them to concerning student mental health services (with establish school partnerships is unclear. Managed the funding level under this proposal—which care plans would have to consider whether the is provided to managed care plans—being amount of the incentive payments is significant substantially larger at $200 million state funds than enough for them to change their current practices the other two proposals at $25 million state funds and establish the desired partnerships. The each) is unclear. The Legislature may wish to use Legislature may wish to ask the administration for the budget process to inquire about overlap and further details on (1) how the amount in incentive coordination of the DHCS proposal with these payments proposal was determined and (2) what related Governor’s budget proposals. LAO Publications This report was prepared by Corey Hashida, and reviewed by Mark C. Newton and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2021-22 LAO Budget Series 5