The Road to Parity: The 1115 Waiver & Medi-Cal in the Year 2020

Behavioral Health providers have often felt like the ugly step-children of the healthcare system. Federal funding for behavioral health has historically ignored the importance of mental health and substance use disorder (SUD) treatment. The most predominant example lies within the controversial Institutes of Mental Disease (IMD) Exclusion found in the Social Security Act. The exclusion prohibits Medicaid funding to any IMD, which is defined as an “institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases.”[1] The law has been slightly amended since its passage, making exceptions for patients under age twenty-one and over age sixty-four. Nonetheless, a clear divide exists between behavioral and physical health within the law.

Recently, efforts to achieve parity among all spheres of health care have emerged, particularly with California’s Bridge to Reform initiative. In light of the Affordable Care Act (ACA), California has presented the 1115 Waiver Renewal to expand the notion of parity and calls for a system transformation, encouraging “whole-person health care.” Proposing increased funding, the waiver outlines several changes to the current system which would ultimately increase access to behavioral health care. The waiver seeks to enhance coordination between Medi-Cal managed health care plans, county specialty mental health plans, substance use disorder treatment services, and contracted providers. With integration of these systems, Medi-Cal patients will be able to receive proper care under the scope of both physical and mental health, regardless of the setting. Moreover, the renewed version of the waiver has an amendment, the Drug Medi-Cal Organized Delivery System waiver, standing in opposition to the IMD Exclusion that “seeks to provide better coordination of care and a full continuum of care for substance use disorder treatment services, including residential treatment…”[2] The waiver also stresses greater access to housing and supportive services (such as case-management). There is a key focus on the use of evidence-based practices with respect to those suffering from substance use or mental disorders. Through a redesigned system, Medi-Cal 2020 seeks to provide behavioral health services previously unavailable to beneficiaries.

In order to integrate behavioral and physical health, the 1115 Waiver Renewal has set forth two new models: the Plan/County Coordination Model and the Provider Integration Model. Under the first proposition, Medi-Cal would offer financial incentives to Medi-Cal Managed Care Plans (MCPs) and Mental Health Plans (MHPs) simply for signing an agreement. By signing, both plans would agree to health information exchange, data collection, shared accountability processes, financial alignment incentives, and other specifics – all dependent on the California Department of Health Care Services (DHCS) approval.[3] After demonstrating that their plans meet standards of quality and outcome, participating MCPs and MHPs would be compensated with another group of incentive payments. Under this model, MCPs and MHPs can work together to ensure that patients have access to physical and mental health care while focusing on value and quality, rather than cost. The second model, the Provider Integration Model, urges physical and mental health plans to unify care for Medi-Cal patients with serious health conditions at the provider level. The waiver suggests co-location or making use of “telehealth,” which will be critical in counties with a lack of providers for specialty care. The end goal is to achieve integrated, “no-wrong-door” health care, providing greater equity for mental health.

In the Year 2020, Medi-Care behavioral health care providers will receive more funding, drawing from the requested $15 to $20 billion in Federal funds. The waiver implements a state/federal savings plan, allowing California to receive a percentage of the federal savings generated by cost reductions. Through this plan, California would reinvest savings into Medi-Cal after demonstrating first that the system saved money while also maintaining a federal balanced budget after reinvestment. With excess costs limited, renewed resources can help provide necessary care for some of the estimated 60,000 Medi-Cal recipients designated as “at risk,” specifically those suffering from substance use disorders.[4] The passage of the waiver would not only lead to increased funding, but also provide support to those previously barred from funding under the IMD Exclusion. Overall, Medi-Cal 2020 demonstrates the movement toward parity in all segments of health care. The 1115 Waiver Renewal has the potential to transform the system through a partnership of the state and federal governments, providing equity and safeguarding the “whole person.”


[1] . “The Medicaid IMD Exclusion: An Overview and Opportunities for Reform.” Legal Action Center.Web. 19 June, 2015.

[2] . Medi-Cal 2020: Key Concepts for Renewal, “Final Draft,” California Department of Healthcare Services, March 16, 2015

[3] . ibid.

[4]  . ibid.