CalAIM - Blessing or Bogus

CalAIM – Managed Medicaid Transformation

Like what happened in Oregon nearly a decade ago, and is happening in Washington State, California is striving to save money, improve individual health, and create a healthier community that moves the bar on overall population health. They recognize that much of health, in fact most of health, happens outside the clinic or hospital and is deeply influenced by social, environmental, and other factors outside the typical purview of the health care system. Their effort is called CalAIM (California Advancing and Innovating Medi-Cal).

Long-term data analysis confirms that the 80/20 rule is alive and well in healthcare. 80% of costs are incurred by the 20% of people with complex and unmet needs. The program changes are structured around 14 community supports following themes like housing, in home supports, transition management (like from hospital to home), short term housing, and addictions.

The Good

Having been involved with the managed care transitions in Oregon and Washington there is a lot of potential good from what California is doing. From my perspective that includes:


  • A greater focus on the whole person and less on time in a facility.

  • Recognition of the complex influences of culture, economic, environment, social, and other factors.

  • Greater communication and coordination between health care providers, social services providers, patients, and informal caregivers.

  • Increased funding (versus an unpaid mandate) for targeted services with a demonstrated positive effect on the program’s goals.

  • Greater emphasis and specific program design on increasing equity and culturally competent services.


The Bad With all the good there are also downsides, which from my perspective include:

  • Far too often there is inadequate funding for social services so improved coordination to nothing does little to move the core goals forward. As an example, wait lists for low-income individuals to use section 8 vouchers are often 2 years or longer. So, streamlining a referral does little good.

  • It does little to nothing to reform the financial incentives in the health care system to over prescribe, over refer, over test, over treat.

  • It fails miserably to enhance patient capacity to manage their own care and function effectively as the captain of the care team.

  • The Oregon CCO program included strong and aligned financial incentives to control overall costs, Washingtons ACH effort was weaker but still better than nothing, the CalAIM program seems to have ignored this entirely.

What should you be doing as an FQHC or health provider? Ideally you would have had strategic discussions with board, staff, and key partners long before the first implementation in January 2022. Late, however, is better than never if you did not. You might be tempted to not get too excited since this is a waiver program and currently authorized for 2022-2027. Experience tells us that if there are any positive outcomes the program is likely to be renewed in similar form to the original. So, it is more likely to be the new normal than an aberration.

Depending on your organizations vision, strategies, and goals CalAIM may be a continuation of what you have already started or a distinctly different direction.

  • If it is inconsistent, you need to look at your overall vision and strategies and determine if the program could be a support for your own strategy. You should be aware and open, but not allow the state program to derail or distract from your overall strategic direction.

  • If it is consistent, you should look at each element and see how they might enhance or supplement what you are already doing or planning to do. There may be funding for activities you are already performing as part of your base budget. You will need to determine where to invest the new funds to take your program to the next level – that is always a lot of fun. It is likely there are roles or functions necessary to carry out the new program elements which are not funded or inadequately funded. You will need to figure out how you are going to fill those funding gaps if you move forward.

Always remember that strategy precedes and determines budget, not the other way around. Figure out your strategy first and then figure out how to fund the strategy.

In conclusion the CalAIM waiver program is most likely a welcome extension of what you as an FQHC have been doing for years, however, each organization’s strategy, budget, financial position, partnerships, et cetera are unique. You should make it a matter of deep and broad discussion how CalAIM fits, or does not, with your vision and strategies. Ignoring it will be to your own peril. Wholesale adoption without strategic and financial analysis is equally perilous. Put in the time and effort to determine how this can move your mission, vision, and strategies forward.

  • If you have the capacity, look at the next steps and plan a few moves ahead. Look at what has happened with your neighbors in Oregon, Washington, and other states with similar efforts.

  • Since much of the effort is in coordination what is your organizations capacity for coordination – culturally, technologically, and operationally?

  • How can you be proactive to encourage the program to evolve in ways that most powerfully and sustainably achieve the promised goals of the waiver and put your organization, patients, and community in the best possible position?

  • Of the elements that are core do you have current capacity? If they are not core are there partners in the area to coordinate with?

  • When it comes to regular referrals to/from social determinants providers do you have software to manage those referrals and facilitate follow up – both ways?

As your organization participates in and promotes the CalAIM I wish you all the best. It is an exciting time to be part of meaningful change and increased ability. Please remember that it is change, however, and must be coordinated with all the other change you are going through – internal and external. Your pace and level of involvement should be balanced so you don’t wear out or overburden staff who live with the new relationships, software, and procedures every day. Take it slow and thoughtful, make sure you have adequate budget for the efforts, and enjoy the benefits of increased patient engagement and success.

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