California Extends, Adds New Medicaid Coverage for SUD Treatment

The nation’s largest Medicaid program has received federal approval to make improvements and additions to its services, among them being those for substance use disorder (SUD) treatment.

The Centers for Medicare & Medicaid Services (CMS) – which is the nation’s largest payer of behavioral health services – has given the go-ahead to the California Department of Health Care Services (DHCS) to implement the changes to Medi-Cal, which provides Medicaid to one-third of residents throughout the Golden State.

The changes began taking effect January 1 and are facilitated by waivers that both extend demonstration projects and implement modifications to the delivery of various health care services.


As part of the changes, SUD treatment services – which are offered statewide through the Drug Medi-Cal Organized Delivery System – are now a permanent part of Medi-Cal’s managed care system.

Medi-Cal recipients can access the system, which was initially established through a demonstration project waiver in 2015, to pay for a variety of treatment services. A newly-approved waiver integrates those treatment services – along with specialty mental health services, Medi-Cal managed care and dental managed care – into a single coordinated body.

California DHCS has also been granted federal approval for new initiatives in their efforts to combat SUD among residents. Only 10% of state residents with SUDs seek help for drug abuse, according to the California Health Care Foundation.


“California is excited to begin statewide … implementation to provide Medi-Cal enrollees with consistent access to the care they need, when they need it, no matter their zip code or the language they speak,” California DHCS Director Michelle Baass said in a press release issued by the agency.

The new initiatives include contingency management services, which provide incentives to individuals to help them in their recovery from SUD.

Contingency management services have become an increasingly favored tool in SUD treatment, with examples of incentives that include vouchers for items like food and movie tickets, as well as lotteries and raffles that give patients the chance to win cash prizes.

The initiatives also include extending peer support specialists – through a combination of federal authorities – to help individuals in their recovery journey.

Each of California’s 58 counties will have the option to use peer support specialists, who are counselors that have previously battled SUDs and other behavioral health afflictions. The state, last year, began developing a certification program for peer support specialists through the Drug Medi-Cal Organized Delivery System.

Forty-one states provide Medicaid reimbursements for peer support services. However, those services were previously not reimbursable through Medi-Cal. The option to implement peer support specialists in California counties will begin in July.

The additions and changes to MediCal were made with the approval by CMS of California Advancing and Innovating Medi-Cal (CalAIM), a state effort created to strengthen its Medicaid reimbursement program.

“We’re making Medi-Cal, which provides health care to one third of all Californians, the most comprehensive, robust such program in the entire country,” California Governor Gavin Newsom said in the press release issued by California DHCS.

Among the goals of the large-scale improvements and additions to MediCal are enhancing care coordination and addressing social determinants of health such as race and income level, which might impact the ability of one to access treatment.

“CalAIM reflects California’s commitment to a healthier and more equitable state and will be a model of transformation for the entire health care system,” California Health & Human Services Agency Secretary Dr. Mark Ghaly said in the press release.

It has previously been estimated that $82 billion has been spent annually to provide Medicaid to California residents, with funding coming from the federal and state levels. The figure, which is the nation’s largest, is almost $20 billion more than that which is spent on residents in New York, which ranks second among fifty states and Washington, D.C.