Attorney Articles | Implementation of the Affordable Care Act in California

Articles by Legal Department Staff

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Implementation of the Affordable Care Act in California

Details on the Implementation of the Affordable Care Act in California 

Details on the Implementation of the Affordable Care Act in California

Sara Jasper, JD
Staff Attorney

The Patient Protection and Affordable Care Act, otherwise known as the Affordable Care Act (“ACA”) or “Obamacare,”is a federal statute that was signed into law on March 23, 2010. One of the ACA’s primary goals is to make healthcare available to millions of Americans who have been unable to afford healthcare. As a result, states were given the option to expand its Medicaid services.1 Medicaid services are generally health care services provided by the state to low-income citizens. California, 24 other states, and Washington D.C. chose to expand its Medicaid services, effective January 1, 2014. In California, Medicaid is commonly known and referred to as Medi-Cal and the Department of Health Care Services (DHCS ) is responsible for implementing the expansion of Medi-Cal services in the state.

This article will discuss how the DHCS is implementing the expansion of Medi-Cal services, specifically mental health services, who is eligible for these expanded services, what those services include, and how Licensed Marriage and Family Therapists (LMFTs), as well as MFT Trainees and Interns, are being utilized as providers of those services.

How the DHCS is Implementing the Expansion of Medi-Cal Mental Health Services
To grasp how the expansion of Medi-Cal mental health services is being implemented throughout the state, a person must first understand how California’s mental health system is structured and governed.

The federal government approves and oversees California’s Medi-Cal program to make sure the program abides by federal laws and regulations. In other words, the federal government has to approve any changes California wishes to make to its Medicaid plan and any waivers the state proposes that would allow it to provide services in a manner not outlined in federal Medicaid law. California has a community-based mental health system that was established in 1957 with the adoption of the Short-Doyle Act. The Act encouraged local governments to deliver mental health services by providing matching state funds for community services. Although the system for the delivery of mental health services has changed over the years, counties have had the primary responsibility for delivering services. The state has been largely responsible for oversight of the system.

The DHCS governs California’s Medi-Cal program. The DHCS is responsible for setting state Medi-Cal policy and for regulating how Medi-Cal covered mental health services are administered. Under the state designed system for delivery of services to Medi-Cal beneficiaries, either County Mental Health Plans or Medi-Cal Managed Care Plans are responsible for providing mental health services. The role the plans ultimately play in delivering services depends upon the needs of the Medi-Cal clients seeking services. The two potential pathways to mental health services for Medi-Cal beneficiaries is described in detail below.

The Role of County Mental Health Plans
Some Medi-Cal mental health services are provided by County Mental Health Plans.2 Children and adults who meet medical necessity criteria or Therapeutic Behavioral (EPSDT) criteria for specialty mental health services will receive those services through MHPs. These services are offered to beneficiaries with severe mental health issues. Medical necessity criteria generally includes having received a covered diagnosis, demonstrating specified impairments, and meeting specific intervention criteria. Medical necessity criteria, however, also differs depending on whether the determination is for inpatient services, outpatient services or outpatient services for beneficiaries who are under the age of 21. The regulations that govern medical necessity criteria may be found at Title 9, California Code of Regulations (CCR), Sections 1820.205 (inpatient), 1830.205 (outpatient), and 1830.210 (outpatient for beneficiaries under the age of 21).

Until January 1, 2014, Medi-Cal beneficiaries with mental health issues that did not meet the criteria for specialty mental health services only had access to limited outpatient mental health services that were delivered by primary care providers or were referred to Medi-Cal Fee-For-Service mental health providers. Medi-Cal Fee-For-Service mental health providers render services and then submit claims for payment to Medi-Cal. Basically, the Fee-For-Service system is a payment model where services are unbundled and paid for separately.

The Role of Medi-Cal Managed Care Plans
As discussed above, the first potential pathway is through MHPs. The second pathway is through Medi-Cal Managed Care Plans (MCPs). MCPs are responsible for providing services to children and adult Medi-Cal beneficiaries who suffer from mild-to-moderate impairment of mental, emotional, or behavioral functioning resulting from a mental health disorder as defined by the DSM, that are outside of the Primary Care Physician’s scope of practice. For services covered by an MCP, medically necessary services are defined as services that are reasonable and necessary to protect life, prevent significant illness or significant disability, or to alleviate severe pain through the diagnosis and treatment of disease, illness, or injury. This new requirement is in addition to the existing requirement that primary care providers offer mental health services within their scope of practice. Note: Conditions that the DSM identifies as relational problems (i.e., couples counseling and family counseling for relational problems) are not covered as part of the new benefit provided by an MCP or an MHP.

Although there are two pathways and each pathway is obligated to provide certain types of services to Medi-Cal beneficiaries, the DHCS ‘ motto is no “wrong door.” In other words, Medi-Cal beneficiaries may seek access to mental health services by following either pathway and the MHPs and the MCPs are responsible for communicating and coordinating with one another to ensure that beneficiaries receive the services they are entitled to receive.

To ensure the necessary communication and coordination between the MHPs and the MCPs takes place, the DHCS required MHPs and MCPs to enter into Memorandums of Understanding (MOUs). An All Plan Letter dated November 27, 2013 from the DHCS states the requirements for those MOUs.3

How MCPS and MHPS will Coordinate Care
A subsequent All Plan Letter dated December 13, 2013 (APL-13-021) from the DHCS describes MCPs’ responsibilities for referring to, and coordinating with, MHPs. The following is information taken directly from the All Plan Letter:

“Each MCP is obligated to ensure mental health screening of all beneficiaries by network primary care providers. Beneficiaries with what the system calls “positive” screening results4 may be treated by a network primary care provider within the primary care provider’s scope of practice. When the beneficiary’s condition is beyond the provider’s scope of practice, the MCP must refer the beneficiary to a mental health provider within the MCP network for a mental health assessment. The mental health provider is required to use a Medi-Cal approved clinical tool or the set of tools that were mutually agreed upon in the agreement with the County Mental Health Plan to assess the beneficiary’s disorder, level of impairment, and appropriate care.

When an MCP beneficiary with a mental health diagnosis is not eligible for specialty mental health services through an MHP because the adult beneficiary’s level of impairment is deemed mild-to-moderate or, for adults and children, the recommended treatment does not meet criteria for specialty mental health services, then the MCP is required to ensure the beneficiary receives outpatient mental health services.

Each MCP is responsible for ensuring its network providers refer beneficiaries with significant impairment evidenced by a mental health assessment and diagnosis to a County Mental Health Plan. In cases when the beneficiary has a significant impairment, but the diagnosis has yet to be determined, the MCP must make sure the beneficiary is referred to the MHP for further assessment. The MCP may, however, negotiate with the MHP to provide outpatient mental health services as long as the MCP covers payment for the services.”

The All Plan Letter also makes it clear that the number of visits for mental health services is not limited as long as the Medi-Cal beneficiary meets medical necessity criteria.

The DHCS is monitoring the implementation of the Medi-Cal expansion services and is establishing reporting requirements as well as methods for evaluating performance to improve the system for services where necessary and to ensure consumer protection.

Who is Eligible for Expanded Medi-Cal Services
Prior to expansion under the ACA, Medicaid was available only to certain types of lowincome individuals, including children, their parents, pregnant women, the elderly or disabled. In a majority of states, adults without dependent children were ineligible for Medicaid and income limits that would disqualify parents for Medicaid eligibility were very low, typically below half the poverty level.5

When it was signed into law, a major focus of the Affordable Care Act was to extend Medicaid to almost all nonelderly adults with incomes at or below 138% of poverty. In 2013, a family of four making about $32,500 would be considered at or below 138% of poverty. Since California chose to expand its Medicaid coverage under the ACA, as of January 1, 2014, Medicaid in California (Medi-Cal) covers a majority of nonelderly adults with incomes up to 138% of poverty.

Prior to this year, states, including California, expanded eligibility for children through Medi-Cal and the Children’s Health Insurance Program (CHIP). In California, children with family incomes up to 266% of poverty (about $62,600 for a family of four) are eligible for Medi-Cal or CHIP. Undocumented immigrants are still ineligible for Medi-Cal and immigrants who are lawfully residing in California are subject to certain Medi-Cal eligibility restrictions.6

In its strategic plan for 2013-2017, the Department of Healthcare Services indicated the State currently funds health care services for more than 8.5 million Medi-Cal members and expects that number to increase to almost 10 million as a result of the ACA’s implementation.

What Medi-Cal Services Include
County Mental Health Plans must offer the following outpatient, residential and inpatient services:

Outpatient Services

  • Mental Health Services (assessments, plan development, therapy, rehabilitation, and collateral)
  • Medication Support
  • Day Treatment Intensive Services
  • Day Rehabilitation Services
  • Crisis Intervention and Crisis Stabilization
  • Targeted Case Management
  • Therapeutic Behavioral Services Residential Services
  • Adult Residential Treatment Services
  • Crisis Residential Treatment Services Inpatient Services
  • Acute Psychiatric Inpatient Hospital Services
  • Psychiatric Inpatient Hospital Professional Services
  • Psychiatric Health Facility Services

Medi-Cal Managed Care Plans must offer the following outpatient services:

  • Individual and group mental health evaluation and treatment (psychotherapy)
  • Psychological testing when clinically indicated to evaluate a mental health condition
  • Outpatient services for the purpose of monitoring drug therapy
  • Psychiatric consultation
  • Outpatient laboratory, drugs, supplies, and supplements7
  • Substance Use—Screening, Brief Intervention and Referral to Treatment (SBIRT) for adults age 18 and older

How Licensed Marriage and Family Therapists, MFT Trainees and Interns are Being Utilized
The expansion of Medi-Cal services under the ACA has the potential to create many opportunities for Licensed Marriage and Family Therapists (LMFTs) as well as MFT Trainees and Interns.

To date, LMFTs are serving the Medi- Cal population in several ways. LMFTs are working for the MHPs as employees of the county, independent contractors, or as employees of agencies that have contracted with MHPs to provide Specialty Mental Health Services for those Medi-Cal beneficiaries who have severe mental health issues.

LMFTs who have contracted to serve as providers for health plans that are participating in the Medi-Cal expansion efforts as MCPs are also serving the Medi- Cal population. For now, however, these are indirect relationships with Medi-Cal. This means, LMFTs are still unable to directly bill Medi-Cal for services and the reimbursements they do receive as a result of their relationships with the counties and managed care plans is an indirect reimbursement. In other words, the monies for Medi-Cal services are distributed by the state to the counties or the managed care plans and LMFTs are then reimbursed by the counties or the managed care plans.

The current lack of recognition of LMFTs as billable Medi-Cal providers is also an issue in Federally Qualified Health Centers (FQHCs). FQHCs routinely struggle to find qualified providers to meet the mental health needs of consumers in rural areas. With the implementation of healthcare reform, the need for providers in these settings is even more urgent because increased consumer demand is creating an even greater disparity in providerto- patient ratios. FQHCs need additional mental health providers and LMFTs are qualified to do such work.

In order to ensure that counties, managed care plans, and FQHCs have adequate provider networks, the DHCS has pledged to address the issue of inclusion of LMFTs as official, fully recognized Medi-Cal providers as part of Phase 2 of its ACA/Medi-Cal expansion implementation process.

While the DHCS has not yet shared with CAMFT, or any of its other mental health stakeholder groups, how recognition of LMFTs as Medi-Cal providers will be achieved or given at timeframe for implementation of that phase of its ACA/Medi-Cal expansion efforts, CAMFT is an active advocate stakeholder and will keep the membership informed as to any ACA developments. To CAMFT’s knowledge, the DHCS would either have to apply for a waiver to be approved by the Center for Medicare and Medicaid Services or draft legislation to gain recognition of LMFTs as Medi-Cal providers. DHCS representatives have indicated they are working with members of the legal staff to determine the best approach to this issue and has been working diligently to keep all of its mental health stakeholders informed through various stakeholder meetings. CAMFT attends the DHCS’s Stakeholder Advisory Committee meetings, its Mental Health and Substance Use Disorder Stakeholder meetings, and its Medi-Cal Managed Care Division Advisory Group meetings to make certain the Association’s members receives timely updates on all of the latest developments.CAMFT has also partnered with other mental health stakeholder groups such as AAMFT and the Primary Care Association to communicate collective concerns about the implementation of the ACA and Medi-Cal expansion services. In addition to working toward inclusion of LMFTs as Medi-Cal providers, CAMFT is focused on making sure MFT trainees and interns are utilized to the fullest extent possible by counties, agencies, and health plans. In December 2013, we became aware that a few of the health plans that had contracted with the DHCS to provide services to Medi- Cal beneficiaries were not allowing MFT Trainees and Interns to provide services to those with mild-to-moderate mental health issues. In January 2014, CAMFT and its partners wrote a letter to the DHCS asking that it clarify with its health plan partners that properly supervised trainees and interns could provide services offered through the Medi-Cal managed care plans. At the time this article was being prepared for publication, CAMFT had not received a response from the DHCS but expected one to be fo


Other Areas of the ACA
Due to the lack of information currently available from the DHCS about substance abuse disorder benefits, CAMFT chose to focus this article on the state’s expansion and implementation of the mental health services offered to Medi-Cal beneficiaries. However, an article which offers details about the expansion of substance use disorder services will appear in an upcoming issue of The Therapist.

Also, please note that providers who do not see Medi-Cal clients and who do not bill insurance companies are not impacted by the implementation of the Affordable Care Act and the State’s expansion of Medi-Cal services. Providers who do work with insurance plans companies, should review the article titled, “The Affordable Care Act and its Potential Impacts on Mental Health Professionals” in the November/December 2013 issue of The Therapist for information about Essential Health Benefits that must be covered by certain plans.

California’s system for offering mental health care services to its Medi-Cal beneficiaries is undergoing many changes as a result of the ACA’s implementation. It is CAMFT’s hope that these changes will result in new service opportunities for LMFTs as well as MFT Trainees and Interns. The Association is committed to keeping members informed about the ACA’s immediate and long-term impacts.

For the most recent information on any ACA implementation efforts, visit CAMFT’s website at or contact Staff Attorney, Sara Kashing.

Sara Jasper, JD is a staff attorney for CAMFT. Sara is available to answer member calls regarding legal, ethical, and licensure issues.

1 A 2012 ruling by the Supreme Court determined that states could not be forced to expand their Medicaid programs as a provision of the ACA.
2 County mental health plans offer specialty mental health services under the state’s Medi-Cal Specialty Mental Health Services (SMHS) Consolidation 1915(b) waiver program. The Specialty Mental Health Services waiver program has been in effect since 1995 and has been renewed eight times. The most recent waiver was approved by the Center for Medicare and Medicaid Services for a two-year term, from July 2013 through June 30, 2015.
3 See All Plan Letter 13-018 in its entirety by going to MMCDAPLsandPolicyLetters/APL2013/APL13-018.pdf
4 A positive screening result does not mean someone has a mental health disorder. A positive result simply means a person shows signs of a possible mental health disorder.
5 Go to as-of-january-1-2014 for more information about pre- and post-ACA Medicaid eligibility for adults.
6 For more information on Medi-Cal coverage for immigrants, go to for-low/
7 Laboratory testing may include tests to determine a baseline assessment before prescribing psychiatric medications or to monitor side effects from psychiatric medications. Supplies may include laboratory supplies. Supplements may include vitamins that are not specifically excluded in the Medi-Cal formulary and that are scientifically proven effective in the treatment of mental health disorders.