CurrentCalifornia Department of Health Care ServicesPolicy N/A

BH-CONNECT Section 1115 Demonstration (Extent and Scope)

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CMS approved California's BH-CONNECT Section 1115(a) demonstration to fund and test community-based behavioral health initiatives, workforce supports, HRSN services, SMI treatment strategies, and targeted housing assistance affecting Medi‑Cal beneficiaries and participating Behavioral Health Plans (BHPs).

Policy Summary

PayerCalifornia Department of Health Care Services

PolicyBH-CONNECT Section 1115 Demonstration (Extent and Scope)

Policy CodePolicy N/A

Change TypeNo material change

Effective DateJan 1, 2025

Next Review DateN/A

Key ActionParticipating Behavioral Health Plans must complete an NCQA MBHO self-directed assessment and meet Incentive Program participation requirements to be eligible for incentive payments.

SourceLink

POLICY UPDATE CHANGES

No material clinical or coverage changes in this revision.

Jan 1, 2025–Dec 31, 2029demonstration effective period

$1.9Btotal incentive funding (5 yrs)

$1,615,000,000DSHP cap

severalauthorized demonstration components

5%→20%accountability at-risk (DY3→DY5)

Authorized Coverage Criteria and Program Rules

Approved and Deferred Services — scope of approved services and waivers

Scope of services approved now and items the state requested but which were deferred are summarized below.

Approved services: waivers and expenditure authorities permitting county‑by‑county operation of selected enhanced community services (peer support, supported employment, enhanced community health worker services) in electing Drug Medi‑Cal counties and other demonstration components specified in the STCs.

Waivers for Enhanced Community-Based Services (county opt-in)

County‑option waivers permit geographically limited implementation of specified community‑based services in electing counties; key conditions are:

Statewide operation waiver allows county‑by‑county implementation so that selected services may be offered only in counties that opt in and meet selection criteria.

Electing county authorities (ONE or MORE)

Peer support services: may be implemented in electing Drug Medi‑Cal State Plan counties on a geographically limited basis (effective upon county election).
Supported employment: may be implemented in electing Drug Medi‑Cal State Plan counties on a geographically limited basis (effective when SPA 24‑0051 is implemented).
Enhanced community health worker services: may be implemented in electing Drug Medi‑Cal State Plan counties on a geographically limited basis (effective when SPA 24‑0052 is implemented).

Participation limited to counties that opt in and satisfy DHCS readiness and program requirements; waivers permit limiting comparability and scope to electing counties as described in the STCs.

Coverage and state-plan interaction

How demonstration authorities interact with the Medicaid/CHIP state plan:

The demonstration authorizes specified programs (Workforce Initiative, DSHP, Activity Funds, Incentive Program, IMD short‑term SMI services, Community Transition In‑Reach, and limited short‑term rental assistance) under the STCs; these operate alongside the Medicaid and CHIP state plans.

State Plan interaction: the state is not required to submit SPAs for populations made eligible solely through the demonstration; if a state‑plan‑eligible population is affected by demonstration changes, a conforming SPA is required. In all cases, the Medicaid and CHIP state plans govern eligibility and standard methodologies.

Eligibility

Eligibility and enrollment stance under BH‑CONNECT:

No change to Medicaid or CHIP eligibility: eligibility standards and methodologies remain those in the Medicaid or CHIP state plans and are subject to applicable laws and regulations.

Enrollment into demonstration‑only services requires membership in Medicaid or CHIP as applicable and meeting program‑specific eligibility criteria described in the STCs for each initiative.

Access, Reform and Outcomes Incentive Program criteria

Access, Reform and Outcomes Incentive Program — participation, use restrictions, and funding conditions:

Program overview: DHCS will administer a pilot incentive program distributing up to $1.9 billion total computable over 5 years to BHPs in selected counties for measurable improvements in access, outcomes, and delivery system reforms.

Participation requirements: BHPs must complete the NCQA MBHO self‑directed assessment on DHCS timelines and meet participation, reporting, and evidence‑based practice (EBP) implementation conditions (e.g., ACT, Forensic ACT, CSC for FEP, IPS Supported Employment, Clubhouse, Enhanced Community Health Worker Services, Peer Support) to be eligible for measures tied to EBP implementation.

Use and non‑supplanting restrictions: Incentive funding must not supplant other federal, state, or local funding or reduce payment amounts otherwise payable for Medi‑Cal activities, and may not reward improvements already incentivized by other state programs; earned incentives must be used to support/expand Medi‑Cal services for members.

Operational conditions: DHCS will determine amounts BHPs can earn using methodology in the Incentive Program Protocol; payments made at least annually; state must submit Protocol for CMS approval; FFP availability contingent on Protocol approval per STCs.

Incentive payment eligibility and operations

Eligibility to earn incentive payments and operational rules:

County and BHP eligibility: program is a pilot limited to up to 80% of counties selected by the state; within participating counties, BHPs that meet participation requirements and implement specified EBPs are eligible to earn payments.

Performance measures and earning: payments are tied to performance on measures across three focus areas (Access; Health Outcomes & Quality of Life; Targeted Delivery System Reforms) as defined in the Incentive Program Protocol; DHCS distributes earned payments at least annually per Protocol methodology.

Claiming and FFP timing: total FFP up to $1.9B over 5 years; FFP for Incentive Program expenditures is subject to CMS approval of the Incentive Program Protocol (with narrow STC exceptions) and may be retroactive to DY2 for approved elements; claiming rules and reporting on CMS‑64 waiver forms apply.

Reporting and audit: BHPs must submit annual reports and data; DHCS will monitor performance, may request supporting documentation, and may remove counties/BHPs for poor performance or noncompliance.

Incentive program accountability and distribution criteria

Accountability, at‑risk funding, and distribution rules for the Incentive Program:

State accountability measures: the state must propose 3–5 accountability measures (with at least one per focus area) that are calculable and aggregable across participating counties.

At‑risk funding schedule: a share of total incentive funding is placed at risk if accountability measures are not met; percent at risk increases by demonstration year (0% DY1–DY2; 5% DY3; 10% DY4; 20% DY5) and is applied to the global funding pool before individual plan allocations.

Accountability scoring and reporting: accountability scores are calculated by weighted aggregation of measures; the state will report its Accountability Score to CMS in the Annual Monitoring Report with supporting calculations; program accountability reductions are forfeited and cannot be restored in later years though earned payments may be paid in subsequent years against the originating year's expenditure limit.

Claiming and distribution constraints: Incentive Program expenditures must be reported on CMS‑64 waiver lines as administrative; incentive payments only distributable for Demonstration Years 1–5 and subject to Protocol and claiming rules.

High‑performance pool eligibility: Protocol must define prerequisites and targets for a high‑performance pool to reward higher performing BHPs; details in Incentive Program Protocol.

Terms and conditions for the five workforce initiatives

Terms and conditions that apply across the five workforce initiatives:

Full‑time service commitments: participants must fulfill full‑time service commitments in defined safety‑net settings (FQHCs; hospitals with ≥40% Medicaid/uninsured; rural hospitals ≥30% Medicaid/uninsured; other behavioral health settings with ≥40% Medicaid/uninsured); part‑time service across qualifying organizations allowed if each meets safety‑net definition.

Compliance and recoupment: state will develop compliance processes; failure to meet service commitments (absent extraordinary circumstances) results in cessation of payments and recoupment of funds with return of federal share to CMS within one year of breach.

Education/training standards: funded education and training programs must be state‑certified/accredited or meet widely recognized guidelines approved by the state.

Program exclusivity: individuals participating in one workforce program under STC Section 6 are ineligible to participate in another until service obligations are satisfied, except Residency participation concurrent with Loan Repayment as specified.

Scholarship & Loan Repayment Criteria

Eligibility, award tiers, service obligations, and payment routing for scholarship and loan repayment programs:

Eligible practitioners: prescribing licensed practitioners and those in training (eligible up to $240,000); non‑prescribing licensed or pre‑licensure associates (eligible up to $180,000); specified community providers (AOD counselors, CHWs, peers, etc.) eligible up to $120,000 as defined in STC 6.2 and related sections.

Award amounts: prescribing practitioners up to $240,000; non‑prescribing licensed/associate up to $180,000; certain non‑prescribing community providers up to $120,000; state may only repay up to the practitioner's loan balance and only loans for the course of study leading to the highest qualifying degree are eligible.

Service obligations by award amount: awards ≥ $20,000 require 4 years full‑time service in safety‑net setting; $10,000–$20,000 require 3 years; < $10,000 require 2 years (full‑time at safety‑net setting) and failure to meet obligations triggers recoupment.

Payment routing: loan repayments must be made directly to the student loan servicer by the state or procured vendor; scholarship payments must be made directly to educational institutions by the state or vendor; funds will not be provided directly to individuals and scholarship recipients must apply to FAFSA and Cal Grant before payments are made.

Program participation limits and oversight: individuals cannot concurrently participate in multiple workforce programs until obligations are fulfilled except specified Residency/Loan Repayment exception; state oversight includes annual reporting from funded organizations.

Coverage and participation criteria across scholarship, recruitment/retention, licensure/certification, supervision/backfill, and community training

Coverage and participation rules across recruitment/retention, licensure/certification, supervision/backfill, and community training:

Scholarship payments: must be made directly only to educational institutions (state or vendor); recipients must apply to FAFSA and Cal Grant before payments are disbursed.

Recruitment and retention bonuses: up to $20,000 per practitioner to provider organizations meeting safety‑net definition; up to $50,000 recruitment bonus to support students completing degree programs with full‑time practice commitment upon licensure; recruitment bonus recipients are ineligible for retention bonuses until recruitment commitment fulfilled.

Licensure/certification payments and supervision supports: up to $1,500 per practitioner for licensure/certification costs (recipients commit to 2 years full‑time at paying provider); up to $35,000 per demonstration year to safety‑net organizations to support supervision hours for pre‑licensure practitioners.

Backfill and training payments: backfill allowed for training in specified EBPs with maximum daily rates by practitioner category; Community‑Based Provider Training Program payments up to $10,000 per practitioner for tuition/exam/certification costs, conditional on 3‑year full‑time service commitment in safety‑net settings; all payments made directly to programs/organizations, not individuals.

Community-Based Provider Training Program

Community‑Based Provider Training Program eligibility and allowable uses:

Eligibility: participation conditioned on a three‑year full‑time service commitment in safety‑net settings defined in STC 6.1(a).

Allowable uses and payment limits: State may pay training programs up to $10,000 per practitioner for program tuition, required fees, professional exam fees, and certification/licensure costs; payments must be made directly to training programs and not to individuals.

Residency/Fellowship Funding

Behavioral Health Residency Training Program terms and operations:

Award limits: up to $250,000 per residency/fellowship slot per demonstration year; state may adjust awards for inflation subject to total funding limits and ensure awards do not exceed slot operating costs.

Recipient requirements: awards only to safety‑net settings meeting STC 6.1(a); recipients must demonstrate training infrastructure and align with residency/fellowship standards; programs must be certified/accredited or approved by recognized bodies.

Enrollment and linkage to loan repayment: practitioners in funded slots will be enrolled in the Student Loan Repayment Program and loan repayment awards will be made on behalf of practitioners during training; service commitments post‑training at safety‑net settings apply.

Payment rules: residency payments made directly to safety‑net settings by State or procured vendor, not to individuals; payments made at least annually; pro‑ration if slots unfilled and state will recoup FFP if slot unfilled beyond one month when pre‑paid.

Funding Limits and Administrative Requirements

Funding limits, redistribution, time‑limited authorities, and administrative requirements for workforce initiatives:

Funding caps and schedules: Table 2 (STC 6.8) sets maximum funding by demonstration year for each workforce initiative (including administrative costs); selected program totals include $234M for Scholarships and $530M for Loan Repayment across DY1–DY5.

Redistribution authority: after DY2, the state may reallocate up to 30% of Workforce Initiatives funding among programs without seeking an amendment, based on program results, with notification to CMS in annual reports.

Time‑limited close‑out authority: state has limited expenditure authority from Jan 1, 2030 to Dec 31, 2033 to pay close‑out administrative costs and monitor remaining service commitments; no workforce payments may be made after demonstration expiration on Dec 31, 2029.

Administrative and federal requirements: all workforce initiative expenditures are matchable only as administrative expenditures, must not be factored into managed care capitation, and must not duplicate other funding; state must follow federal statutes/regulations for eligibility and oversight.

Activity Funds Initiative — eligibility overview

Activity Funds Initiative — high‑level eligibility overview:

General eligibility: member must be enrolled in Medicaid or CHIP and meet Activity Funds eligibility criteria under STC 7.1 (child/youth child welfare‑related categories or other listed categories).

Child welfare‑related eligibility (ONE or MORE)

Under age 21 and currently involved in California child welfare.
Under age 21 and previously received child welfare care in California or another state within past 12 months.
Aged out of child welfare up to age 26 (in foster care on 18th birthday or later).

Purpose: Activity Funds support items/services that promote community inclusion and improved behavioral health outcomes for eligible children/youth, similar to 1915(i) HCBS‑style supports.

Eligibility criteria set

Detailed Activity Funds eligibility and required clinical criteria:

Enrollment requirement: member must be enrolled in Medicaid or CHIP.

Child/welfare categories (ONE or MORE)

Under age 21 and currently involved in child welfare in California.
Under age 21 and previously received child welfare care in California or another state within past 12 months.
Aged out of child welfare up to age 26 (in foster care on 18th birthday or later).
Under age 18 and eligible for or in California's Adoption Assistance Program.
Under age 18 and currently receiving or received Family Maintenance services within past 12 months.

Clinical criteria (ONE of)

Member has a diagnosed behavioral health condition.
Member is at high risk for a behavioral health condition as assessed by a licensed behavioral health professional and determined to need the service.

Service linkage requirement: items/services must be prescribed/indicated in the member's clinical record by an authorized provider per STC 7.3 and be unavailable through another source.

Use, linkage, exclusions, and administration

Permitted uses, documentation/linkage requirements, exclusions, and administration for Activity Funds:

Permitted uses (ONE or MORE)

Physical wellness activities and goods (e.g., sports fees, gym memberships, bicycles, scooters, roller skates, safety equipment).
Strengths‑developing activities (e.g., music lessons, art lessons, therapeutic summer camps).
Items/services that promote community inclusion, increase home safety, or facilitate age‑appropriate participation/autonomy to improve physical or behavioral health outcomes.

Documentation/linkage: items/services must clearly link to an assessed need documented in the member's clinical record and be determined by an authorized provider per STC 7.3; providers must assess need, identify activities, document them in the record, and connect members to activity providers.

Exclusions: Activity Funds may not be used for items solely for entertainment/recreation, tobacco or alcoholic products, illegal activities, or duplicate items unless a documented change in need warrants replacement.

Administration and disbursement: DHCS may contract with a third‑party administrator to disburse funds; no funds shall be disbursed directly to a child, youth, or family member; DHCS or TPA will collect documentation and pay activity providers; funds are additive and do not duplicate state plan benefits.

Activity Funds criteria

Activity Funds service delivery, documentation, payment rules, and administrative responsibilities:

Service delivery requirements: providers must document assessed need in the clinical record, identify appropriate activities, document the activity, and connect members with activity providers as described in STC 7.3.

Payment and disbursement rules: no funds disbursed directly to children, youth, or family members; DHCS or a contracted TPA will collect documentation and pay activity providers or program vendors on behalf of beneficiaries.

Administrative coordination: DHCS will administer Activity Funds, may partner with CDSS via inter‑agency agreements for administration and data exchange, and will maintain the list of allowable activity types and provider types.

Eligibility and exclusions restated: members must be enrolled in Medicaid/CHIP and meet STC 7.1 criteria; Activity Funds cannot be used for illegal or federally/state‑prohibited activities.

SMI Program and Implementation Plan criteria

SMI Program participation, benefits scope, and required components of the SMI Implementation Plan:

BHP participation and reinvestment: BHPs seeking FFP for IMD services must be approved by DHCS, cover specified EBPs on DHCS timelines, and reinvest FFP received for IMD services to support members.

Benefit scope and LOS target: beneficiaries will have access to otherwise covered Medicaid services across intensities including short‑term IMD treatment; state must achieve a statewide average IMD length of stay no more than 30 days monitored via the SMI Monitoring Plan.

Implementation Plan submission and approval: state must submit SMI Implementation Plan within 90 calendar days (revised within 60 days if CMS comments); FFP cannot be claimed for IMD SMI services until CMS approves the Implementation and Financing Plans; Financing Plan must be submitted within 90 days and include steps to increase non‑hospital crisis stabilization and community‑based services.

Quality, licensure, accreditation, oversight: IMD hospitals and residential providers must be licensed/certified and meet accreditation/conditions of participation prior to claiming FFP; Implementation Plan must describe oversight, unannounced visits, utilization review entities, screening/revalidation per federal program integrity requirements (42 CFR Part 455), and patient assessment tool usage (e.g., LOCUS/CASII) to determine level of care/length of stay.

Care coordination and transitions: Implementation Plan must describe intensive pre‑discharge care coordination, housing assessment/linkage, protocols to ensure contact with discharged beneficiary and community provider within 72 hours, and strategies to reduce ED length of stay and improve crisis stabilization access.

Required SMI Implementation Plan elements

Minimum required elements the state's SMI Implementation Plan must include (organized as criteria nodes):

Strategic approach and timetables: must describe the state's strategic approach, timetables, milestones, and programmatic content to meet SMI program goals (quality, access, transitions, integration).

Quality of care requirements: ensure psychiatric hospitals and residential settings are licensed/approved and comply with 42 CFR Part 482 conditions of participation or have Medicare deemed status; residential IMDs must be licensed and nationally accredited before FFP is claimed.

Oversight and auditing: establish oversight/auditing processes including unannounced visits to ensure licensure/accreditation and quality standards are met.

Utilization review and LOS management: describe use of utilization review entities (e.g., MCOs or ASOs) to ensure appropriate levels of care and to limit lengths of stay to medically necessary durations.

Program integrity processes: establish provider screening and revalidation per 42 CFR Part 455 Subparts B and E, Medicaid provider agreements per 42 CFR 431.107, and robust protocols to prevent fraud and misconduct.

Care coordination and transition protocols: implement intensive pre‑discharge care coordination, housing assessment and linkage, allow community providers to initiate services while beneficiary remains in facility, engage peer support for transitions, and ensure contact with discharged beneficiary and referred community provider within 72 hours of discharge.

SMI Health IT Plan: include a Health IT Plan section describing required health IT functionalities, assurance of sufficient health IT infrastructure across state, delivery system, plans, and providers; include implementation milestones and alignment with State Medicaid Health IT Plan and performance metrics for monitoring.

Monitoring and reporting: include approach to monitor SMI Health IT Plan progress each Demonstration Year, report progress in Annual Monitoring Reports, and provide annual assessments of service availability and MOE reporting.

SMI and Community Transition In‑Reach coverage criteria

Coverage and funding‑related requirements for SMI services and Community Transition In‑Reach Services:

SMI Financing Plan submission: state must submit an SMI Financing Plan within 90 calendar days after demonstration approval; failure to submit is material noncompliance and may lead to termination or suspension of the SMI program.

Financing Plan components: must include plans to increase availability of non‑hospital crisis stabilization services and ongoing community‑based services (e.g., intensive outpatient, ACT) and demonstrate maintenance of state/local outpatient community mental health funding (MOE) for the SMI program duration.

FFP availability for IMD stays: FFP available for services during IMD stays up to 60 days if state demonstrates a 30‑day ALOS at MidPoint Assessment; if ALOS not met, FFP limited to 45 days until compliance; services beyond these durations are not eligible for FFP.

Unallowable FFP expenditures: no FFP for room and board for residential treatment providers unless inpatient under 1905(a); no FFP for services in nursing facilities qualifying as IMDs under 1919; no FFP for services to certain involuntary criminal residents or for beneficiaries under 21 in IMDs unless facility meets federal pediatric psychiatric inpatient requirements.

Community Transition In‑Reach eligibility and county participation: Community Transition In‑Reach Services require the member to be enrolled in Medi‑Cal and meet clinical/setting criteria (including 'at risk of extended LOS' definition); counties/BHPs opting in must submit plans assessing service and housing availability, track bed utilization, ensure coverage/provision of specified EBPs (ACT, Forensic ACT, IPS, Peer Support), and obtain DHCS approval of continuum of care before participation.

Coding, Claiming, and Key Numeric Limits

inv-38: Community Transition In‑Reach timing — Services available up to 180 days prior to discharge for individuals at risk of stays ≥120 days

Coverage windowCommunity Transition In‑Reach Services available up to 180 days prior to discharge

Target population thresholdIndividuals experiencing or at risk of experiencing lengths of stay of 120 days or more

Provider deliveryDelivered by community‑based multidisciplinary teams (not the inpatient/subacute/residential facility)

Participation restrictionLimited to Medicaid beneficiaries served by participating BHPs approved by the state

inv-39: Short-term rental assistance caps — room-and-board support up to combined 6 months per household per demonstration period

Service definitionShort-term rental assistance defined as room-and-board only support (room alone or room and board together) without clinical services included

BH-CONNECT capRoom-and-board-only support allowed up to a combined 6 months per household per demonstration period under BH-CONNECT

Cross‑demonstration combined capTotal combined cap of 6 months for room-and-board supports across CalAIM and BH-CONNECT per beneficiary in any 12‑month period

Implementation timingInitially optional for managed care plans; mandatory for certain beneficiaries no sooner than Jan 1, 2026 and mandatory for all populations no sooner than Jan 1, 2027

inv-40: Medicaid-to-Medicare rate ratio threshold — 80% threshold triggers required rate increases

Threshold triggerIf average Medicaid-to-Medicare payment rate ratio for a service category is below 80% the state must increase provider payment rates

Minimum increase requiredRate increases must be at least two percentage points in the Medicaid-to-Medicare ratio for the affected service category

ScopeApplies to primary care, behavioral health, or obstetric care service categories and relevant delivery systems where ratio <80%

inv-41: Community Transition In-Reach eligibility lookback — members at risk with stays ≥120 days

Eligibility lookbackMembers experiencing or at risk of extended stays of 120 days or more qualify as eligible for Community Transition In‑Reach

At‑risk definitionIncludes individuals with clinical profiles similar to those whose stays exceed 120 days (e.g., prior stays, medication adherence issues, co-occurring disorders, limited supports, homelessness, civil commitment)

Enrollment requirementBeneficiary must be enrolled in Medi‑Cal and served by participating BHPs approved by DHCS

inv-42: Amendment submission lead time — 120 calendar days

Submission lead timeAmendment requests must be submitted to CMS no later than 120 calendar days prior to planned implementation

Implementation restrictionAmendments may not be implemented until CMS approves them

Required elementsAmendment requests must include public process explanation and required supporting materials per STC 3.7

inv-43: Enrollment suspension period — 6 months before demonstration end

Suspension timingIf the state elects to suspend/terminate/not extend the demonstration, enrollment of new individuals must be suspended during the last 6 months of the demonstration

ScopeEnrollment suspension applies to the demonstration and does not affect Medicaid eligibility determinations under the state plan

NotificationState must follow phase-out requirements in STC 3.9 when suspending or terminating the demonstration

inv-44: FFP claim timing — FFP not claimable for Incentive Program payments until CMS approves the Incentive Program Protocol (with limited DY1 exception)

FFP claim conditionFFP may not be claimed for Incentive Program payments until CMS has approved the Incentive Program Protocol (except the single measure described in STC 5.12 for DY1)

Earliest approved FFP dateOnce the Protocol is approved, approved expenditures may be claimed beginning January 1, 2026

Claiming designationIncentive Program expenditures must be claimed as administrative on CMS‑64 waiver forms once eligible

inv-45: Program accountability at-risk percentage — 5% in DY3; 10% in DY4; 20% in DY5

At‑risk percentages by DYProgram accountability at risk: 5% in DY3; 10% in DY4; 20% in DY5

DY1–DY2No program accountability percentage at risk in DY1 and DY2 (0%)

ApplicationAccountability applied prior to calculation of individual BHP performance; reductions apply to global funding pool

inv-46: Accountability measures required — 3-5 measures across focus areas

Measure countState must propose 3–5 accountability measures

Focus areasMeasures must cover the program's focus areas (Access; Health Outcomes & Quality of Life; Targeted Delivery System Reforms) and be aggregable across counties

ApprovalMeasures to be defined and approved by CMS in the Incentive Program Protocol

inv-47: Percent of incentive at risk by demonstration year — 5% in DY3 to 20% in DY5

Percent at risk timelinePercent of incentive funding at risk increases from 5% in DY3 to 20% in DY5

Effect on poolProgram accountability reductions are applied to the global funding pool before plan-level performance calculations

ForfeitureExpenditure limit reductions for the state are forfeited and cannot be earned back in later years

inv-48: Service obligation by award amount — awards ≥ $20,000 → 4 years; $10,000–$20,000 → 3 years; < $10,000 → 2 years

≥ $20,000 awardsRecipients of awards equal to or greater than $20,000 must commit to 4 years full‑time service at a safety net setting

$10,000–$20,000 awardsRecipients of awards of $10,000 up to $20,000 must commit to 3 years full‑time service at a safety net setting

< $10,000 awardsRecipients of awards less than $10,000 must commit to 2 years full‑time service at a safety net setting

inv-49: Service commitment durations by bonus amount — >= $20,000 → 4 years; $10,000–$20,000 → 3 years; < $10,000 → 2 years (full‑time at safety net setting)

>= $20,000 bonusService commitment: 4 years full‑time at a safety net setting

$10,000–$20,000 bonusService commitment: 3 years full‑time at a safety net setting

< $10,000 bonusService commitment: 2 years full‑time at a safety net setting

inv-50: Maximum award per residency/fellowship slot — $250,000 per slot per demonstration year

Maximum per‑slot awardUp to $250,000 per residency/fellowship slot per demonstration year

Recipient eligibilityAwards made only to safety net settings meeting the STC 6.1(a) definition

Payment adjustmentsState may adjust awards for inflation subject to total initiative funding limits and must ensure award does not exceed slot operating cost

inv-51: Replacement restriction — No funding for same-type item/service for same member unless documented change in need

Replacement restrictionActivity Funds cannot be used to fund items of the same type for the same member unless a documented change in the member's need warrants replacement

Exclusions contextActivity Funds may not be used for activities illegal or prohibited by federal/state regulations; funds not disbursed directly to members

Documentation requirementProvider must document assessed need in the clinical record to justify Activity Funds expenditures

inv-52: Statewide average IMD length of stay — must be no more than 30 days

Statewide ALOS targetState must achieve a statewide average IMD length of stay of no more than 30 days

MonitoringALOS monitored pursuant to the SMI Monitoring Plan and SMI Implementation Plan requirements

FFP linkageALOS performance affects FFP eligibility for IMD day limits (see IMD FFP day limits)

inv-53: MOE and bed tracking — maintain state/local funding levels and bed-tracking/reporting obligations

MOE requirementState must maintain state/local funding levels for outpatient community‑based mental health services at no less than the amount at program start (annual MOE reporting)

Bed trackingState must implement capacity improvements to track availability of inpatient and crisis stabilization beds and report updates annually

ReportingUpdates on actions taken to increase availability of services and bed tracking included in Annual Monitoring Report

inv-54: IMD FFP day limits — up to 60 days conditional (may be limited to 45 days at MidPoint Assessment if ALOS unmet)

Maximum FFP days (conditional)State may claim FFP for services during IMD stays of up to 60 days if state demonstrates a 30‑day ALOS at MidPoint Assessment

MidPoint contingencyIf state fails to show 30‑day ALOS within one standard deviation at MidPoint Assessment, FFP limited to 45 days until compliance demonstrated

Services beyond limitsServices furnished during stays exceeding applicable FFP day limits are not eligible for FFP; state must still ensure medically necessary care is provided

Provider Requirements, Payment Routing, and Operational Rules

Prior Authorization

Limit IMD & In‑Reach Claims to Approved BHPs

IMD expenditure authority and Community Transition In‑Reach Services are limited to Medicaid beneficiaries served by participating Behavioral Health Plans (BHPs) that agree to defined conditions and are approved by the state; waivers for statewide operation, comparability, and amount/duration/scope are granted to enable this limitation.

Billing Rule

Provide Short‑Term Rental Assistance via Managed Care per Timeline

Short-term rental assistance (room-and-board only) must be provided through the managed care delivery system; it is initially optional for managed care plans, becomes mandatory for certain beneficiaries no sooner than Jan 1, 2026, and mandatory for all populations no sooner than Jan 1, 2027.

Billing Rule

Increase Provider Rates When Medicaid‑to‑Medicare Ratio < 80%

If the state's average Medicaid‑to‑Medicare provider payment ratio for primary care, behavioral health, or obstetric care is below 80%, the state must increase and sustain Medicaid FFS base rates and/or require managed care plans to increase network provider payment rates by at least two percentage points in the ratio for affected service categories and delivery systems.

Prior Authorization

DSHP Funding Cap, State Contribution & Approval Conditions

CMS authorizes time‑limited DSHP expenditure authority (cap up to $1,615,000,000) and requires the state to contribute non‑DSHP funds (original, non‑freed up funds) and submit a sustainability plan; new DSHP initiatives require CMS approval via STC‑compliant amendment.

DSHP cap authorized up to $1,615,000,000; state must contribute $142,500,000 over the demonstration period.
DSHP authority is time‑limited and contingent on submission of a sustainability plan and CMS approval of specific DSHP initiatives.

Billing Rule

FFP Authorized for Incentives and Community Transition In‑Reach

Expenditure authority is granted for incentive payments to Behavioral Health Plans under the Access, Reform and Outcomes Incentive Program and for Community Transition In‑Reach Services for qualifying Medi‑Cal members, with time‑limited close‑out authority specified.

Incentive Program expenditures authorized (with close‑out claiming periods).
Community Transition In‑Reach Services expenditures authorized for qualifying members; payments not made to facilities.

Prior Authorization

Waiver Permits Medicaid State‑Plan Services for Short‑Term IMD SMI Treatment

CMS authorizes a waiver allowing Medicaid state plan services to be furnished to otherwise eligible individuals primarily receiving SMI treatment during short‑term IMD stays, enabling county‑by‑county operation of this authority.

Authority applies to short‑term IMD residents primarily receiving SMI treatment consistent with SMDL #18‑011.

Note

Authorized Demonstration Components (Workforce, DSHP, Activity Funds, Incentives, IMD, In‑Reach, Rental Assistance)

The demonstration authorizes the Workforce Initiative, DSHP funding, Activity Funds, the Access, Reform and Outcomes Incentive Program, IMD short‑term SMI services, Community Transition In‑Reach, and limited short‑term rental assistance.

Prior Authorization

Submit Demonstration Amendments ≥120 Days Before Implementation

Amendment requests must be submitted to CMS no later than 120 calendar days prior to planned implementation and may not be implemented until CMS approves the amendment; requests must include the public process summary and required elements per STC 3.7.

Submit amendment ≥120 calendar days before implementation.
Do not implement changes until CMS approval.

Billing Rule

FFP Limited to Close‑Out Costs on Termination/Withdrawal

If the project or waivers are terminated or withdrawn, Federal Financial Participation (FFP) is limited to normal closeout costs, including continued services due to appeals and administrative disenrollment costs; CMS may withdraw authorities if continuation no longer promotes Medicaid objectives.

Prior Authorization

Suspend New Enrollment During Final 6‑Month Phase‑Out if Elected

If the state elects to suspend, terminate, or not extend the demonstration, enrollment of new individuals must be suspended during the last six months of the demonstration.

Documentation Required

BHPs Must Complete NCQA MBHO Assessment and Annual Reporting

BHPs must complete an NCQA MBHO self‑directed assessment on a DHCS‑specified timeline, implement specified EBPs where required, submit reports and data at least annually, and participate in program reporting to be eligible for Incentive Program payments.

Complete NCQA MBHO assessment per DHCS timeline.
Submit annual reports/data to DHCS; failure to report may preclude future funding.

Denial Risk

County Removal Possible for Poor Performance or Noncompliance

DHCS may remove a county from the Access, Reform and Outcomes Incentive Program for poor performance or noncompliance with program requirements.

Documentation Required

Report Incentive Expenditures on CMS‑64 and Follow Timely Filing; DY1–DY5 Distribution Only

The state must report Incentive Program expenditures on CMS‑64 waiver forms, follow timely filing rules, and may only distribute incentive payments associated with Demonstration Years 1–5.

Denial Risk

Incentive Funding Is At‑Risk if Accountability Measures Not Met (5%→20%)

A share of total Incentive Program funding is at risk if participating BHPs fail to meet accountability measures; the at‑risk percentage increases from 5% in DY3 to 20% in DY5.

At‑risk percentages: 5% (DY3), 10% (DY4), 20% (DY5).
State must propose 3–5 accountability measures calculable and aggregable across counties.

Documentation Required

Submit Incentive Program Protocol for CMS Approval; FFP Retroactive to DY2 for Approved Elements

The state must submit a proposed Incentive Program Protocol for CMS approval describing selected measures, targets, earning and distribution methodology, allocation factors and high‑performance pool targets; except for one DY1 measure, the state is at risk for incentive payments until the Protocol is approved and FFP is retroactive to DY2 for approved elements.

Protocol must specify measures, technical specifications, earning/distribution methodology, and high‑performance pool targets.
FFP retroactive to DY2 for approved Protocol elements; state at risk until Protocol approved (except STC 5.12 measure).

Billing Rule

Make Scholarship & Loan Repayment Payments Directly to Institutions/Servicers (Not Individuals)

Loan repayment payments must be made directly to the student loan servicer by the state or a procured vendor; scholarship payments must be made directly to the educational institution by the state or a procured vendor; funds will not be provided to individual practitioners or participants.

Documentation Required

Annual Reporting Required for Entities Receiving Workforce Funding

Provider organizations and educational institutions receiving workforce funding must submit annual reports detailing use of workforce funds and are subject to state oversight.

Billing Rule

Route Scholarship & Training Payments Directly to Institutions/Programs

Scholarship and training payments must be routed directly to educational institutions or training programs; funds will not be provided to individual participants.

Documentation Required

Require FAFSA & Cal Grant Applications Before Scholarship Payments

Scholarship participants must apply to the Free Application for Federal Student Aid (FAFSA) and the Cal Grant program; the state or intermediary may not make scholarship payments until both applications are submitted and a Cal Grant determination is made.

Denial Risk

Recruitment Bonus Blocks Immediate Eligibility for Retention Bonus

A practitioner awarded a recruitment bonus is not eligible to receive a retention bonus until the recruitment service commitment has been fulfilled.

Billing Rule

Pay Residency/Training Funds to Programs or Safety‑Net Settings, Not Individuals

Residency and training payments must be made directly to safety‑net settings or training programs (not to individual practitioners); residency payments are made no less than annually and community training payments are made to programs on behalf of practitioners.

Billing Rule

Pro‑rate Slot Payments & Recoup FFP for Unfilled Residency Slots

The state may pro‑rate residency/fellowship slot payments if slots are unfilled and will recoup and return FFP if a pre‑paid slot remains unfilled beyond one month after becoming vacant.

Documentation Required

Document Assessed Need in Clinical Record & Coordinate Delivery

Providers must document assessed need in the member's clinical record and coordinate delivery with the member, caregiver, and social worker as appropriate; items/services must link to assessed need and be determined by an authorized provider per STC 7.3.

Document assessment of beneficiary need in clinical record.
Coordinate activity delivery with member/caregiver/social worker; link items/services to assessed need.

Billing Rule

Activity Funds Only When No Other Source; Use TPA for Disbursement; No Direct Payments to Families

Activity Funds may only be provided when the item or service is not available through another source; DHCS may contract with a third‑party administrator (TPA) to disburse funds and will not disburse funds directly to the child, youth, or family member.

Activity Funds are payor of last resort—only when other sources unavailable.
No direct payments to children/youth/families; DHCS or TPA will handle disbursement and documentation.

Documentation Required

DHCS May Use TPA & Inter‑Agency Agreements to Administer Activity Funds; No Direct Member Disbursement

DHCS may contract with a third‑party administrator to disburse Activity Fund payments; funds shall not be disbursed directly to children, youth, or family members, and DHCS may enter inter‑agency agreements (e.g., with CDSS) for administration and data exchange.

Documentation Required

Require Utilization Review & Provider Screening per 42 CFR Part 455

Use of a utilization review entity (for example, an MCO or administrative service organization) is required to ensure appropriate levels and types of care and to limit lengths of stay to medically necessary durations; program integrity processes must include risk‑based screening and revalidation per 42 CFR Part 455.

Employ utilization review to oversee length of stay and level of care.
Conduct risk‑based screening of new providers and revalidation of existing providers under 42 CFR Part 455 Subparts B and E.

Documentation Required

Submit County Readiness Plan & Track/Report Beds to Opt Into Community Transition In‑Reach

Counties/BHPs opting into Community Transition In‑Reach Services must submit a readiness plan to DHCS describing assessment of available mental health/SUD services and housing, track and report bed utilization across facility types on DHCS cadence, and ensure coverage or provision of ACT, Forensic ACT, IPS Supported Employment, and Peer Support Services.

Submit plan assessing service and housing availability and actions to address gaps.
Track/report bed utilization and ensure specified EBPs are available or covered.

Prior Authorization

BHPs May Only Offer In‑Reach After DHCS Approval of County Readiness

A BHP may only participate in Community Transition In‑Reach Services after DHCS approves that an appropriate continuum of care and county readiness are in place; DHCS will assess readiness and require monitoring report updates.

Do not provide In‑Reach services until DHCS approves county readiness.
DHCS will include readiness updates in monitoring reports.

Key Definitions and Program Terminology

inv-83: Safety net settings — examples of safety net provider types

Examples of safety net provider typesFederally Qualified Health Centers (FQHCs), Community Mental Health Centers (CMHCs), Rural Health Clinics (RHCs), hospitals meeting payer‑mix thresholds

Hospital payer‑mix thresholdGeneral hospitals with ≥40% Medicaid/uninsured or rural hospitals with ≥30% Medicaid/uninsured

Behavioral health settingsOther behavioral health settings with ≥40% Medicaid/uninsured population also qualify as safety net settings

inv-84: Short-term rental assistance — definition clarifying room and board only

DefinitionShort-term rental assistance is defined as room-and-board only support (room alone or room and board together) without clinical services included in the payment

Benefit typeClassified as an HRSN housing intervention provided through managed care delivery system

Duration capsSubject to BH‑CONNECT and cross‑demonstration combined 6‑month caps as specified in STCs

inv-85: Hypothetical expenditures — definition used for budget neutrality calculations

PurposeHypothetical expenditures are used for budget neutrality testing for services that could otherwise be covered via the Medicaid state plan or other Title XIX authority

SHAC relationshipHRSN expenditures treated as hypothetical are subject to a Supplemental HRSN Aggregate Ceiling (SHAC) spending ceiling

Limit rationaleSHAC upper limit set at mid‑point estimate and cannot exceed 3% of the state's total computable Medicaid spending

inv-86: SHAC — Supplemental HRSN Aggregate Ceiling definition and role

DefinitionSHAC — Supplemental HRSN Aggregate Ceiling: a budget neutrality spending ceiling applied to HRSN expenditures treated as hypothetical

Upper limitSHAC upper limit set at mid‑point estimate and in no case may exceed 3% of the state's total computable Medicaid spending

ConsequenceIf state exceeds SHAC limits, it may not offset the excess with savings from the rest of the demonstration

inv-87: DSHP — Designated State Health Programs definition

DefinitionDSHP — Designated State Health Programs: state initiatives eligible for CMS‑approved expenditure authority under section 1115 with conditions including state non‑DSHP fund contributions and a sustainability plan

Authorized capCMS authorizes up to $1,615,000,000 in DSHP expenditure authority for BH‑CONNECT workforce initiatives

Amendment requirementAny new DSHP‑funded initiative requires CMS approval via a demonstration amendment meeting STC 3.7 transparency requirements

inv-88: STCs — Special Terms and Conditions description of federal/state obligations

RoleSTCs are the Special Terms and Conditions that set detailed conditions and limitations on waivers and expenditure authorities and describe federal/state obligations for the demonstration

ScopeSTCs accompany the approval and are effective for Demonstration Years DY1–DY5 (Jan 1, 2025–Dec 31, 2029) unless otherwise specified

FunctionSTCs detail program requirements, monitoring, reporting, and implementation obligations for the state and CMS

inv-89: IMD short-term residents — definition of facilities meeting IMD definition for short-term SMI treatment

DefinitionIMD short‑term residents: individuals primarily receiving SMI treatment who are short‑term residents in facilities that meet the IMD definition, eligible for Medicaid state plan services under the demonstration

FFP conditionsFFP for IMD services limited to short‑term stays with day limits and ALOS requirements as specified in STC 8.5

Provider requirementsIMD hospitals and residential IMDs must meet licensure/accreditation and oversight standards before claiming FFP

inv-90: BHPs — Behavioral Health Plans definition (MHPs, DMC-ODS, Integrated Plans)

DefinitionBHPs — Behavioral Health Plans: includes Mental Health Plans (MHPs), Drug Medi‑Cal Organized Delivery Systems (DMC‑ODS), and Integrated Prepaid Inpatient Health Plans

RoleBHPs participate in program components (e.g., IMD coverage, Community Transition In‑Reach, Incentive Program) and must meet participation/coverage requirements

Eligibility for FFPFFP for certain services (e.g., IMD services) is available only for beneficiaries served by participating BHPs that meet STC conditions

inv-91: Common Rule Exemption — demonstration meets human subject research exemption per 45 CFR 46.104(d)(5)

Exemption statusDemonstration meets the Common Rule exemption under 45 CFR 46.104(d)(5) for human subject research involvement limited to CMS‑conducted or CMS‑approved projects

ImplicationHuman subject research protections apply only for CMS‑approved demonstration evaluations; state must ensure compliance with STC 3.15

OversightState must ensure any required projects are conducted by or subject to CMS approval consistent with the exemption

inv-92: Access, Reform and Outcomes Incentive Program — pilot program definition and funding cap ($1.9B)

Program definitionAccess, Reform and Outcomes Incentive Program: a pilot in selected counties providing incentive payments to BHPs for improvements in access, outcomes, and delivery system reform

Funding capTotal computable funding up to $1.9 billion over 5 years (DY1–DY5)

Participation limitPilot limited to up to 80% of counties; DHCS selects participating counties per the Incentive Program Protocol

inv-93: EBPs — Evidence-Based Practices definition

DefinitionEvidence‑Based Practices (EBPs) — specified practices (e.g., ACT, Forensic ACT, CSC for FEP, IPS Supported Employment, Clubhouse, Enhanced CHW, Peer Support) that BHPs must cover/implement for certain measures

RoleEBP implementation is a prerequisite for earning measures tied to implementation in the Incentive Program

Assessment linkageBHPs must complete NCQA MBHO self‑assessment and report EBP coverage/implementation per DHCS timelines

inv-94: Incentive Program Protocol — defined requirement for protocol submission and contents

Protocol requirementIncentive Program Protocol: DHCS must submit a protocol for CMS approval describing measures, methodologies, baselines, reporting, allocation and distribution methodologies, and high‑performance pool parameters

FFP retroactivityFFP may be retroactive to DY2 for approved Protocol elements; most Incentive Program FFP not claimable until Protocol approval

Protocol contentsMust specify measure specifications, county selection approach, earning/distribution methodology, and stratifications (e.g., OMB race/ethnicity) as applicable

inv-95: BHP allocation factors — allocation methodology factors for distributing incentive funds

Allocation factorsBHP allocation factors may include total participating BHPs, total Medi‑Cal member enrollment in the county, and county‑level social and health risk indicators (e.g., HPI percentile)

County limitsProtocol will include minimum and maximum allocation limits per county

MethodologyInitial allocation methodology will be detailed in the Incentive Program Protocol

inv-96: High-performance pool — definition and rules for pool composed of unearned incentives

High‑performance pool compositionPool composed only of unearned incentives from BHPs (not Accountability funds) and used to reward higher‑performing BHPs

ParametersEarning parameters and measure subsets for the pool defined in the Incentive Program Protocol

RedistributionUnused/unearned incentives after annual performance periods may be redistributed via the high‑performance pool per Protocol

inv-97: Safety net settings detailed definition and payer-mix thresholds

Safety net settings definitionSafety net settings include FQHCs, CMHCs, RHCs, hospitals with ≥40% Medicaid/uninsured (rural hospitals ≥30%), and other behavioral health settings meeting payer‑mix thresholds

Payer‑mix thresholdsHospitals: ≥40% Medicaid/uninsured; Rural hospitals: ≥30%; Other behavioral health settings: ≥40%

Use in programsSafety net setting definition determines eligibility for workforce awards, residency slots, and other funded initiatives

inv-98: safety net setting (reference) — education & training program standards

Program standards referenceEducation & training programs funded must be certified/accredited by the state or recognized organizations, or meet widely recognized guidelines approved by the state

Training payment capState may pay training programs up to $10,000 per practitioner for exam fees and certification/licensure costs

Service commitmentParticipation conditioned on multi‑year full‑time service commitments in safety net settings

inv-99: education and training program standards — certification/accreditation requirement

Accreditation requirementAll education and training programs must be certified or accredited by the state or organizations recognized by the state; if none available, must meet widely recognized guidelines and be approved by the state

State approvalState to approve programs that meet guidelines when formal accreditation not available

Application to workforce initiativesApplies to all five workforce initiatives funded under STC Section 6

inv-100: safety net setting as defined in STC 6.1(a) — eligibility for awards and payments

Eligibility useSafety net setting as defined in STC 6.1(a) is the required practice setting for recipients to fulfill service commitments and be eligible for awards/payments

Applicable programsApplies to Student Loan Repayment, Scholarships, Recruitment/Retention, Residency, and Community Training initiatives

Definition cross‑referenceSee STC 6.1(a) for payer‑mix thresholds and eligible setting types

inv-101: practitioner categories — prescribing / non-prescribing categories for backfill rates

Practitioner categoriesPrescribing and non‑prescribing practitioner categories defined in STC 6.2(a)(i)–(iii) determine applicable backfill and award rules

Backfill rates linkagePractitioner category determines maximum backfill daily rates for training activities (e.g., prescribing vs non‑prescribing)

Program eligibilityCategory definitions used to determine eligibility for loan repayment, scholarships, and bonuses

inv-102: safety net settings referenced as eligibility for awards and payments

Safety net eligibilitySafety net settings as defined in STC 6.1(a) are required provider destinations for workforce awards and payments

Program applicationRecipients must demonstrate employment/practice in eligible safety net setting to receive and retain awards

OversightState will verify compliance and may recoup funds for noncompliance with service commitments

inv-103: residency/fellowship program requirements — accreditation and sustainability plan expectations

AccreditationResidency/fellowship programs must be certified/accredited and demonstrate training infrastructure and sustainability plans

Sustainability planAward recipients must include a sustainability plan for maintaining slots beyond funding period

Student loan repayment linkagePractitioners filling residency/fellowship slots will be enrolled in the Student Loan Repayment Program and subject to service commitments

inv-104: Activity Funds — definition and intent

DefinitionActivity Funds: payments for items or services that support eligible members' community inclusion and behavioral/physical health outcomes (additive to state plan)

PurposeIntended to promote community inclusion, increase home safety, and facilitate age‑appropriate participation/autonomy for eligible children/youth

Delivery ruleActivity Funds are additive to, and do not duplicate, Medicaid State Plan benefits

inv-105: Eligible members — list of eligible member categories for Activity Funds

Eligible member groupsYouth under 21 currently involved in child welfare; youth under 21 previously in child welfare within past 12 months; individuals aged out up to 26; under‑18 in Adoption Assistance; under‑18 receiving Family Maintenance within past 12 months

Program enrollmentMember must be enrolled in Medicaid or CHIP to qualify

Clinical requirementMember must have a diagnosed behavioral health condition or be assessed as high risk by a licensed behavioral health professional

inv-106: Activity Funds Initiative — eligibility summary

Initiative summaryActivity Funds Initiative provides payments for allowable activities/items for eligible children/youth in child welfare to support behavioral health needs

AdministrationDHCS may contract with a third‑party administrator to disburse funds; no funds paid directly to child/youth/family; TPA/DHCS responsible for documentation and payment to providers

ExclusionsCannot fund items of same type for same member unless documented change in need; cannot fund illegal or federally prohibited activities

inv-107: BHP participation — behavioral health plan participation requirements and reinvestment obligations

Participation requirementBHPs must cover specified EBPs and reinvest FFP received for IMD services to support members to participate in the SMI program and claim FFP

Reinvestment obligationBHPs must reinvest FFP from IMD services to support members and coverage of EBPs per STCs

Approval requirementBHPs must be approved by DHCS and meet conditions to receive FFP for IMD services

inv-108: SMI Health IT Plan — definition and role in implementation

DefinitionSMI Health IT Plan: a component of the SMI Implementation Plan describing Health IT functionalities affecting beneficiaries and demonstration‑funded providers

ContentsMust include necessary capabilities, implementation milestones, projected dates, alignment with State Medicaid Health IT Plan, and monitoring metrics

ReportingState will monitor DY‑level progress on Health IT Plan implementation and report in the Annual Monitoring Report

inv-109: Evidence-based patient assessment tool — example instruments and requirement

DefinitionEvidence‑based patient assessment tool: a publicly available instrument (e.g., LOCUS, CASII) used to determine appropriate level of care and length of stay

RequirementProviders, plans, and utilization review entities must use an evidence‑based assessment tool to determine level of care and LOS

PreferencePreferably endorsed by a mental health provider association

inv-110: Health IT Plan — state's Health IT plan for SMI and demonstration-funded providers

DefinitionHealth IT Plan: the state's plan describing Health IT functionalities and assurances of sufficient Health IT infrastructure across state, delivery system, health plan/MCO and providers for SMI goals

AlignmentMust align with the State Medicaid Health IT Plan and include implementation milestones and monitoring metrics

Standards guidanceState should leverage ISA and 45 CFR 170 Subpart B standards or ONC ISA where applicable

inv-111: Individuals at risk of extended length of stay — definition and illustrative risk factors

DefinitionIndividuals at risk of extended length of stay: persons in inpatient, residential, or subacute settings with LOS shorter than 120 days but with clinical presentation similar to those whose stays exceed 120 days

Illustrative risk factorsPrior stays, medication adherence issues, co‑occurring disorders, limited supports, civil commitment/guardianship, homelessness, severe functional impairment

Use in eligibilityUsed to determine eligibility for Community Transition In‑Reach Services (with services available up to 180 days prior to discharge)

Policy Summary

PayerCalifornia Department of Health Care Services

PolicyBH-CONNECT Section 1115 Demonstration (Extent and Scope)

Policy CodePolicy N/A

Change TypeNo material change

Effective DateJan 1, 2025

Next Review DateN/A

Key ActionParticipating Behavioral Health Plans must complete an NCQA MBHO self-directed assessment and meet Incentive Program participation requirements to be eligible for incentive payments.

SourceLink

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BH-CONNECT Section 1115 Demonstration (Extent and Scope)

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Authorized Coverage Criteria and Program Rules

Approved and Deferred Services — scope of approved services and waivers

Scope of services approved now and items the state requested but which were deferred are summarized below.

Waivers for Enhanced Community-Based Services (county opt-in)

County‑option waivers permit geographically limited implementation of specified community‑based services in electing counties; key conditions are:

Statewide operation waiver allows county‑by‑county implementation so that selected services may be offered only in counties that opt in and meet selection criteria.

Electing county authorities (ONE or MORE)

Peer support services: may be implemented in electing Drug Medi‑Cal State Plan counties on a geographically limited basis (effective upon county election).
Supported employment: may be implemented in electing Drug Medi‑Cal State Plan counties on a geographically limited basis (effective when SPA 24‑0051 is implemented).
Enhanced community health worker services: may be implemented in electing Drug Medi‑Cal State Plan counties on a geographically limited basis (effective when SPA 24‑0052 is implemented).

Participation limited to counties that opt in and satisfy DHCS readiness and program requirements; waivers permit limiting comparability and scope to electing counties as described in the STCs.

Coverage and state-plan interaction

How demonstration authorities interact with the Medicaid/CHIP state plan:

Eligibility

Eligibility and enrollment stance under BH‑CONNECT:

No change to Medicaid or CHIP eligibility: eligibility standards and methodologies remain those in the Medicaid or CHIP state plans and are subject to applicable laws and regulations.

Enrollment into demonstration‑only services requires membership in Medicaid or CHIP as applicable and meeting program‑specific eligibility criteria described in the STCs for each initiative.

Access, Reform and Outcomes Incentive Program criteria

Access, Reform and Outcomes Incentive Program — participation, use restrictions, and funding conditions:

Incentive payment eligibility and operations

Eligibility to earn incentive payments and operational rules:

Reporting and audit: BHPs must submit annual reports and data; DHCS will monitor performance, may request supporting documentation, and may remove counties/BHPs for poor performance or noncompliance.

Incentive program accountability and distribution criteria

Accountability, at‑risk funding, and distribution rules for the Incentive Program:

State accountability measures: the state must propose 3–5 accountability measures (with at least one per focus area) that are calculable and aggregable across participating counties.

High‑performance pool eligibility: Protocol must define prerequisites and targets for a high‑performance pool to reward higher performing BHPs; details in Incentive Program Protocol.

Terms and conditions for the five workforce initiatives

Terms and conditions that apply across the five workforce initiatives:

Education/training standards: funded education and training programs must be state‑certified/accredited or meet widely recognized guidelines approved by the state.

Scholarship & Loan Repayment Criteria

Eligibility, award tiers, service obligations, and payment routing for scholarship and loan repayment programs:

Coverage and participation criteria across scholarship, recruitment/retention, licensure/certification, supervision/backfill, and community training

Coverage and participation rules across recruitment/retention, licensure/certification, supervision/backfill, and community training:

Scholarship payments: must be made directly only to educational institutions (state or vendor); recipients must apply to FAFSA and Cal Grant before payments are disbursed.

Community-Based Provider Training Program

Community‑Based Provider Training Program eligibility and allowable uses:

Eligibility: participation conditioned on a three‑year full‑time service commitment in safety‑net settings defined in STC 6.1(a).

Residency/Fellowship Funding

Behavioral Health Residency Training Program terms and operations:

Funding Limits and Administrative Requirements

Funding limits, redistribution, time‑limited authorities, and administrative requirements for workforce initiatives:

Activity Funds Initiative — eligibility overview

Activity Funds Initiative — high‑level eligibility overview:

Child welfare‑related eligibility (ONE or MORE)

Under age 21 and currently involved in California child welfare.
Under age 21 and previously received child welfare care in California or another state within past 12 months.
Aged out of child welfare up to age 26 (in foster care on 18th birthday or later).

Purpose: Activity Funds support items/services that promote community inclusion and improved behavioral health outcomes for eligible children/youth, similar to 1915(i) HCBS‑style supports.

Eligibility criteria set

Detailed Activity Funds eligibility and required clinical criteria:

Enrollment requirement: member must be enrolled in Medicaid or CHIP.

Child/welfare categories (ONE or MORE)

Under age 21 and currently involved in child welfare in California.
Under age 21 and previously received child welfare care in California or another state within past 12 months.
Aged out of child welfare up to age 26 (in foster care on 18th birthday or later).
Under age 18 and eligible for or in California's Adoption Assistance Program.
Under age 18 and currently receiving or received Family Maintenance services within past 12 months.

Clinical criteria (ONE of)

Member has a diagnosed behavioral health condition.
Member is at high risk for a behavioral health condition as assessed by a licensed behavioral health professional and determined to need the service.

Service linkage requirement: items/services must be prescribed/indicated in the member's clinical record by an authorized provider per STC 7.3 and be unavailable through another source.

Use, linkage, exclusions, and administration

Permitted uses, documentation/linkage requirements, exclusions, and administration for Activity Funds:

Permitted uses (ONE or MORE)

Physical wellness activities and goods (e.g., sports fees, gym memberships, bicycles, scooters, roller skates, safety equipment).
Strengths‑developing activities (e.g., music lessons, art lessons, therapeutic summer camps).
Items/services that promote community inclusion, increase home safety, or facilitate age‑appropriate participation/autonomy to improve physical or behavioral health outcomes.