In Depth: Understanding Health and Behavioral Healthcare

America’s healthcare systems have historically prioritized acute interventions over preventive care, resulting in ballooning costs and relatively poor health outcomes. Policymakers have begun reconsidering the design of these systems in ways that could make us safer.


Improving preventive healthcare not only impacts health outcomes, it prevents crime. For example, addressing addiction can reduce crimes driven by addiction like petty theft and trespassing. Poor health status contributes to poor socio-economic status, which in turn makes individuals more likely to be involved in the criminal justice system and vice versa.

The Affordable Care Act (ACA) and California’s commitment to expanding Medi-Cal are making significant resources available to counties developing the type of health and behavioral health infrastructure necessary to fill the gap for low-income, childless adults and other vulnerable populations. Although the future of the ACA and funding for expanded coverage is less certain in light of the new federal administration, programs continue to exist at this time and California’s leadership has stated a commitment to continuing their support. But even with existing coverage, continued dialogue and collaboration between state and local leaders around payment structures and reimbursement remain critical. Some of the guidelines and programs to consider are below.

California’s Medi-Cal expansion under the Affordable Care Act

Medi-Cal provides free or very low cost healthcare coverage to low-income California residents, including legal permanent residents, DREAMers and, as of 2015, undocumented children. Prior to the ACA, Medi-Cal provided coverage only to certain low-income populations, such as children, pregnant women, people with disabilities and seniors. Upon expansion, the program was simplified and extended to those with incomes up to 138% of the federal poverty level. With expansion, Medi-Cal offers an enhanced set of benefits. Of note are expanded substance abuse services, previously limited to a small fraction of Medi-Cal members but which now include single, childless adults under the age of 65.

Reimbursement reform and outcome-tracking mechanisms to reward prevention across silos

In the fee-for-service model of reimbursing healthcare services, health plans and the government pay providers for discrete services and procedures. This model has contributed to an emphasis on high acuity care at the expense of primary and preventive healthcare, which has led policymakers to consider alternate payment mechanisms that reward providers and health care systems that emphasize primary care and prevention.

These payment reform mechanisms include:

  • Capitated payment structures that reimburse health systems and/or providers with predetermined payments on a per-patient basis, rather than on the basis of specific services or procedures provided, and
  • Pay-for-performance structures that reimburse health systems and/or providers for achieving certain pre-determined metrics, such as reductions in hospital readmissions or hospital-acquired infections.

Additionally, California counties, which have significant local control of spending across multiple sectors, could align spending with improved outcomes in preventive health, criminal justice and other areas of public interest by integrating expenditure-making processes across sectors. This integration could reduce the transfer of problems and expenses between local sectors. For instance, patients discharged from public hospitals only to resurface in local jails represent additional county costs, despite the fact that the hospital would be unaware of – as well as devoid of financial liability for – the later jail admission.

Preventive healthcare systems

The ACA and California’s Medi-Cal expansion created broad eligibility for health care coverage for low-income adults, including coverage for hospital services, outpatient healthcare services, mental health services and substance use disorder services. Four specific programs create additional opportunities for counties to dramatically improve preventive healthcare:

Whole Person Care pilot programs

California’s recently approved Medicaid 1115 Waiver, “Medi-Cal 2020,” includes funding for Whole Person Care (WPC) pilot programs that coordinate physical healthcare, behavioral health and social services for vulnerable Medi-Cal beneficiaries at risk of experiencing poor health outcomes and/or who are high utilizers of services. WPC entities will be able to make necessary infrastructure improvements and fund services not otherwise covered through Medi-Cal, such as housing. These pilots have the opportunity to target vulnerable populations at most risk for becoming justice-involved.

Drug Medi-Cal Organized Delivery System

The Medi-Cal 2020 Waiver also authorizes California to implement a groundbreaking new substance use disorder (SUD) delivery system known as the Drug Medi-Cal Organized Delivery System (DMC ODS). For counties that opt in, the DMC ODS provides a full continuum of SUD services depending on an individual’s medical necessity, and will provide coordinated care – not just between SUD service providers at different levels of care, but between SUD providers, primary care providers and the Medi-Cal Managed Care plans.

This robust, coordinated system of SUD treatment could potentially improve health outcomes, prevent individuals from becoming involved with the criminal justice system or help individuals already justice-involved to access care.

Health Homes Program and improved coordination of services

The California state legislature adopted an optional provision of the ACA known as the Health Homes Program (HHP). The HHP benefit provides an additional Medi-Cal benefit for care management and care coordination services for beneficiaries with certain chronic health conditions who are high utilizers of healthcare services and aims to enhance Medi-Cal for some of California’s most vulnerable residents, including individuals with serious mental illnesses and individuals with SUDs.

Incentives realignment emphasizing prevention strategies

The Medi-Cal 2020 Waiver authorizes California to spend up to $7.5 billion to reform its public and municipal hospital systems to create systems of care centered on high-value preventive care rather than costly and inefficient acute interventions. An overarching goal of the Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program is to transition California’s safety-net hospital systems from a fee-for-service reimbursement system to alternative payment structures that reward value and prevention, such as capitated payment structures.

Although the structure of the PRIME program limits the incentive payments to health-based performance metrics, the inclusion of post-incarceration populations as a target group suggests policymakers’ growing understanding of the connection between health and public safety.