Treatment centers shuttering

Providers say the main culprit is CalAIM, which was an overhaul of Medi-Cal, the state’s Medicaid system. The new system began a couple years ago through a phased rollout, which is still ongoing and includes initiatives for better coordination of care and payment changes. In some respects, it has succeeded, said Caminar CEO Mark Cloutier, but not when it comes to behavioral health care payment reform. 

Prior to the change, Cloutier said the nonprofit’s costs related to non-clinical services, such as payroll, benefits, food, leases and utilities, were included in their reimbursements. Now, all payments are rolled into one set fee, or a fee-for-service model, which only covers between 50% to 65% of the actual cost. 

“We can’t run that kind of loss and continue to operate the program,” Cloutier said.

The change has been particularly stark for behavioral providers, especially those who provide care for those with addiction and severe mental health challenges.

“It is definitely not just impacting StarVista and Caminar. All of our providers providing alcohol and drug and specialty mental health services in San Mateo County are being significantly impacted,” StarVista Chief Clinical Officer Shareen Leland said. 

The county receives about $602 per bed per night from MediCal for a service like what the Redwood House provides, one of the residential programs Caminar is closing. Typically, the county takes about one-third of that amount for administration and passes on the remainder. Cloutier said the county agreed to increase the nonprofit’s percentage, but it still wouldn’t cover their costs.

He added the county negotiated in good faith, as a lot is out of its control, given the rates are dictated and influenced by the state’s Medi-Cal system, which in turn takes direction from the federal Centers for Medicaid and Medicare. 

The assisted outpatient treatment program would have lost $308,000 per year if it didn’t shut it down, Cloutier added. 

Currently, Medi-Cal coverage for substance abuse services and specialty mental health care is administered through the county’s Behavioral Health and Recovery Services Division, which acts as the liaison to the state’s Medi-Cal system. The county also operates the Medi-Cal-funded Health Plan of San Mateo, though it provides coverage for less acute services. 

Caminar’s Redwood House and the assisted outpatient treatment program comprises roughly 60 clients in total, and the nonprofit is also terminating case management services for its young adult transition program. About 10% of its workforce will likely be laid off due to the shutdowns. 

Leland said StarVista projects a $1 million loss this fiscal year due to the change. Between the closure of its San Mateo County programs, as well as one in Solano, Caminar would have lost about $2.5 million this fiscal year. 

Even though CalAIM updated payment structures for Medi-Cal-funded behavioral health services across the state, its impact is not uniform. Each county has its own set of reimbursement rates, and both Cloutier and Leland said San Mateo’s rate is particularly low, yet many are unsure why. The data that was provided to the state for the purposes of determining  the rate is unclear, and the formula Medi-Cal used in its calculation amounts to a black box, Leland said.  

“Sadly, it seems as though there’s just not a lot of historical knowledge about how these rates were set and why they were set this way with San Mateo County,” Leland said. 

Getting the county to financially supplement the programs is complicated and unclear. Leland said she is unsure of any stopgap funding efforts at the county level. 

Jei Africa, director of Behavioral Health and Recovery Services, said in an emailed statement that the staff “have met with contractor staff regularly and provided a budget tool to help track utilization of services with the new rates,” adding that they also offered technical assistance to improve document and billing and “one-time funding for providers to learn how to earn incentives associated with the new requirements.”

In Santa Clara County, one contractor, Momentum for Mental Health, had to terminate its contracts with the county due to the payment cuts, resulting in a 15% workforce reduction. But the county also started covering more front-end costs, which comprise the ongoing, non-clinical services needed to get people into treatment — such as finding individuals, continuously engaging with them and enrolling them in treatment. 

“[Santa Clara County] funded a couple of programs just for the front-end engagement, and they paid for that out of other sources of funding, so it essentially covered what was covered before under the cost-based model,” Cloutier said.

The issue presents a significant problem not just for clients who are in need of services, but also for county leaders, who have frequently stated they want to expand treatment access to those in need. The number of alcohol and drug-related deaths in the county increased by 15% between 2019 and 2023. 

San Mateo County Supervisor Ray Mueller said the county is still in discussion with behavioral health providers and exploring supplemental funding options in light of the reimbursement changes. 

“The county is trying to determine whether or not some of these service providers are related solely to reimbursement or if there is something else taking place,” he said, noting that services determined to be duplicative could potentially be consolidated for cost savings and more efficiency.

The issue is a timely one, as the passage of Proposition 36 would spike demand for rehabilitation facilities, necessitating increased funding. The ballot measure would elevate nonviolent drug possession charges to felonies by the third offense, which could be dismissed with successful completion of treatment. The law currently allows judges to issue similar sentences —  forgoing conviction or jail time if treatment is completed — though the charges remain as misdemeanors, not felonies. 

Heightened demand paired with fewer treatment options could present challenges, at least in the near term. Conversely, Mueller said, the increased need would actually help behavioral health providers, as higher caseloads would create the economies of scale needed to operate with a lower reimbursement rate. 

But that means treatment centers will have to start filling up soon — or they may permanently fold. 

“I’m not going to name names, but I know there are other programs at risk of closing,” Leland said.  “But the real impact is happening on the most vulnerable folks in San Mateo County … so when these programs are closing, that is who is affected.”

Caminar’s two programs will shut down by the end of the year. Cloutier said they are in the midst of transitioning clients to other providers. 

alyse@smdailyjournal.com

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