Californias $12 Billion Medicaid Makeover Banks on Nonprofits Buy-In

TURLOCK, Calif. For much of his young life, Jorge Sanchez regularly gasped for air, at times coughing so violently that hed almost throw up. His mother whisked him to the emergency room late at night and slept with him to make sure he didnt stop breathing.

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Hes had these problems since he was born, and I couldnt figure out what was triggering his asthma, Fabiola Sandoval said of her son, Jorge, now 4. Its so hard when your child is hurting. I was willing to try anything.

In January, community health workers visited Sandovals home in Turlock, a city in Californias Central Valley where dust from fruit and nut orchards billows through the air. They scoured Sandovals home for hazards and explained that harsh cleaning products, air fresheners, and airborne dust and pesticides can trigger an asthma attack.

The team also provided Sandoval with air purifiers, a special vacuum cleaner that can suck dust out of the air, hypoallergenic mattress covers, and a humidity sensor goods that retail for hundreds of dollars. Within a few months, Jorge was breathing easier and was able to run and play outside. Fabiola Sandovals son, Jorge Sanchez.(Angela Hart/KFF Health News)

The in-home consultation and supplies were paid for by Medi-Cal, Californias Medicaid health insurance program for low-income residents. Gov. Gavin Newsom is spearheading an ambitious $12 billion experiment to transform Medi-Cal into both a health insurer and a social services provider, one that relies not only on doctors and nurses, but also community health workers and nonprofit groups that offer dozens of services, including delivering healthy meals and helping homeless people pay for housing.

These groups are redefining health care in California as they compete with businesses for a share of the money, and become a new arm of the sprawling Medi-Cal bureaucracy that serves nearly 15 million low-income residents on an annual budget of $158 billion.

But worker shortages, negotiations with health insurance companies, and learning to navigate complex billing and technology systems have hamstrung the community groups ability to deliver the new services: Now into the third year of the ambitious five-year experiment, only a small fraction of eligible patients have received benefits.

This is still so new, and everyone is just overwhelmed at this point, so its slow-going, said Kevin Hamilton, a senior director at the Central California Asthma Collaborative. Community health workers also provided Sandoval with air purifiers, a special vacuum cleaner that can suck dust out of the air, hypoallergenic mattress covers, and a humidity sensor. Within a few months, her son, Jorge, was breathing easier and was able to run and play outside.(Angela Hart/KFF Health News) Email Sign-Up

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The collaborative has served about 3,650 patients, including Sandoval, in eight counties since early 2022, he said. It has years of experience with Medi-Cal patients in the Central Valley and has received about $1.5 million of the new initiatives money.

By contrast, CalOptima Health, Orange Countys primary Medi-Cal insurer, is new to offering asthma benefits and has signed up 58 patients so far.

Asthma services are so difficult to get going because the nonprofit infrastructure for these services is virtually nonexistent, said Kelly Bruno-Nelson, CalOptimas executive director for Medi-Cal. We need more community-based organizations on board because theyre the ones who can serve a population that nobody wants to deal with.

Newsom, a Democrat in his second term, says his signature health care initiative, known as CalAIM, seeks to reduce the cost of caring for the states sickest and most vulnerable patients, including homeless Californians, foster children, former inmates, and people battling addiction disorders.

In addition to in-home asthma remediation, CalAIM offers 13 broad categories of social services, plus a benefit connecting eligible patients with one-on-one care managers to help them obtain anything they need to get healthier, from grocery shopping to finding a job.

The 25 managed-care insurance companies participating in Medi-Cal can choose which services they offer, and contract with community groups to provide them. Insurers have hammered out about 4,300 large and small contracts with nonprofits and businesses.

So far, about 103,000 Medi-Cal patients have received CalAIM services and roughly 160,000 have been assigned personal care managers, according to state data, a sliver of the hundreds of thousands of patients who likely qualify.

Were all new to health care, and a lot of this is such a foreign concept, said Helena Lopez, executive director of A Greater Hope, a nonprofit organization providing social services in Riverside and San Bernardino counties, such as handing out baseball cleats to children to help them be active.

Tiffany Sickler runs Koinonia Family Services, which offers California foster children mental health and other types of care, and even helped a patient pay off parking tickets. But the program is struggling on a shoestring budget.

If you want to do this, you have to learn all these new systems. Its been a huge learning curve, and very time-consuming and frustrating, especially without adequate funding, she said. Alondra Mercado, a community health worker with the Central California Asthma Collaborative, helps provide services through an ambitious California Medicaid initiative. (Angela Hart/KFF Health News) In January, community health workers visited Sandovals home. They scoured it for hazards and explained that harsh cleaning products, air fresheners, and airborne dust and pesticides can trigger an asthma attack. (Angela Hart/KFF Health News)

Brandon Richards, a Newsom spokesperson, defended CalAIM, saying that it was on the cutting edge of health care and that the state was working to increase awareness of these new services and support.

For nonprofits and businesses, CalAIM is a money-making opportunity one that top state health officials hope to make permanent. Health insurers, which receive hefty payments from the state to serve more people and offer new services, share a portion with service providers.

In some places, community groups are competing with national corporations for the new funding, such as Moms Meals, an Iowa-based company that delivers prepared meals across the United States.

Moms Meals has an advantage over neighborhood nonprofit groups because it has long served seniors on Medicare and was able to immediately start offering the CalAIM benefit of home-delivered meals for patients with chronic diseases. But even Moms Meals isnt reaching everyone who qualifies, because doctors and patients dont always know its an option, said Catherine Macpherson, the companys chief nutrition officer.

Utilization is not as high as it should be yet, she said. But we were well positioned, because we already had departments to do billing and contracting with health care.

Middleman companies also have their eye on the billions of CalAIM dollars and are popping up to assist small organizations to go up against established ones like Moms Meals. For instance, the New York-based Nonprofit Finance Fund is advising homeless service providers how to get more contracts and expand benefits.

Full Circle Health Network, with 70 member organizations, is helping smaller nonprofit groups develop and deliver services primarily for families and foster children. Full Circle has signed a deal with Kaser Permanente, allowing the health care giant to access its network of community groups.

Were allowing organizations to launch these benefits much faster than theyve been able to do and to reach more vulnerable people, said Camille Schraeder, chief executive of Full Circle. Many of these are grassroots organizations that have the trust and expertise on the ground, but theyre new to health care.

One of the biggest challenges community groups face is hiring workers, who are key to finding eligible patients and persuading them to participate.

Kathryn Phillips, a workforce expert at the California Health Care Foundation, said there isnt enough seed money for community groups to hire workers and pay for new technology platforms. They bring the trust that is needed, the cultural competency, the diversity of languages, she said. But there needs to be more funding and reimbursement to build this workforce.

Health insurers say they are trying to increase the workforce. For instance, L.A. Care Health Plan, the largest Medi-Cal insurer in California, has given $66 million to community organizations for hiring and other CalAIM needs, said Sameer Amin, the groups chief medical officer.

They dont have the staffing to do all this stuff, so were helping with that all while teaching them how to build up their health care infrastructure, he said. Everyone wants a win, but this isnt going to be successful overnight. Fabiola Sandoval has struggled to help her son, Jorge Sanchez, control his asthma since he was an infant. She has received several items from Californias Medicaid program, including air filters, cleaning products, pillow and mattress covers, and a specialized vacuum, which shes holding, that can suck dust out of the air.(Angela Hart/KFF Health News)

In the Central Valley, Jorge Sanchez is one of the lucky early beneficiaries of CalAIM.

His mother credits the trust she established with community health workers, who spent many hours over multiple visits to teach her how to control her sons asthma.

I used to love cleaning with bleach but learned it can trigger breathing problems, Sandoval said.

Since she implemented the health workers recommendations, Sandoval has been able to let Jorge sleep alone at night for the first time in four years.

Having this program and all the things available is amazing, said Sandoval, as she pointed to the dirty dust cup in her new vacuum cleaner. Now my son doesnt have as many asthma attacks and he can run around and be a normal kid.

This article was produced by KFF Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

Angela Hart:, @ahartreports Related Topics California Health Care Costs Health Industry Insurance Medi-Cal Medicaid States Contact Us Submit a Story Tip