'Growing Pains as California Adds Social Services to Medicaid' Transcript

October 26, 2023

Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode

Dan Gorenstein: California’s Medicaid program is two years into an audacious overhaul.

The state’s health insurance program for low-income people now pays to help some folks find a place to live, buy nutritious food, even learn life skills like cooking and cleaning.

It’s all part of an effort known as CalAIM.

Kelly Bruno-Nelson: CalAIM is California’s recognition that a person’s ability to be healthy is 80% dictated by things outside of the traditional health care system.

DG: It’s the nation’s most ambitious bet that addressing people’s social needs will make them healthier and drive down health spending in the long run. Of course everyone has expected bumps out of the gate.

KBN: The reality is it took decades for these populations to become unhealthy, and it’s going to take decades for them to be healthy.

DG: Today, CalAIM’s early challenges and what’s being done to right the ship.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.


DG: Pooja Bhalla runs a nonprofit in Southern California — the Illumination Foundation — that helps people dealing with homelessness find somewhere to stay when they are too sick for the streets, but too healthy for the hospital.

So when Medicaid created CalAIM with an intention to pay for services exactly like that she was thrilled.

Pooja Bhalla: CalAIM is this awesome program that is really starting to look at the social determinants of health to help a client access health care.

DG: The whole idea behind CalAIM is that by giving people more support with things like housing, food and addiction treatment they will need fewer expensive trips to the ER, hospital or nursing homes.

Today 50% of Medicaid dollars in California are spent on just 5% of the state’s Medicaid recipients.

People typically with lots of social needs and multiple medical problems — diabetes, heart disease, kidney failure.

So in 2022 California’s Medicaid program launched CalAIM and started to pay for 14 different social services that had some evidence that they improve people’s health like covering someone’s security deposit or installing grab-bars.

For Pooja this was an opportunity to help people she’s historically struggled to help.

PB: Prior to CalAIM, for every 10 clients who needed these services, maybe 2 would actually be eligible and get them. And the hope with CalAIM is to make it more accessible.

DG: If California could pull this off with more than 15 million people on Medicaid, it would show other states what is possible and potentially revolutionize care for some of the sickest and most vulnerable people nationwide.

But to do that, organizations like Pooja’s have had to stretch a lot.

Pooja had funded her organization through grants and philanthropy for 20 years. Medicaid? That was a different beast.

Overnight, Pooja had to transform her housing nonprofit into something that worked more like a doctor’s office, or a hospital.

PB: We had to build our own billing department. There were systems that we’ve never had to think about before. There were different codes for each service, so it was a whole new language for my staff to get used to.

DG: Hundreds of social service organizations like the Illumination Foundation have taken the plunge into the new cumbersome, complicated world of getting paid by Medicaid.

The state has handed out about $800 million to help these groups make the transition but it’s been hard.

Pooja says when she talks with her counterparts around the state they all agree their biggest challenge is working with the health insurance companies.

PB: I just can’t stress enough the administrative burden with all the different health plans.

DG: 23 insurance plans cover people on Medicaid in California.

Some are run by big national insurers like Blue Cross and Kaiser Permanente, others by counties. Then you’ve got the ones managed by local nonprofits.

Each insurer has its own rules, its own systems that social service organizations must navigate.

PB: The requirements are different, the criteria is different, the portals, the documentation.

DG: The Illumination Foundation works with eight different health plans.

Pooja says some are very easy to work with; they feel like true partners.

Others, well it can take weeks, even months to get the green light for certain services and when she needs help they rarely solve her problems.

Then there’s the paperwork.

PB: We have to document in our own system. We have to document in their system. There’s claims that are denied. They come back to us, we submit everything. They still don’t have what they need.

DG: Here’s another challenge, says Pooja: getting paid to track down patients who are homeless.

Insurance companies send the Illumination Foundation lists of folks who are eligible for CalAIM.

Pooja says her team spends an average of 5 to 6 hours trying to find each person.

PB: The success rate is about 25%. So all of that work went into finding all the patients that we didn’t find, we do not get paid for those services. If we’re not able to get paid for those services, we can’t hold on to all that staff. We can’t make the financing work.

DG: Administrative headaches, annoying health plans, low pay rates are reasons why some social service organizations have stopped providing some CalAIM services just two years into this grand experiment.

Pooja’s sticking around she believes in CalAIM — says it’s already helping more people find housing, saving lives every single day. 

But she also knows there’s a price for the program’s early dysfunction.

She thinks of one man in particular: a 49 year-old named Gregory. Gregory came to the Illumination Foundation seven months ago after a short stint in the hospital.

PB: He’s got so much going on medically like chronic renal disease, hypertension, diabetes. He has a wound. He has an ulcer. He also suffers from depression.

DG: And he was homeless — exactly the kind of person CalAIM is designed to help.

Pooja’s team reached out to Gregory’s insurer to get him a CalAIM care manager who could help Gregory get to all his medical appointments and start looking for housing.

But it took his health plan a month and a half — 6 weeks — to approve the service. 

By then, Gregory was back on the street.

PB: We know he’s eligible. Our unhoused population,with medical and mental health issues all are eligible. Why not just provide that service?

DG: Instead of getting the medical and social services CalAIM promised to Gregory, Pooja says Gregory’s been in and out of the hospital a dozen times and still has no place to live.

PB: He hasn’t been connected to a doctor. He’s not taking his medications. He needs surgery. His health is deteriorating. And if we don’t get him connected to the system, it’s only going to get worse. 

DG: When we come back, we’ll hear from a health insurer and the director of California’s Medicaid program about their own struggles and the path forward for CalAIM.


DG: Welcome back. Kelly Bruno-Nelson understands the frustrations of social service providers like Pooja Bhalla.

Kelly ran a homelessness nonprofit in Los Angeles for 15 years before leaving last year to work for a health insurance company.

KBN: It’s almost like I went to the dark side, right? Or I went to the enemy. 

DG: Kelly runs CalAIM for the health plan CalOptima, a nonprofit insurer that covers nearly a million people in Orange County.

Kelly knew overhauling Medicaid meant CalOptima and other insurers would also have to adapt to a whole new way of doing business.

Imagine CalAIM is an orchestra. Social service providers are the musicians — a cellist, a bassoon player. The health plans, they’re more like the conductor, responsible for assembling all the musicians and making sure they’re playing their part.

KBN: It’s big. It’s huge. It’s scary, and it’s also unpredictable.

DG: California pays private health plans every year a lump sum to manage the care of people on Medicaid. That means paying for their X-rays and hip replacements.

With CalAIM these insurance companies are now expected to help people find housing, too.

KBN: That stuff takes time and you just can’t throw money at it. There are almost 6,000 unhoused folks in our community. I do not have enough providers in the county to suddenly be able to magically provide housing navigation for 6,000 people.

DG: The state tapped the health plans to identify which people qualify for the new services, find organizations like the Illumination Foundation to provide those services, and build a system to approve and pay for it all.

It’s a lot for the insurers.

KBN: They are like a deer in headlights: willing and wanting to learn, but not really knowing what the heck to do.

DG: CalOptima is a perfect example.

The insurer struggled to get these new services off the ground. So about 6 months into CalAIM they hired Kelly — banking on her background — to get things going.

KBN: CalOptima Health recognized our expertise and brought not only me — but my entire leadership team — over to the health plan to help launch its CalAIM efforts.

DG: Kelly fanned out across the county. She explains the easy thing would’ve been to just contract with a handful of big social service providers.

From her time in LA, she knew smaller providers would bring the personal, intimate energy needed to do things like help people get mold out of their walls and give folks a safe place to sober up.

KBN: These smaller nonprofits don’t necessarily have the infrastructure and the capacity they need to help us.

DG: Kelly gave $100,000 upfront to each one of the more than 120 social service providers she contracted with.

She knew they’d need the cash to fit Medicaid’s bureaucratic and regulatory needs.

KBN: Oftentimes a health plan’s mentality is, well, we’ll help you after we know that you are doing good work. But the issue is how can I do good work if I don’t have the money to do good work? And you go in this circle, right? So we said, okay, we’re going to trust first and we’re going to distribute dollars and then get the rewards afterward.

DG: Once Kelly got those groups on board, her team spent months training them on the ins and outs of being a Medicaid provider, holding their hands through the paperwork and the red tape.

And once they finally started providing services, Kelly checked in regularly to hear their concerns and make quick course corrections when needed.

​​KBN: It started with just listening and doing something with the information that we heard. We can’t just listen and say, “Thanks for telling us what you think, and now we’re going to go do whatever the heck we want to do.”

DG: Kelly says her hand-holding approach has delivered results. CalOptima provided more CalAIM services to more people than nearly any other health plan in the state in 2022.

But the insurance company also spent more than $100 million finding all those organizations and getting them up to speed. 

It was a huge investment for CalOptima.

KBN: These are financial decisions. And so each health plan has to make those decisions for themselves.

DG: Kelly says a lot of plans have been hesitant, afraid even, of investing in these new services.

That hesitation is understandable, but it does have a cost. People’s social needs go unmet. They keep living under overpasses and in makeshift encampments.

But Kelly says more plans are starting to come around to the idea that their jobs go beyond traditional medical services that they have to invest in addressing these other basic needs.

In CalAIM’s first year, only three counties had health plans offering all of the new social services.

As of August 2023, that has grown to 13 out of the state’s 58 counties. 

KBN: This is what determines a person’s ability to be healthy. And the longer health plans want to ignore it, the farther behind they’re going to be.

DG: California’s Medicaid Director Jacey Cooper knows folks are frustrated and knows people wanted more from CalAIM by now.

Jacey Cooper: We’ve always said this is a five-year plan. We implemented one of the most comprehensive changes of a health care delivery system on the tail end of Covid.

DG: Jacey recognizes some changes to CalAIM are needed right now.

One of the biggest: Take away some flexibility insurers have had to write their own rules.

As of January 1, 2024, the state will instead require all health plans to use the same criteria to determine who is eligible for CalAIM services.

CalAIM will also force health plans to streamline their paperwork so patients get their care approved faster. 

JC: We are dictating more here than we’ve ever dictated before. And that was our reality check. Okay, we do need to be more prescriptive because that’s what we were seeing as the barriers.

DG: The state has also increased how much it pays providers for CalAIM services by about 50% and Jacey says her team is also working on better compensating providers for the time they spend trying to find new patients.

If she could do it all again Jacey says she would’ve allowed more time before CalAIM launched — for insurers and providers to prepare for these new roles and build up some trust.

JC: Being the first is hard. It just is, right? We’re going to make a lot of the mistakes that others get to come and sit around a table and we get to tell them all the things to do different.

DG: In spite of all the real bumps, Jacey’s also convinced the program is going in the right direction.

When asked why, she says 26% of people experiencing homelessness in California got some kind of CalAIM service last year.

JC: I think that is proof we can break down systems — we can break down those walls of health care — and that there is hope in regards to where we’re going.

DG: 26% represents some 40,000 people who got help finding a stable place to recover after leaving the hospital, or buying healthy food, potentially lifesaving care.

Those stories make Jacey, Kelly and Pooja all excited.

In fact, California just asked federal officials to let the state pay for 6 months of rent for people who find housing through CalAIM. In other words, the state is doubling down.

No one expects CalAIM to solve California’s housing crisis, but that 26% benefitting from CalAIM so far is also a reminder that three-quarters of homeless Californians are still on the outside looking in.

Jacey says that’s why everyone connected to CalAIM — the providers, the insurers and state officials — must step up. Because the longer it takes to figure all this out, the more people will get sicker day by day, eligible but unable to get care that could help.

I’m Dan Gorenstein. This is Tradeoffs.

Tradeoffs coverage of CalAIM is supported in part by the California Health Care Foundation.

Want more Tradeoffs? Sign up for our weekly newsletter!

Episode Resources

Selected Research and Reporting on CalAIM:

CalAIM Explained: A Five-Year Plan to Transform Medi-Cal (California Health Care Foundation, 7/26/2021)

Health care ‘game-changer’? Feds boost care for homeless Americans (Angela Hart, KFF Health News and CNN, 8/16/2023)

‘Go to the people’: Street medicine teams bring health care to the unhoused (Larry Valenzuela, CalMatters, 7/11/2023)

Addressing Social Needs through Medicaid: Lessons from Planning and Early Implementation of North Carolina’s Healthy Opportunities Pilots (Katie M. Huber, William K. Bleser, Rebecca G. Whitaker, Karina Vasudeva, Jessye Halvorson, Amanda Van Vleet, Michelle J. Lyn and Robert Suanders; Milbank Memorial Fund and Duke Margolis Center for Health Policy; 9/2023)

CalAIM Experiences: Implementer Views After First Year of Reforms (Goodwin Simon Strategic Research and the California Health Care Foundation, 7/2023)

The Push to Bring Medicaid Behind Bars (Ryan Levi and Dan Gorenstein, Tradeoffs, 2/23/2023)

California Bets Big on Housing in Medicaid (Ryan Levi and Dan Gorenstein, Tradeoffs, 9/22/2022)

Episode Credits


Pooja Bhalla, DNP, RN, CEO, Illumination Foundation

Jacey Cooper, Medicaid Director, California Department of Health Care Services

Kelly Bruno-Nelson, MSW, Executive Director of Medi-Cal/CalAIM, CalOptima Health

The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode from Blue Dot Sessions and Epidemic Sound.

This episode was reported by Ryan Levi, edited by Deborah Franklin and Dan Gorenstein, and mixed by Andrew Parrella and Cedric Wilson.

Additional thanks to: John Baackes, Elaine Chhean, Glen Hilton, Susan Philip, Melora Simon, Sandra Wilkniss and Cheryl Winter, the Tradeoffs Advisory Board and our stellar staff!