Strategies and Options for Creating an Advanced Child Health Delivery System: Lessons Learned in CA

Manatt on Health: Medicaid Edition

By Jocelyn A. Guyer, Managing Director, Manatt Health | Alice J. Lam, Managing Director, Manatt Health | Madeleine Toups, Manager, Manatt Health | Donna Cohen Ross, Independent Consultant

Editor’s Note: In a new report commissioned by the David and Lucile Packard Foundation, the J.B. and M.K. Pritzker Family Foundation, and Genentech Charitable Giving, Manatt Health—in partnership with DCR Initiatives and the Center for the Study of Social Policy—presents strategies for leveraging Medi-Cal, California’s Medicaid program, to strengthen the social and emotional development of young children. The Options Paper, summarized below, presents policies and financing mechanisms that are central to the support of an equitable, advanced child health delivery system. Click here to download a free copy of the full report. To view Manatt’s free webinar sharing key strategies and options from the report on demand—and to download a free copy of the webinar presentation—click here.

California’s long-standing efforts to promote child development and kindergarten readiness have brought greater focus to the vital role of child health in realizing the full strength of these critical state investments. As a large and diverse state, with 5 million children enrolled in Medi Cal – including 53 percent of all children under the age of 5 - policy and practice innovations originating in California that benefit young children and families have the capacity to demonstrate ways to make meaningful, positive change for millions of others. And with two-thirds of children enrolled in Medi Cal being children of color, these efforts are critical to efforts to contend with the long-neglected obligation to advance racial justice and health equity.

Steps to Address Children’s Social and Emotional Development

In recent years, the Newsom administration and state legislative leaders have taken steps to focus on young children’s social and emotional development.A Initiatives include:

  • Supplemental Provider Payments for ACEs and Developmental Screenings. Starting in January 2020, Medi-Cal providers have been able to receive supplemental payments—on top of the general reimbursement rate—for providing adverse childhood experiences (ACEs) screenings for child and adult Medi-Cal beneficiaries and developmental screenings for children enrolled in Medi-Cal.1
  • Family Therapy Guidance. In September 2020, the California Department of Health Care Services (DHCS) issued first-in-the-nation guidance permitting children enrolled in Medi-Cal to receive “dyadic” treatment (i.e., treatment of the child and parent/caregiver as a unit) without requiring the child to have a mental health diagnosis.2
  • Master Plan for Early Learning and Care. Published in December 2020, the “Master Plan” prioritizes a child’s first five years of life and highlights supporting their caregivers, families and educators to ensure children are prepared for success. The Master Plan presents key objectives and policy goals to focus on a child’s early learning and care, including supporting positive health outcomes.3
  • Roadmap for Resilience. Also published in December 2020, the “Roadmap” discusses solutions, models and best practices to recognize and effectively address ACEs and toxic stress. In particular, the Roadmap identifies cross-sector strategies for addressing ACEs and toxic stress at the state level and prioritizing prevention, equity in outcomes, and enhanced coordination across health care, public health, social services, early childhood, education and justice.4

These actions illustrate California’s commitment to improve care for young children, and, while many issues still remain, can form the basis for further innovation in the years to come.

Key Characteristics of an Equitable, Advanced Child Health Delivery System for California

The following strategies, if deployed in California and other states, will build upon the progress to date to support an equitable, advanced delivery system for young children that features:

  • A Whole Child Approach. The system will treat the “whole child,” which is to say it will recognize that children’s health is based on their physical health, but also on their mental health, their relationship with their parents or caregivers, social and economic factors (e.g., access to safe and stable housing, food, economic supports, educational opportunities), and the extent to which they face systemic racism and inequity, immigration concerns, and exposure to ACEs. A key feature of the whole child approach is providing preventive care and services, as well as identifying and connecting children and their families to support before major issues and challenges develop.
  • Family-Centered Care. An equitable, advanced child health system will offer family-centered care in recognition that a nurturing, secure relationship with a parent or caregiver is essential to a child’s optimal health and development. Since a parent’s health and behaviors have a direct impact on a child’s well-being, the pediatric care provider will screen caregivers for depression and tobacco or other substance use, as well as for economic and social needs.
  • A Community-Driven Team Based Model. An integrated pediatric primary care team will include community health workers, peer support specialists, doulas and/or family navigators that share lived experiences with families, including with systemic racism and discrimination. Through community partnerships, care team members can help link families to culturally competent supports and resources outside of the clinic, ensure that the family has been able to follow up on referrals, and offer cross-sector coordination.

Short-Term Strategies (12 Months)

The strategies in this section can be initiated within the next 12 months in California and other states to support an equitable, advanced child health system.

1. Leverage Medi-Cal managed care plan (MCP) reprocurement to strengthen accountability and quality

Nearly 90 percent of the 5 million children enrolled in Medi-Cal receive their physical health care and behavioral health services for mild-to-moderate conditions through Medi-Cal MCPs, making the state’s reprocurement of these plans a powerful tool for driving change.5 With some exceptions, Medi-Cal MCPs have not been focused on young children because they are relatively inexpensive to cover—even when at risk for significant health issues later in life—and investing in their care is unlikely to show a major short-term return on investment (ROI), even if it improves their well-being, generates a long-term ROI, or creates savings for other sectors such as education or the juvenile justice system. In the absence of incentives to do otherwise, plans gravitate toward focusing on populations with high current expenditures, such as adults with unmanaged chronic conditions.

DHCS has recognized the importance of addressing child health issues in the reprocurement now underway. It has listed child health as one of ten top priorities in reprocurement materials and advised stakeholders that the issue is “of the utmost importance to the agency.”6 Tools available to increase plan accountability for children in reprocurement include:

  • Use withholds or incentives to encourage MCPs to improve care for young children.
  • Establish a robust and timely child health dashboard that displays how well plans are doing, including progress on racial disparities.
  • Strengthen care coordination and facilitate connections to community resources for children (e.g., parenting supports, housing instability, food insecurity, ACEs).
  • Incentivize or require use of community-driven team based care.

2. Strengthen and build on existing Early and Periodic Screening, Diagnostic and Treatment (EPSDT) policy

A cornerstone of federal Medicaid law is its guarantee of all medically necessary services for Medicaid-enrolled children under the age of 21. Historically, California has faced significant concerns that children enrolled in Medi-Cal have not received EPSDT services to which they are entitled. California is now working to address these concerns and can use the Medi-Cal reprocurement and related actions to leverage the federally guaranteed EPSDT benefit. Potential strategies include:

  • Reinforce compliance with existing EPSDT policies through strong MCP contract language and outreach and education to plans, providers and families.
  • Extend approach from 2020 DHCS family therapy guidance to support a broader preventive approach to behavioral health for young children.
  • Continue enhanced payments for ACEs and developmental screenings, and incorporate lessons learned from recent initiatives.

3. Provide additional resources to DHCS and MCPs to focus on children

Given the number of young children receiving care through Medi-Cal and California’s sizable investments in the program, DHCS should consider dedicating additional resources squarely focused on the needs and priorities of children. Potential options include:

  • Require each MCP to establish a key position as the point of accountability for Medi-Cal children and children’s health initiatives.
  • Establish a DHCS leadership position accountable for improving child health outcomes and equity and ensuring an effective state-level advisory committee on children’s health.
  • Facilitate effective uptake of new child and family-centered policies by supporting Medi-Cal MCPs and providers with information, training and technical assistance, and by identifying available funding that can be leveraged to conduct such activities.

Long-Term Strategies (2–5 Years): Strengthen the Medi-Cal Child Health Delivery System

While the focus of this analysis is on short-term, actionable strategies available to California over the next several months to move toward an equitable, advanced child health delivery system, it is important to identify some of the more significant structural features of Medi-Cal that will warrant review in the longer term. Many of the ideas and recommendations outlined below have been discussed in California for years, reflecting their importance, as well as that they may require sweeping, longer-term changes in Medi-Cal’s structure.

1. Increase investment in the pediatric delivery system

California invests relatively little in pediatric primary care compared to other states, ranking 49th in the nation for Medicaid physician fee index for primary care.7 In order to dramatically improve children’s development and support families, California may need to invest more in pediatric and family-based care. A key strategy would be to require a minimum share of capitation dollars to be dedicated to pediatric primary care.

2. Continue to address access issues for children through rate increases and other means

California faces persistent concerns about the extent to which children (and other populations) have access to appropriate care in Medi-Cal. The state may need to consider initiatives aimed directly at increasing funding to support children’s access to care, which has been the subject of litigation on a number of occasions. Some of the additional steps that California could take in the longer term include:

  • Increase provider reimbursement rates.
  • Require MCPs to provide out-of-network access.

3. Develop a value-based payment model that reflects a pediatric-specific approach

California has reiterated in recent guidance and stakeholder materials that it is committed to continuing to move toward greater use of value-based payments, allowing the state to pay for outcomes and high-quality care rather than for the volume of services delivered by a provider. When making greater use of value-based payments, it is important to reflect that some “traditional” elements of value-based payments are not well-designed for children, especially those at risk for, but not yet diagnosed with, significant physical or mental health conditions.B With some notable exceptions, children are relatively healthy and inexpensive to serve and, therefore, traditional methods of structuring value-based payments around short-term shared savings work poorly for rewarding high-quality, family-based, equitable care.

DHCS could develop a value-based payment methodology that reflects the short- and long-term benefit of high-quality, preventive care for children. DHCS would need to determine how to identify high-quality, family-based care, which could be done by outcome measures or, in the early years, by identifying the key characteristics of effective pediatric providers.

4. Revisit the bifurcated behavioral health system

A number of leading foundations and experts have analyzed the Medi-Cal behavioral health system and concluded it is highly fragmented and difficult for beneficiaries to navigate. In California, MCPs are charged with covering behavioral health services for beneficiaries with “mild-to-moderate” conditions while county specialty mental health plans (SMHPs) are charged with addressing severe behavioral health conditions. Moreover, counties are responsible for financing much of the cost of the Medi-Cal behavioral health system while the state covers the non-federal share of other Medi-Cal costs, creating disparate financing for behavioral health versus other Medi-Cal benefits. This bifurcation and expectation that SMHPs will fund more serious care creates a disincentive for MCPs to fully embrace preventive behavioral health services under their mild-to-moderate benefit requirements, as well as creates an incentive for county SMHPs to classify children as only requiring services for mild-to-moderate conditions.

5. Strengthen coverage options for children and their families

All the options and recommendations outlined in this analysis rest on a foundation of coverage for California’s children and families. To the extent that the state again experiences a decline in coverage for children—as occurred in the months before the COVID-19 pandemic hit—or if new enrollment does not keep pace with need in light of the pandemic and related unemployment, it will be more difficult to improve care for children in California. Of particular concern is the drop in coverage that occurred prior to the pandemic among children who are part of immigrant families, reflecting greater fear and concern about using Medi-Cal in light of anti-immigrant policies adopted by the Trump administration.8 While California has taken a number of steps to address these issues and concerns, including by covering all children regardless of immigrant status, some additional steps are available to further strengthen the coverage foundation, including:

  • Implement continuous Medi-Cal coverage for up to five years for children.
  • Pursue 12 months continuous Medi-Cal coverage for adults.
  • Extend postpartum coverage for Medi-Cal eligible women.


Though California-specific, the concepts in the Options Paper could be utilized by any state to identify opportunities to support young children who are enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) in advancing their social and emotional development through pediatric primary care. The research is clear that addressing social and emotional concerns at a young age, as well as supporting a child’s parents, caregivers and families, improves long-term well-being and health options. Given the rapidly surging COVID-19 pandemic and the likely long-standing after effects, supporting young children is more important than ever.

A Among the state’s current leaders are a significant number of nationally recognized early childhood experts and advocates. Selected examples include California’s first surgeon general, Dr. Nadine Burke Harris, a pediatrician, national authority on the impact of early trauma and ACEs on long-term health, and chair of the First 5 California Children and Families Commission, and California’s Health and Human Services deputy secretary for early childhood development and senior advisor to Governor Newsom on early childhood development initiatives, Kris Perry, who is the former executive director of First 5 California and First 5 San Mateo.

B California has established value-based payment initiatives that offer add-on payments to providers for key services associated with important quality metrics, including for an early childhood bundle of services. Specifically, DHCS offers an add-on payment for each beneficiary who receives a particular service with those “not at risk” members receiving a basic add-on and “at risk” members receiving an even larger increase. The definition of an “at risk” member includes those with a diagnosed substance use disorder or a serious mental illness, or who are experiencing homelessness or have inadequate housing, a set of criteria that primarily describes high-risk adults. To make the criteria more inclusive of children, DHCS could add children with a serious emotional disturbance to the “at risk” definition.

1 DHCS. All Plan Letter 19-016: All Medi-Cal Managed Care Health Plans: Proposition 56 Directed Payments for Developmental Screening Services. December 2019. Retrieved from

2 DHCS. Medi-Cal Psychological Services Manual. September 2020. Retrieved from

3 California for All Kids. Master Plan for Early Learning and Care: Making California for All Kids. December 2020. Retrieved from

4 Office of the California Surgeon General. Roadmap for Resilience: The California Surgeon General’s Report on Adverse Childhood Experiences, Toxic Stress, and Health. December 2020. Retrieved from

5 Children Now. Children’s Medi-Cal Managed Care in California Counties: A Landscape. July 2020. Retrieved from

6 DHCS. Request for Information #20-001. September 2020. Retrieved from

7 Kaiser Family Foundation. Medicaid Physician Fee Index: Primary Care. 2016. Retrieved from,%22sort%22:%22asc%22%7D.

8 Bernstein, H., Gonzalez, D., Karpman, M., and Zuckerman, S. Amid Confusion Over the Public Charge Rule, Immigrant Families Continued Avoiding Public Benefits in 2019. Urban Institute. May 2020. Retrieved from



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