The Next Phase for Whole Person Care: Setting the Stage for the Future of Medi-Cal Transformation
April 1, 2026 | By Lillian Chen, MPP, MPH, and Sarabeth Zemel, JD
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Since 2021, California’s Medi-Cal program has been on a transformative journey through the California Advancing and Innovating Medi-Cal, or CalAIM, initiative, which largely focuses on delivering integrated, whole-person care to high-need Medi-Cal enrollees.
CalAIM’s overarching purpose is to strengthen comprehensive, patient-centered care for the state’s most vulnerable populations.
How CalAIM Is Authorized
In sum, CalAIM is authorized through two waivers that require approval from the federal government:
- The Section 1115 waiver allows states to pilot programs/policies typically not allowable under federal Medicaid rules.
- The Section 1915(b) waiver allows states to waive federal rules to implement Medicaid managed care programs.
This year is pivotal for CalAIM since federal approvals for both of the CalAIM waivers expire at the end of 2026, so the state must apply for renewal and receive approval to continue the work. The state’s 1115 renewal application is in progress, and the state plans to submit the 1915(b) renewal application this summer.
In this blog, we explore early evidence to date of CalAIM’s effectiveness and unpack what California is proposing as part of its 1115 waiver renewal application.
How CalAIM Addresses Whole-Person Care: History in the Making
Prior to CalAIM, the state of California led the way to addressing whole-person health through their Whole Person Care Medicaid 1115 waiver pilot program aimed at addressing high-risk, high-utilizing enrollees who had a complex profile, with multiple service needs.
This was a well-documented success across all of the 25 pilots, including one led by Transform Health, LLC in Sacramento — the only city-led pilot in the state — resulting in overall reduction in emergency room visits and hospitalizations. To build off this work, the state introduced CalAIM.
CalAIM introduced two programs that work together to advance whole-person care: Enhanced Care Management (ECM) and Community Supports.
- ECM is a statewide benefit that provides comprehensive care management to managed care members with complex needs.
- This care management operates alongside a suite of Community Supports to help individuals address their social and economic needs, such as housing insecurity and lack of access to healthy food, that may impact their ability to be healthy.
ECM and most of the Community Supports are currently authorized under federal Medicaid managed care regulations. On the other hand, three of the Community Supports — Short-Term Post-Hospitalization Housing, Recuperative Care, and Transitional Rent — cover room and board, which is typically not payable under federal Medicaid funds and thus requires Section 1115 authority.
Initial Data Suggest CalAIM Is Cost-Effective
In April 2025, the California Department of Health Care Services (DHCS) released initial cost-effectiveness data for the Community Supports authorized under managed care authority. The state found that most (nine out of 12) Community Supports were associated with net cost reductions in inpatient and emergency services in the initial study period:
| Housing Deposits | Day Habilitation | Personal Care and Homemaker Services | Sobering Centers |
|---|---|---|---|
31.6% cost savings | 17.1% cost savings | 58.4% cost savings | 11.7% cost savings |
DHCS anticipated that the three remaining supports — Housing Tenancy and Sustaining Services, Medically Tailored Meals/Medically Supportive Food, and Asthma Remediation — would show cost-effectiveness over time as more data are collected.
The CalAIM interim evaluation, released in December 2025, found utilization for all Community Supports increased during the study period, with the number of users of Medically Tailored Meals/Medically Supportive Food and Housing Transition Navigation Services increasing the most. The summative evaluation report, due to the federal government in 2028, will provide more information on the impact of Community Supports on quality, outcomes, and cost of care.
In terms of ECM, the state does not yet have data on cost-effectiveness. However, the precursor to CalAIM had many similar components and did result in cost reductions. An evaluation team looking at the Whole Person Care pilot program implemented from 2016-2021 under the previous 1115 waiver found cost savings including:
- A $383 reduction in costs per enrollee per year.
- 130 fewer emergency department visits per 1,000 enrollees.
See a real-world story about the impact of CalAIM in this video produced by the California Health Care Foundation:
What's Next for CalAIM
Continuing ECM and Most Community Supports
California’s ability to operate ECM and those Community Supports not authorized by the 1115 waiver is derived from the state’s managed care regulatory authority and does not depend on Section 1115 or 1915(b) waiver approvals, as the state noted in its waiver renewal concept paper. As such, the state intends to continue covering ECM and those Community Supports under that existing authority.
Updates in the 1115 Waiver Application
DHCS released the 1115 waiver renewal application in February 2026 for public comment, illuminating its plans for what programs it seeks to continue, newly fund, or end:
- The Justice-Involved Initiative covers a targeted set of Medi-Cal services for up to 90 days immediately prior to an individual’s expected date of release from a state prison, county jail, or youth correctional facility. As of November 2025, 12 counties have launched their programs; all 58 counties are required to go live by Oct. 1, 2026.
- Substance Use Disorder (SUD) Initiatives include contingency management, SUD outpatient services at county option, and allowing Medicaid reimbursement for short-term residents of Institutions of Mental Disease (IMDs) receiving Drug Medi-Cal Organized Delivery System (DMC-ODS) services.
- Traditional healers and natural helpers provide culturally based care to eligible Medi-Cal members through Indian Health Service (IHS) facilities, Tribal health clinics, and Urban Indian organizations (UIOs) through the DMC-ODS delivery system.
- Dual eligible exclusively aligned enrollment integrates care for members who are dually eligible for Medicare and Medi-Cal.
- The Global Payment Program (GPP) combines uncompensated care funding with Disproportionate Share Hospital (DSH) funds and compensates participating designated public hospital systems for caring for uninsured individuals.
- Employment Supports – The state is looking to provide coverage for employment supports for Medi-Cal enrollees subject to the work/community engagement requirements that DHCS must implement by 2027 as part of H.R. 1. These services would include job readiness assessments, individualized employment planning, job placement assistance, and post-employment retention services. The state is also seeking planning and start-up funding to help both DHCS and counties that opt in to provide these services.
- BridgeCare Pilots – DHCS is proposing a set of home and community-based services (HCBS) and caregiver supports that counties could opt to provide to “near duals,” who are low-income Medicare beneficiaries with incomes close to but above Medicaid income requirements (between 138–220% of the Federal Poverty Level). These pilots would support older adults to remain in their homes and communities and prevent them from having to spend down their income to qualify for Medicaid and nursing home care.
- Recuperative Care and Short-Term Post Hospitalization Housing (STPHH) – DHCS wants to continue these services, but due to signals from the federal government, the state will seek to create a care model that incorporates the levels of care offered under both recuperative care and STPHH — except for room and board — and sunset STPHH as a separate Community Support. The state plans to transition the authority for recuperative care to Medicaid managed care In Lieu of Services and Settings (ILOS) authority, which is the authority used for all other Community Supports services. California will also seek technical assistance from the Centers for Medicare & Medicaid Services (CMS) to determine if another federal authority would be appropriate for recuperative care, such as a 1915(i) home and community-based services state plan option.
- Providing Access and Transforming Health (PATH) Initiative – PATH is a five-year, $1.85 billion initiative to provide capacity and infrastructure to community-based providers and organizations, hospitals, and county agencies to successfully participate in ECM, Community Supports, and other programs under CalAIM. The initiative includes funding opportunities, as well as statewide collaboratives that convene stakeholders with the goal of developing solutions for ECM and Community Supports implementation challenges. Transform Health, LLC facilitates the collaboratives in Central Valley (Kings, Fresno, and Madera), Los Angeles, and Sacramento. These time-limited investments are sunsetting in December 2026 and were never intended to last past the current waiver’s five-year period.
Next Steps
DHCS accepted comments on the 1115 waiver application through March 12, 2026, including through two public hearings in February and early March. They will review the stakeholder feedback and make any necessary changes to the application before submitting it to CMS. The state and federal government will negotiate the waiver’s terms and conditions before it is approved. Since California’s waiver expires at the end of the year, the application must be approved by December 31, 2026. Otherwise, the state must get a short extension while negotiations continue.
Our team continues to closely monitor CalAIM waiver renewal developments. We also continue to keep an eye on other states renewing 1115 waivers that also address upstream drivers of health for any other signals of the current administration’s appetite to continue these types of initiatives on a case-by-case basis.
Do you want a thought partner as you navigate impacts of these policy developments in your organization? Transform Health is here to help. Book a free discovery call today.
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