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Receive a presentation on the transition of Solano County's Drug Medi-Cal Organized Delivery System (DMC-ODS) from the Partnership HealthPlan of California regional model to Solano County Behavioral Health administration, effective January 1, 2027, including an update regarding implementation planning, continuity of the existing substance use disorder (SUD) provider network, administrative and information technology infrastructure, and preliminary fiscal considerations
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Published Notice Required? Yes ___ No x
Public Hearing Required? Yes ___ No x
DEPARTMENTAL RECOMMENDATION:
The Department of Health and Social Services (H&SS) recommends that the Board of Supervisors receive a presentation on the transition of Solano County's Drug Medi-Cal Organized Delivery System (DMC-ODS) from the Partnership HealthPlan of California regional model to Solano County Behavioral Health administration, effective January 1, 2027, including an update regarding implementation planning, continuity of the existing substance use disorder (SUD) provider network, administrative and information technology infrastructure, and preliminary fiscal considerations.
SUMMARY:
Solano County is preparing to take over direct responsibility for managing the system that provides substance use disorder treatment to Solano County residents covered by Medi-Cal. Since 2019, Partnership HealthPlan of California (Partnership) has performed this administrative role for Solano County and several other counties through a regional arrangement (Drug Medi-Cal Organized Delivery System or DMC-ODS). Partnership notified the County that it will stop providing these services effective December 31, 2026. Beginning January 1, 2027, Solano County Behavioral Health will directly manage the program and Solano County Behavioral Health is working with the California Department of Health Care Services (DHCS) on the transition.
The DMC-ODS program provides a continuum of care modeled after the American Society of Addiction Medicine (ASAM) Criteria for SUD treatment services, meaning it provides a range of treatment services based on the severity of a person's substance use disorder, from outpatient treatment through residential and other higher levels of care. The change in program oversight does not eliminate or replace the substance use disorder treatment services currently available to Medi-Cal members. Rather, it changes who is responsible for organizing, overseeing, and paying providers for those services. The County will assume responsibilities that Partnership currently performs, including maintaining an adequate network of treatment providers, ensuring residents can timely access appropriate care, monitoring the quality of services, meeting State and federal Medi-Cal requirements, processing and overseeing payments, and managing the program's financial reporting. Approximately 1,700 Solano County residents received treatment through this system in 2025.
As a county opt-in program, DMC-ODS also enables more local control and accountability, provides greater administrative oversight, creates utilization controls to improve care and efficient use of resources, implements evidenced based practices in SUD treatment, and coordinates with other systems of care.
FINANCIAL IMPACT:
The current DMC model administered by Partnership is reimbursed on a fixed Per-Utilizer-Per-Month (PUPM) basis, regardless of the services provided to the client or the volume of services provided in a month. The County does not have final cost data for the program since its inception because reconciliations among Partnership, DHCS, and the County have been delayed. The transition of the DMC-ODS program to the County changes the reimbursement structure from fee-for-service to one in which Medi-Cal reimbursement is based on the actual type and volume of covered services delivered and billed at State-established rates for the applicable provider type and service codes. Because of the significant changes in the reimbursement methodology as well as programmatic and administrative expectations, determining long-term program costs is challenging.
Using Partnership PUPM data and other statewide paid claims data for comparable counties, estimated program treatment costs range between $12.5 million and $12.8 million. Treatment costs are reimbursed through Medi-Cal claims and are funded with a combination of federal and state Medi-Cal revenues, primarily from the 2011 Realignment as the non-federal match. Residential room and board costs are not reimbursed as treatment costs and have historically been funded through the Substance Use Block Grant (SUBG) and 2011 Realignment. Approximately $2.4 million in room and board costs were paid in FY2025/26.
Additional staffing for this transition will be needed for provider network administration, fiscal and claiming infrastructure, information technology, Electronic Health Record (EHR) modifications, utilization and quality management, compliance, and other implementation expenses. Federal financial participation will be available for most of these expenses, as counties can claim up to 15% of Drug Medi-Cal services; however, a non-federal match will be required. H&SS is continuing to refine projected service utilization, reimbursement, administrative claiming, and net County costs and will return to the Board with additional fiscal information as part of subsequent staffing and contract actions.
The FY2026/27 Working Budget includes $12.7 million in appropriations for the DMC-ODS program, including room-and-board costs. The Department may need to return to the Board to add appropriations and revenue later when more information is available.
DISCUSSION:
Regional DMC-ODS Transition
DMC-ODS provides a substantially broader continuum of Medi-Cal SUD treatment than the traditional Drug Medi-Cal State Plan. Services currently available to Solano beneficiaries include residential treatment, withdrawal management, outpatient and intensive outpatient treatment, medication-assisted treatment, narcotic treatment, recovery services, and case management. Participation in DMC-ODS has enabled Solano County beneficiaries to access this continuum of care through a regional network administered by Partnership.
With Partnership ending the regional model, reverting to the more limited State Plan would place access to portions of the existing treatment continuum at risk. H&SS, therefore, notified DHCS of the County's intent to operate its own DMC-ODS and is participating in an expedited DHCS transition and readiness process.
County administration of DMC-ODS is not unusual in California. Most DMC-ODS counties directly administer their systems, and Solano already operates a specialty Mental Health Plan with many of the managed care functions necessary to support the transition.
County Responsibilities Beginning January 1, 2027
Under direct County administration, Behavioral Health will assume responsibility for functions currently performed or supported through the Partnership regional model, including:
• Provider network oversight and contract management;
• Beneficiary screening, access, referral, and care coordination;
• Utilization management and service authorization;
• Quality assurance and performance improvement;
• Network adequacy and timely access monitoring;
• Grievances, appeals, and beneficiary protections;
• State and federal regulatory reporting;
• Medi-Cal billing, claiming, and provider reimbursement;
• Accounting, cost reporting, and fiscal reconciliation; and
• Integration of SUD and specialty mental health administrative functions.
The transition coincides with broader State requirements to integrate the administration of specialty mental health and substance use disorder services beginning in 2027. This provides an opportunity for Solano County to develop a more integrated behavioral health system, including a common point of access for residents seeking either mental health or SUD services.
Continuity of the Existing Provider Network
Maintaining continuity of care is a central component of the transition. DHCS transition planning requires the County to demonstrate an adequate provider network and address continuity of care as part of readiness for January 1, 2027. H&SS is working with County Purchasing, County Counsel, and Human Resources, and with other appropriate County departments, to identify the contracting process necessary to establish transitional agreements with the existing provider network, consistent with County procurement requirements, DHCS requirements, and applicable labor notification requirements.
The immediate objective is to prevent disruption of medically necessary treatment during the transition. Once the county-administered system is operational and stabilized, H&SS anticipates conducting a competitive procurement for the DMC-ODS provider network, currently anticipated within approximately 18 to 24 months.
H&SS expects to return to the Board at a future meeting with approval of the provider contracts necessary to maintain continuity of care.
Administrative Infrastructure
Although the County currently administers the specialty Mental Health Plan and can leverage portions of its infrastructure, in operating the DMC-ODS, Solano County Behavioral Health will assume substantial responsibilities for provider contracting, quality assurance, utilization management, access, compliance, fiscal administration, accounting, claims, and reporting.
H&SS has evaluated the staffing necessary to operate these functions while maximizing the use of existing resources and vacant allocations. The Department anticipates returning to the Board at a future meeting with recommendations regarding the positions necessary to support implementation and ongoing administration of DMC-ODS.
Information Technology and EHR Readiness
DMC-ODS implementation will also require additional information technology and electronic health record support. The County's Netsmart/Avatar behavioral health system will require configuration and development to support SUD workflows, authorizations, billing and claiming, CalOMS reporting, provider monitoring, and integrated behavioral health access functions. Implementation must also address federal 42 CFR Part 2 confidentiality requirements governing SUD treatment records, including appropriate consent management, access controls, information sharing, and protection against unauthorized disclosure.
H&SS anticipates strengthening its existing Netsmart support and working closely with the Department of Information Technology (DoIT) on configuration, security, interfaces, testing, reporting, and implementation readiness. Adequate technology support is critical to successful DHCS readiness, compliant claiming and reporting, and continuity of beneficiary services.
Implementation Timeline
Key activities underway or anticipated to implement DMC-ODS by January 1, 2027 include:
• August-October 2026: DHCS transition planning and readiness activities; provider contracting preparation; staffing and IT implementation planning.
• October/November 2026: Provider onboarding; system configuration and testing; policy and procedure development; workforce training; claiming and fiscal workflow development; and DHCS readiness activities.
• December 2026: Completion of final operational readiness activities.
• January 1, 2027: Solano County assumes direct administration of DMC-ODS.
• 2027-2028: Stabilization, evaluation of network performance, and development of a competitive procurement for the longer-term provider network.
H&SS will return to the Board with additional actions necessary to complete the transition, including recommendations regarding staffing, provider contracts, and the State-County agreement.
ALTERNATIVES:
The Board could direct H&SS to pursue a return to the traditional Drug Medi-Cal State Plan rather than operating DMC-ODS. This alternative is not recommended because it would substantially reduce the continuum of Medi-Cal-funded SUD services currently available to Solano County residents and could jeopardize access to residential treatment, withdrawal management, case management, recovery services, and other services currently utilized by beneficiaries.
The Board could also direct staff to pursue a different implementation approach. This is not recommended given Partnership's December 31, 2026, termination date and the limited time available to obtain DHCS approval, maintain the provider network, establish the necessary administrative infrastructure, and ensure continuity of care.
OTHER AGENCY INVOLVEMENT:
H&SS Behavioral Health and Administrative Services/Fiscal are coordinating the DMC-ODS transition and have been working directly with the California Department of Health Care Services through the transition and readiness process.
The Department is also coordinating with the County Administrator's Office, County Counsel, Human Resources, Purchasing, and the Department of Information Technology regarding contracting, labor requirements, staffing, technology, fiscal administration, and implementation.
Partnership HealthPlan of California continues to administer the regional DMC-ODS through December 31, 2026, and is coordinating with affected counties and DHCS regarding transition activities.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION