The California Department of Health Care Services has signed a memorandum of understanding with the Centers for Medicare and Medicaid Services to conduct a large demonstration program to improve care to senior and disabled beneficiaries dually enrolled in Medicare and Medicaid.

Under the program, which will serve up to 456,000 beneficiaries in eight California counties, the dual eligibles will combine their Medicare and Medi-Cal benefits into one health plan, called Cal MediConnect, and receive more coordinated and accountable care. The demonstration is not a formal accountable

The demonstration program will evaluate the effectiveness of two payment models: fee-for-service and capitated care. But the goal in both models is for improved care coordination between providers and payers by offering medical, behavioral, long-term institutional, and home/community based services through a single organized delivery system. Participating organizations will collect and analyze data on about 85 quality measures. Implementation of the three-year demonstration program is scheduled for October 2013.

The California program envisioned in the memorandum of understanding is significantly scaled back from what Gov. Jerry Brown (D) proposed in January 2012; he wanted to serve 800,000 beneficiaries across the state. The eight counties selected for the program are Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo and Santa Clara.

California is the fifth state to enter into a memorandum of understanding with CMS to launch a demonstration program for dual-eligible beneficiaries. Thirty-seven states have submitted letters of intent and at least 15 states have received design grants. More information on the California program is available here.

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