In 2021, Julio Franco had been battling drug addiction for a decade. He was addicted to methamphetamine and suffered from psychosis, having difficulty distinguishing what was real from what was not. He cycled in and out of hospital emergency rooms.
“My body couldn’t take it anymore,” Franco, 34, said.
The Redwood City native’s first step toward lasting sobriety was a drug treatment center run by the nonprofit Star Vista in Burlingame, where he stayed for three weeks and weaned himself off meth with the help of qualified personnel. Once stabilized, he entered inpatient rehabilitation. Franco said he has since been sober and works as a drug counselor for Star Vista.
Detox is a crucial landing point for addicted people. But San Mateo County, the fifth largest in the Bay Area, has just one operating drug rehab center after Star Vista closed its drug rehab center in October.
The reason? The nonprofit no longer has enough funding from the state health agency to keep its doors open, clinical director Shareen Leland said. Reforms to Medi-Cal, the health care provider for low-income Californians, have changed the way it reimburses providers like Star Vista. This went into effect in San Mateo County in July.
“It puts incredible pressure on the healthcare network,” Leland said. “It’s a big deal.”
A major funder of behavioral health services, Medi-Cal covered the costs of drug treatment. But thanks to CalAim, a massive expansion of the programproviders in San Mateo County are no longer paid for client outreach, meals and transportation, or other costs they deem essential to programs.
CalAIM, launching in 2022, is an expansion of Medi-Cal that lets health insurance pay for some things that aren’t considered traditional medical care, such as services to help homeless Californians find and keep accommodation. Supporters say it brought a much-needed infusion of cash to the state’s overburdened homeless services system.
While CalAim has strengthened housing and social services coverage, it has also changed the way health care providers are paid for their services. That amounts to a reduction in funding for many, advocates and a county official said.
A spokesperson for the California Department of Health Services, which oversees CalAim, did not respond to a request for comment at the time of publication.
The closures and reductions come as California prepares to implement Proposition 36, which took effect Wednesday. The voter-approved measure toughens penalties for people repeatedly convicted of shoplifting and drug crimes, with the goal of steering more people into behavioral health treatment. This is widely expected to put more pressure on the Bay Area’s current shortage of healthcare providers.
Star Vista actually took a $177,000 cut this summer, Leland said. In early December, the nonprofit Caminar closed a crisis house in Redwood City for seriously mentally ill and addicted people who had just been released from prisons and emergency rooms, said executive director Mark Cloutier.
Free at Last, a rehabilitation program in East Palo Alto, also plans to cut costs, said executive director Gaynell Mays. She said the nonprofit has an 80% gap between the cost of its inpatient and outpatient programs and what Medi-Cal currently pays.
“It makes us and every other provider very vulnerable,” Mays said. “No one is happy.”
Anxiety among San Mateo County providers follows similar reductions in Santa Clara County last year due to CalAim. Momentum, one of Santa Clara County’s largest nonprofit behavioral health service providers, closed six of its programs and laid off 85 staff members at the end of December 2023.
Because counties are implementing reform at different rates, the impact is uneven across the region and state. But according to Cloutier, CalAim’s new reimbursement rates also don’t work for providers in other Bay Area counties.
“It’s really, really sad,” Jei Africa, director of San Mateo County Behavioral Health and Recovery Services, said of CalAim’s impacts. “The state’s new rates, due to CalAim payment reform, have impacted many, many county entities.”
Africa said treatment options like gated rehab in Burlingame are sorely needed and the country is helping providers adapt. His office asked CalAim administrators to recalculate payment rates to better account for the high cost of doing business in the county, he said.
Africa nevertheless hopes that the reform will make providers more efficient by reducing administrative costs and operating in a “leaner” manner.
For example, Africa said the Star Vista drug rehab center was only 39 percent full between July and October of this year. When county providers referred potential clients to them, staff sometimes refused to accept them because the facility was understaffed, he said. It’s a national behavioral health challenge.
But Leland said the county hasn’t referred enough clients to the drug treatment center. She said officials suggested Star Vista do more outreach to potential customers to fill beds.
The rehab was small, with four beds in a warehouse-like building in a shopping district. Typically, two or three of those beds were occupied at a time, Leland said.
His clientele consisted of men like Franco, long-time addicts to fentanyl or methamphetamine, who often arrived from the San Mateo Medical Center. Many had overdosed and needed medication, counseling and emotional support before they were ready to enter residential treatment, Leland said.
When the rehab center closed in October, those clients were diverted to other programs, she said. Due to lack of funding, Star Vista is also scaling back its drug treatment program for women living “in really unsupportive situations” like homeless shelters, Leland said.
Ironically, Medi-Cal reform that focuses on providers in San Mateo County largely increases state support for social services and vulnerable residents.
Under Governor Gavin Newsom, CalAim launched a $12 billion expansion of Medi-Cal in 2022 to provide comprehensive services beyond what is traditionally considered health care, like housing. When reform began, about half of Medi-Cal’s $133 billion annual budget was spent on 5% of its covered population: people in need struggling with homelessness, poverty, drug addiction and mental illness, CalMatters reported.
Proposition 1, which voters narrowly approved in March, will release $6.4 billion in bonds to fund thousands of new mental health treatment beds. But Cloutier said that would support construction, not the ongoing finances of treatment providers. He called on officials to reexamine CalAim’s impact.
“There is a systematic problem here,” Cloutier said. “The state needs to address this problem.”
Originally published: