The Uncertain Future of Community-Based Providers in Medi-Cal

Key Takeaways

• Policy changes to the ECM and CHW benefits, effective January 1, 2027, will make it harder for community providers to keep supporting underserved families through Medi-Cal. Some First 5s expect to cut ECM caseloads by half or more and CHW claims by 50 to 90 percent.

• Implementation supports are sunsetting and will force community providers to navigate new Medi-Cal changes without state funded technical assistance.

• These changes come as two million members move from managed care to fee-for-service and H.R. 1 tightens eligibility, just when families most need the navigation community providers offer.

• First 5s are asking DHCS for implementation flexibility, close monitoring of impacts, and continued technical assistance after PATH.

The future of community-based providers in California’s Medi-Cal transformation is at an inflection point. For the past five years, First 5s and other community providers have been the trusted link between Medi-Cal and the families who need these services most. Home visitors, family navigators, community health workers, promotoras, and more share the language, culture, and lived experiences of the families they serve. Now, new billing and service delivery requirements for the Enhanced Care Management (ECM) and Community Health Worker (CHW) Services benefits, along with the sunsetting of the Providing Access and Transforming Health (PATH) grant and technical assistance initiative, are making it harder for community organizations to join or remain in Medi-Cal. At the same time, two million Medi-Cal members with unsatisfactory immigration status are transitioning out of the managed care system that community organizations spent years building relationships with.

Together, these shifts threaten to put the community framework CalAIM has worked hard to build on shaky ground. These changes also create an imperfect storm that will disproportionately affect the local providers closest to the members that Medi-Cal transformation was designed to support.

Medi-Cal Policy Headwinds

Delivering quality ECM services to underserved, medically complex populations takes significant time and effort. Many Medi-Cal members eligible for ECM face real barriers to accessing consistent care, which is why they are eligible for ECM to begin with. In September 2026, the Department of Health Care Services (DHCS) updated the ECM policy guide, making significant changes that alter the calculus for community providers delivering these services.

The most significant change DHCS made is a new monthly encounter minimum between ECM providers and Medi-Cal members. Effective January 1, 2027, all ECM providers must provide three or more monthly encounters to members receiving ECM services. If this is not possible, managed care plans (MCPs) are directed to move them off ECM to less intensive forms of care coordination, such as the CHW benefit. As a result, members who benefit from ECM may lose it simply because the barriers that made them eligible also make them hard to reach three times a month.

DHCS is also encouraging plans to align reimbursement for the ECM benefit with the intensity of services delivered. This has prompted some plans to rethink how they pay for the benefit. Currently, ECM providers receive a capitated monthly per member payment to deliver ECM. Since the announcement, several MCPs have indicated they plan to either reduce their ECM rate or shift to a fee-for-service (FFS) model that reimburses providers per encounter.

In addition to changes to the ECM policy guide, DHCS also made a significant update to CHW reimbursement. In June of 2026, DHCS updated its CHW billing guidance to require providers to meet with a Medi-Cal member for at least 16 minutes to bill for an encounter. Previously, there was no minimum. CHW reimbursement rates already do not reflect the true cost of service. Travel to and from meeting members where they are, attending required trainings, completing notes, and researching and gathering information for meetings with members are all not reimbursable.

Because of the preparation that goes into a visit, a Medi-Cal member does not always need to meet with a provider for more than 16 minutes. Moreover, providers cannot force a member to meet with them for that long just to meet the billing requirement. We heard from one First 5 that they often meet with families between doctors’ appointments or other obligations, making it challenging to have a parent or caregiver’s undivided attention while they are simultaneously trying to care for their young child. The new CHW Services billing guidance does not reflect the reality of service delivery on the ground for so many community providers.

These changes are meant to ensure members receive high-quality services and control costs. However, during an already tenuous time surrounding Medi-Cal service delivery, these changes create unintended headwinds for organizations delivering services and for those considering becoming providers. Within our own network, several First 5s are questioning the long-term sustainability of continuing to deliver ECM and CHW services. One First 5 expects to cut ECM caseloads by 50 to 67 percent because of the monthly encounter requirement, citing a lack of staff capacity to ensure three visits. Several First 5s also expect their CHW claims to be cut by 50 to 90 percent. First 5s are not alone. There have been numerous stories of community organizations reconsidering their role as Medi-Cal providers because the business case no longer makes sense.

The Support Cliff

At the end of this year, the technical assistance that brought community organizations into Medi-Cal goes away. PATH and its Collaborative Planning and Implementation (CPI) regional collaboratives both sunset in December 2026. Launched in 2022, PATH was a five-year, nearly $2 billion investment in the state’s Medi-Cal technical assistance infrastructure meant to address organizational capacity and infrastructure gaps faced by community organizations that wanted to deliver ECM or community supports. PATH provided grants directly to organizations to enable them to hire additional staff, build the necessary billing infrastructure and data exchange capabilities, and work with consultants, all with the goal that community organizations would be better equipped to contract with MCPs and expand the services they offer to Medi-Cal members.

The success of CalAIM and the broader Medi-Cal transformation hinged on the state’s ability to bring trusted community providers into the Medi-Cal ecosystem as a new class of providers delivering benefits such as ECM, CHW services, Community Supports, and doula services. For local, community organizations, the journey to becoming a Medi-Cal provider can be daunting. New data security requirements, HIPAA compliance, and the intricacies of contracting with MCPs were foreign concepts for many community providers prior to CalAIM, making capacity building support essential.

Within the First 5 network alone, 13 First 5s have received PATH Capacity and Infrastructure Transition, Expansion and Development (CITED) grants for technical assistance or have directly accessed technical assistance through the PATH TA Marketplace. This support has catalyzed First 5s' ability to contract with local MCPs, helping them build key infrastructure such as becoming HIPAA compliant and developing provider workflows.

The federal administration has signaled it will not approve federal matching funds for Designated State Health Programs (DSHP), the mechanism that funded PATH. Meaning any future technical assistance support would fall entirely on the state. Community organizations looking to become Medi-Cal providers now face this support cliff head-on, with no plans for future technical assistance opportunities from the state.

The (Im)perfect Storm

On January 1, 2027, the same day ECM monthly encounter minimums take effect, approximately two million Medi-Cal members, including children, with unsatisfactory immigration status will move from managed care to FFS. For members, that means having to find doctors who accept FFS Medi-Cal on their own and losing their health plan and the care coordination, member services, and provider networks that came with it. At the same time, new federal eligibility rules under H.R. 1 will make it harder for many adults to keep their coverage. Children are largely exempt from these rules, but when a parent loses Medi-Cal, the whole family is impacted.

Together, these coverage changes (and the broader H.R. 1-related Medi-Cal changes), the new ECM and CHW requirements, and the support cliff left by PATH sunsetting have created an imperfect storm for community providers in Medi-Cal, coming at a time when families need these providers most.

This is why ECM and CHW providers are essential. They help families stay covered, get re-enrolled after losing coverage, and find new care when they lose their usual source of care. That navigation support is what makes community providers a protective influence against every other obstacle families face, and weakening these benefits now removes that protection when families can least afford it.

What’s Next?

Families with young children can’t afford to lose access to the community-based care coordination network that providers have spent years building. Community-based providers and First 5s are looking to DHCS for support as these changes take effect so they can better support families. This includes:

1. Flexibility in how new requirements are applied, so ECM members who are hard to reach aren’t dropped and CHW encounters reflect the full work of their support.
2. Close monitoring of the impact, including how many members are moved off ECM and how CHW claims change, with a commitment to adjust course to address unintended consequences.
3. Continued investment in technical assistance after PATH, so community organizations have a path to becoming and remaining Medi-Cal providers.
4. Clear guidance for families and providers on fee-for-service, including how families can keep getting navigation and care coordination, and how providers should bill.
5. Additional resources such as FAQs, toolkits, and webinars to help providers and MCPs implement these changes.

As a statewide network, First 5s and their partners are well positioned to document the impact of these changes and elevate family and provider voices to our state leaders. Sharing those impacts with local partners, MCPs, and DHCS will continue to push our Medi-Cal ecosystem to recognize the critical role community providers play and the need to support them through these changes. Above all, no provider or family should be forced to navigate these changes alone.