California Counties’ Continuum of Mental Health Care and
Medi-Cal Specialty Mental Health “Carve Out”
Services for Adults with Serious Mental Illness
February 2013
INTRODUCTION
The purpose of this document is to provide a concise overview of the continuum of mental health care offered
to California’s adults with serious mental illness. In our state, California’s counties administer, directly operate,
and contract with local providers to help adults experiencing a serious mental illness to recover and live full,
independent lives in the community. This document provides information about the adult clients we serve, the
services we provide, and the funds that support California’s public mental health system. For more information,
contact the California Mental Health Directors Association at (916) 556-3477 or visit www.cmhda.org.
OUR GOALS FOR ADULT CLIENTS

As expressed in California’s Bronzan-McCorquodale Acti, the mission of California's mental health
system is to “enable persons experiencing severe and disabling mental illnesses and children with
serious emotional disturbances to access services and programs that assist them, in a manner tailored
to each individual, to better control their illness, to achieve their personal goals, and to develop skills
and supports leading to their living the most constructive and satisfying lives possible in the least
restrictive available settings.”

The President’s New Freedom Commission on Mental Health, which presented its final
recommendations to President George W. Bush in 2003ii, identified that successfully transforming the
mental health service delivery system rests on these two principles:
1. Services and treatments must be consumer and family centered, geared to give consumers real
and meaningful choices about treatment options and providers - not oriented to the
requirements of bureaucracies.
2. Care must focus on increasing consumers' ability to successfully cope with life's challenges, on
facilitating recovery, and on building resilience, not just on managing symptoms.
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ADULT CLIENTS SERVED BY COUNTIES

The adult target population for California’s public mental health system and Medicaid state plan and
waivers are people who are experiencing a serious and disabling mental disorder.
o Clients served by county mental health departments are primarily Medi-Cal beneficiaries,
although this can vary depending on socioeconomic levels in each county.
o Counties also provide mental health services to indigent individuals, to the extent resources are
available.
o Using prevention and early intervention resources from Proposition 63, counties are also
implementing programs to reach individuals with the early signs of mental illness to prevent it
from becoming severe or disabling.
o The most common diagnoses among our adult clients are: Schizophrenia; Schizoaffective
Disorder; Bipolar Disorder; Anxiety Disorders, including Post-Traumatic Stress Disorder; and
Major Depression. (See Appendix 1 for a basic overview of these mental health conditions).
What is a “serious and disabling” mental disorder?
The clinical terms in state lawiii
Severe and persistent; and
May cause behavioral functioning that
interferes substantially with the primary
activities of daily living, and may result in an
inability to maintain stable adjustment and
independent functioning without treatment,
support, and rehabilitation for a long or
indefinite period of time
What do these terms mean?
A severe illness with complex symptoms,
requiring ongoing treatment and
management. The illness is “chronic”, similar
to diabetes, asthma, or high blood pressure,
which are not temporary, must be managed
over the lifespan, and tend to worsen if left
untreated.
Due to a mental disorder, the person may have
difficulty with basic and important activities of
daily living (eating, bathing, dressing,
shopping, budgeting, household chores), with
important social relationships, or with working
and sustaining an income and housing.

There is currently no cure for mental illness, and left untreated, mental illness can be disabling and lead
to other health complications or even suicide. However, people with mental illness can and do recover
every day after receiving evidence-based medications, treatments, and services.

Medi-Cal beneficiaries with serious mental health needs that cannot be met within a primary care
physician’s scope of practice receive specialty mental health services and supports that are
administered by counties. These services are often described as “carved out” because they are not
provided by the Medi-Cal managed care plans, but are provided by counties instead because of their
specialized nature.

County mental health plans (MHPs), which are the county mental health departments throughout the
state, perform this function under the state’s Specialty Mental Health Services (SMHS) Consolidated
Medicaid Waiver.
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
California’s Medi-Cal beneficiaries whose needs are less serious can access basic mental health services,
such as prescription medications and appointments with psychiatrists, through the state’s Medi-Cal feefor-service system or through their Medi-Cal managed care plan.iv

Medi-Cal beneficiaries are eligible to receive “carved out” Medi-Cal specialty mental health services
from the counties if they meet the medical necessity criteria in state regulations, described in the table
below.
Who receives “carve out” Medi-Cal Specialty Mental Health?
Medical necessity criteriav
1) Diagnosed, qualified mental disorder;
What do these criteria mean?
One of 18 diagnoses in the Diagnostic and
Statistical Manual of Mental Disorders
(DSM).vi
2) Experiencing a significant impairment in an
important area of life functioning, or a reasonable
probability of significant deterioration in an
important area of life functioning; and
Due to a mental disorder, the person may
have difficulty with basic and important
activities of daily living (eating, bathing,
dressing, shopping, budgeting, household
chores), with important social
relationships, or with working and
sustaining an income and housing.
3) The focus of the intervention is to address the
resulting impairment condition, the service is
expected to significantly improve the condition, and
the condition would not be responsive to physical
health case based treatment.
Effective interventions are used with
clients, and the services will help – not
harm – the individual.
COUNTIES ADMINISTER A BROAD CONTINUUM OF EMERGENCY AND
REHABILITATIVE SERVICES

Counties provide a broad continuum of voluntary, outpatient mental health services and supports.

Involuntary psychiatric hospitalization only occurs when a person, due to a mental disorder, poses harm
to their self or others, or is gravely disabled (cannot provide basic needs).

The services are individualized and are based on each person’s needs and goals, are evidence-based,
and are linguistically and culturally appropriate. Services are community-based and mobile, not just
clinic-based.

Services and provider qualifications funded by the Mental Health Services Act (Proposition 63) are
described in state law and regulations. Medi-Cal Specialty Mental Health services and provider
qualifications are described in state regulations and California’s Medicaid State Plan, Medi-Cal Specialty
Mental Health Consolidated Medicaid Waiver, and two Medicaid state plan amendments (SPAs) –
Rehabilitative Services and Targeted Case Management.

In particular, California’s Rehabilitative Services SPA and Prop. 63 provide county mental health
departments with funding and tools to do more than just treat the medical symptoms of an illness.
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Taken together, these services help address the whole person – from the symptoms of their mental
illness, to their ability to successfully live and work in the community.

See Appendix 2 for a comprehensive list of the services counties administer.
COMMUNITY-BASED, RATHER THAN CLINIC-BASED, SERVICES

To be as accessible and responsive to individuals’ diverse needs as possible, service settings are diverse
and strive to be as community-based and culturally appropriate as possible. Services are offered in
what one may think of as “traditional” settings, such as mental health clinics, hospitals, and long-term
care facilities. However, significant portions of our services are offered outside of clinical settings,
including wellness centers, individuals’ homes, schools and colleges, jails and courts, and on the streets
or in homeless shelters.

Adults access public mental health services through a variety of sources, including by referring
themselves for help. Referrals to counties and community providers come from family members,
guardians, conservators, physicians, hospitals, county welfare departments, and law enforcement
agencies. Additionally, all counties operate a 24/7 toll-free access hotline and emergency services, which
are available to all community members.
WIDE ARRAY OF PROVIDERS

Services are provided by an array of professionals, paraprofessionals, consumers, and family members,
the variety of which far exceed what is traditionally available in primary care settings. These include:
o Psychiatrists
o Psychologists
o Licensed Clinical Social Workers
o Licensed Marriage and Family Therapists
o Licensed Professional Clinical Counselors
o Licensed Psychiatric Technicians
o Mental Health Rehabilitation Specialists
o Physicians and Physician Assistants
o Registered Nurses, Certified Nurse Specialists, Licensed Vocational Nurses, Nurse Practitioners
o Pharmacists
o Occupational Therapists
o Peers and family members

Counties also partner with others in the community, including schools, law enforcement, health clinics,
hospitals, churches, and county social services, child welfare, and substance use disorder services.
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FUNDING SOURCES SUPPORTING THE CONTINUUM OF CARE

As depicted in the pie chart below, the largest funding source (about one-third) for California’s
community mental health services is federal Medicaid reimbursement. One-quarter of funds are from
the Mental Health Services Act (Prop. 63), and the remaining funds come from state sales tax revenues,
provided by 1991 and 2011 Realignment. Some counties also provide local funds, and a small amount of
federal grant funds are available. Counties coordinate other third-party reimbursement, such as
Medicare and private insurance.
Estimated California Community
Mental Health Funding in FY 2012-13
(Total: $4.865 billion)
Other
$185 million
Federal
Medicaid
$1.7 billion
2011
Realignment
$780 million
15%
35%
23%
23%
Prop. 63
$1.1 billion
1991
Realignment
$1.1 billion
Note: These are estimated amounts for fiscal year 2012-13. Actual amounts depend largely on
economic performance of state sales tax, Vehicle License Fees, and personal income tax revenues.

These funding sources do not operate in silos – they are used in a complementary fashion to meet each
client’s unique needs, while maximizing federal Medicaid reimbursement. For example, a Medi-Cal
beneficiary may need psychotherapy and assistance managing their symptoms. The county could use
1991 or 2011 Realignment funds as match to provide these Medi-Cal specialty mental health services,
and to receive federal Medicaid reimbursement. However, the beneficiary may also need assistance
with housing, which the county could provide using Prop. 63 funds.
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Major Funding Sources for Community Mental Health in California
Federal Medicaid – Federal funds that reimburse counties (generally 50%) for medically necessary services
provided to Medi-Cal Specialty Mental Health beneficiaries. Funds takes an average of 2 years after a service is
delivered/claimed to be distributed to counties. Funds from all of the sources listed below are used as match to
the greatest extent possible to draw down these federal funds.
1991 Realignment – Dedicated sales tax revenues distributed to counties to provide: emergency evaluation and
treatment for persons who are a danger to self/others or gravely disabled; long-term nursing care; state hospital
care; hospitalization in skilled nursing facilities licensed as Institutions for Mental Disease. Most services funded
by this source are not permitted to be funded by other sources.
Proposition 63 – The Mental Health Services Act, passed by voters in 2004, provides personal income tax
revenues (surcharge on incomes above $1 million) to counties to expand services to people of all ages with
serious mental health issues and build upon evidence-based, effective service models. It also requires that a
specific percentage of funding to be used for prevention and early intervention services.
2011 Realignment – Dedicated sales tax revenues distributed to counties to provide medically necessary services
to Medi-Cal Specialty Mental Health beneficiaries, including Early and Periodic Screening, Diagnosis and
Treatment mental health services to children and adolescents.
Other – Some counties provide county general funds or receive federal block grant funds.
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APPENDIX 1
Adult Serious Mental Illnesses: A Basic Overview
Schizophrenia
 Schizophrenia most often appears in men in their late teens or early twenties, while it appears in women in their late
twenties or early thirties.
 Interfering with a person's ability to think clearly, manage emotions, make decisions and relate to others, schizophrenia
impairs a person's ability to function to their potential when it is not treated. Psychosis, a common symptom of
schizophrenia, is the experience of loss of contact with reality and usually involves hallucinations and delusions.
 Along with medication, psychosocial rehabilitation and other community-based support can help those with schizophrenia go
on to lead meaningful and satisfying lives.
Schizoaffective Disorder
 Schizoaffective disorder has features that resemble both schizophrenia and also serious mood symptoms. It affects 1% of
adults in the US. Schizoaffective disorder is thought to be between the bipolar and schizophrenia diagnoses as it has features
of both.
 Most experts believe it is a type of chronic mental illness that has psychotic symptoms at the core, and with depressive and
manic symptoms as a secondary—but equally debilitating—component.
 For most people with schizoaffective disorder, treatment will be very similar to treatment of schizophrenia and will include
antipsychotic medications to help address symptoms of psychosis.
Bipolar Disorder
 Bipolar disorder is a serious brain disorder that causes extreme shifts in mood, energy, and functioning. It is characterized by
intense emotional states known as mania and depression, which can last from days to months. It affects 1.2% of adults in the
US.
 A manic state can be identified by feelings of extreme irritability and/or euphoria, along with several other symptoms during
the same week such as agitation, surges of energy, reduced need for sleep, talkativeness, pleasure-seeking and increased
risk-taking behavior. Depression is identified by feelings of extreme sadness, hopelessness, and loss of energy.
 Bipolar disorder is a chronic and generally life-long condition with recurring episodes that often begin in adolescence or early
adulthood, and occasionally even in children. While there is no cure for bipolar disorder, it is a treatable and manageable
illness once it is correctly diagnosed.
Anxiety Disorders
 Anxiety disorders include panic disorder, obsessive-compulsive disorder, post-traumatic stress disorder, generalized anxiety
disorder, and phobias (such as social phobia, agoraphobia, etc.). They affect 13.3% of adults in the US.
 Panic disorder is characterized by “panic attacks,” and results in sudden feelings of terror that can strike repeatedly and
sometimes without warning. Obsessive-compulsive disorder is characterized by repetitive, intrusive, irrational and unwanted
thoughts (obsessions) and/or rituals that seem impossible to control (compulsions).
 Post-traumatic stress disorder (PTSD) is an anxiety disorder that can occur after someone experiences a traumatic event that
caused intense fear, helplessness, or horror. PTSD can result from personally experienced traumas (e.g., rape, war) or from
the witnessing of or learning of a violent or tragic event.
Major Depression
 Depression is a biological disorder that results in a syndrome of sleeping, eating and energy disturbance that impairs
functioning and may lead to suicide. Depression is not just a bad day, the blues or being moody. It affects approximately 5%
of adults in the US. Among all major medical illnesses, major depression is the leading cause of disability in America.
 Unlike normal emotional experiences of sadness, major depression is persistent and can significantly interfere with an
individual’s thoughts, behavior, mood, activity, job productivity and physical health.
 Although major depression can be a devastating illness, it is highly treatable. Between 80 and 90% of people living with
serious depression can be effectively treated and return to their normal daily activities and feelings.
Sources: National Alliance on Mental Illness (NAMI), Primer on Depressive, Bipolar and Anxiety Illnesses: Facts
for Policymakers and NAMI: What is Mental Illness?
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APPENDIX 2
What kinds of services are provided by counties?
Service types
What is the purpose?
COMMUNITY-BASED, OUTPATIENT SERVICES





Outreach, engagement, and screening
Programs and activities to identify un-served individuals who are
eligible for public mental health services in order to engage them,
and when appropriate their families, so that they receive the
appropriate services
Assessment and diagnosis
Client assessments include things such as the chief complaint and
history of the presenting problem, current level of functioning,
family history, relevant cultural issues, client strengths, medical
and mental health history, substance use, mental status exam, and
complete diagnosis from the most current DSM
Client plan
Plans are developed at least annually with the client. Plans include
specific goals and treatment objectives; proposed types,
frequency, and duration of interventions; address recovery and
resiliency supports; and address identified functional impairments
as a result of the mental disorder
Full Service Partnership
Targeted to people who need a range of services and supports in
order to recover, providing 24/7 assistance with housing,
employment, education, mental health supports, physical health
care, clothing, food, or other services
Counseling and psychotherapy
Focuses on reducing symptoms, restoring functioning, and
improving coping and adaptation, including modifying feelings,
thoughts, attitudes or behaviors that are ineffective in the
person’s life
 Prevention and early intervention
Efforts to reduce the stigma associated with mental illness,
offering services to individuals with the earliest signs of illness,
serving high-risk students in schools, and suicide prevention
programs
 Non-mental health services and supports
This can include food, clothing, housing (rent subsidies, housing
vouchers, house payments, residence in a drug/alcohol
rehabilitation program, transitional and temporary housing),
respite care, or the cost of other health care
 Peer and family member supports
Services and supports provided by mental health clients and their
family members to support wellness, recovery, and resiliency
(Continued from previous page)
To identify individuals who may need mental
health services and supports
To determine what mental illness issues may be
affecting the individual
To identify the goals and services desired by the
client and provider
To reduce the negative outcomes that result
from untreated mental illness, including suicide,
incarceration, school failure or dropout,
unemployment, prolonged suffering,
homelessness, and removal of children from
their family homes
To alleviate psychological distress and provide
support, education, and guidance, and to assist
in developing adaptive thinking and skills
To prevent mental illnesses from becoming
severe and disabling
To support an individual in living successfully in
the community
To help people connect and get guidance from
others who have experienced mental illness
(Table continued on next page)
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What kinds of services are provided by counties?
Service types
 Medication support
Prescribing, administering, dispensing, and monitoring prescription
drugs; education on risks, benefits, and side effects
 Targeted case management
Services to assist individuals in gaining access to needed medical,
alcohol and drug treatment, educational, and other services
 Crisis intervention
A field-based, unplanned, expedited, emergency service enabling
an individual to cope with a crisis and assist the individual in
regaining their status as a functioning community member
 Crisis stabilization
An unplanned, expedited service lasting <24 hours in a licensed
setting to address an urgent condition requiring immediate
attention that cannot be addressed safely or adequately in a
community setting
What is the purpose?
To effectively alleviate symptoms
To help individuals obtain needed services
To avoid hospitalization and stabilize an
immediate crisis within a community or clinical
treatment setting
To avoid the need for inpatient services which, if
the condition/symptoms are untreated, present
an imminent threat to the individual/ others, or
could result in them becoming gravely disabled
INPATIENT, LONG-TERM CARE SERVICES




Crisis residential treatment
Short-term (<3 mos.), 24/7 therapeutic/rehabilitative services in a
non-institutional residential setting as an alternative to
hospitalization for individuals in an acute psychiatric episode or
crisis who do not require nursing care for medical complications.
Includes counseling, developing a community support system, skillbuilding, and socialization
Residential treatment
Recovery focused, 24/7 rehabilitative services provided in a noninstitutional residential site for individuals otherwise at risk of
hospitalization or institutional placement that includes counseling,
developing a community support system, skill-building, and
socialization
Day rehabilitation
Structured program offered 3+ hrs/day to a group of individuals,
including rehabilitation, skill building and process groups, to
improve or restore independence and functioning in order to live
in the community
Day treatment intensive
Structured, multidisciplinary program offered 3+ hrs/day to a
group of individuals, intended as an alternative to hospitalization
or to avoid more restrictive placements and assist individuals in
living in community settings
To provide an alternative to hospitalization and
restore, improve, or preserve an individual’s
interpersonal and independent living skills and
access to community support systems that
support recovery and enhance resiliency
To minimize the risk of hospitalization and
restore, improve, or preserve an individual’s
interpersonal and independent living skills and
access to community support systems that
support recovery and enhance resiliency
To improve independence and assist in living in
the community
To avoid hospitalization and assist in living in the
community
(Table continued on next page)
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What kinds of services are provided by counties?
Service types
(Continued from previous page)
What is the purpose?

Psychiatric health facility services
Therapeutic/rehabilitative, multidisciplinary services provided in a
locked, licensed, psychiatric health facility for individuals who do
not have a physical illness/injury that requires inpatient treatment.
Services include psychiatric, psychosocial, counseling,
rehabilitative, and social services
To provide a less costly alternative to psychiatric
inpatient hospitalization for individuals who, due
to a mental disorder, have been determined to
be a danger to themselves or others

Psychiatric inpatient hospitalization
Services provided by a free-standing psychiatric hospital (or
psychiatric unit of a general hospital) for diagnosis or treatment of
a mental disorder that cannot be effectively or safety treated in an
outpatient setting
Mental health rehabilitation centers
Licensed, locked centers that provide 24/7, long-term, intensive
support and rehabilitation services to assist adults with mental
disorders to develop the skills to become self-sufficient and
capable of increasing levels of independent functioning
Locked skilled nursing facilities
Licensed, locked nursing facilities that provide 24/7 long-term,
intensive support. Individuals often have co-morbid medical or
substance use disorders
State hospitals
State hospitals, operated by the California Department of State
Hospitals, provide 24-hour long-term care, treatment and
education in a locked, institutional setting to individuals who, due
to a mental disorder, have been civilly committed, determined to
be gravely disabled, and have a court-appointed guardian
To treat an acute episode of mental illness for
individuals who, due to a mental disorder, have
been determined to be a danger to themselves
or others



To provide an alternative to state hospital or
other mental health facility placements for
individuals who, due to a mental disorder, have
been determined to be gravely disabled and
have a court-appointed guardian
To treat individuals who, due to a mental
disorder, have been determined to be gravely
disabled and have a court-appointed guardian
To provide care, treatment, and education to
individuals who, due to a mental disorder, have
been determined to be gravely disabled and
have a court-appointed guardian
Note: This is a comprehensive, but not fully exhaustive list of the defined mental health services that counties
administer. Additional details can be found in state regulations and California’s Medicaid Waivers and State Plan
Amendments.
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DRAFT
END NOTES
i
Welfare and Institutions Code 5600.1
ii
New Freedom Commission on Mental Health, Achieving the Promise: Transforming Mental Health Care in
America. Final Report. DHHS Pub. No. SMA-03-3832. Rockville, MD: 2003.
iii
Welfare and Institutions Code 5600.3
iv
As part of their responsibility for coordination of care, Medi-Cal managed care plans must have written policies
and procedures to ensure that they assist members who need mental health services that the plan does not cover.
If the member has a tentative psychiatric diagnosis that meets eligibility criteria for specialty mental health
services, the managed care plan must make appropriate referrals to the county MHP. If the member has a
psychiatric diagnosis that the county MHP does not cover, the managed care plan must refer them to an
appropriate fee-for-service Medi-Cal mental health provider and must consult with the county MHP as necessary
to identify other appropriate community resources and help the member to locate available mental health
services. Their contracts with the state require them to negotiate in good faith and execute a Memorandum of
Understanding with the MHP. The MOU must specify the respective responsibilities and protocols of the Medi-Cal
managed care plan and the MHP in delivering medically necessary covered services and specialty mental health
services to members.
v
9 CCR § 1830.205 and 1805.210
vi
The 18 DSM diagnoses that are part of medical necessity criteria for Medi-Cal beneficiaries to obtain specialty
mental health services that are the responsibility of the MHP are: (A) Pervasive Developmental Disorders, except
Autistic Disorders; (B) Disruptive Behavior and Attention Deficit Disorders; (C) Feeding and Eating Disorders of
Infancy and Early Childhood; (D) Elimination Disorders; (E) Other Disorders of Infancy, Childhood, or Adolescence;
(F) Schizophrenia and other Psychotic Disorders, except Psychotic Disorders due to a General Medical Condition;
(G) Mood Disorders, except Mood Disorders due to a General Medical Condition; (H) Anxiety Disorders, except
Anxiety Disorders due to a General Medical Condition; (I) Somatoform Disorders; (J) Factitious Disorders; (K)
Dissociative Disorders; (L) Paraphilias; (M) Gender Identity Disorder; (N) Eating Disorders; (O) Impulse Control
Disorders Not Elsewhere Classified; (P) Adjustment Disorders; (Q) Personality Disorders, excluding Antisocial
Personality Disorder; and (R) Medication-Induced Movement Disorders related to other included diagnoses. (See: 9
CCR Section 1830.205)
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