​​CalAIM Behavioral Health Payment Reform: Intergovernmental Transfer (IGT) Frequently Asked Questions (FAQ)​

Overview of the Current Cost-Based Claiming Process

Mental Health Plans (MHPs), Drug Medi-Cal (DMC) counties, and DMC Organized Delivery System (DMC-ODS) counties are all currently paid based on Certified Public Expenditures (CPE). The counties submit claims for reimbursement. The payments that the Department of Health Care Services (DHCS) makes for these claims are considered interim payments. Payments to the counties do not include the county portion of the claim, only the federal portion and/or the state portion. 

On an annual basis, counties and their contract providers are required to document and submit actual costs to DHCS as part of a cost settlement process. The DHCS Audits and Investigations Cost Settlement units analyze the cost report submissions and interim payments, and then prepare an interim cost settlement to adjust payments based on the actual county costs to provide services. A final cost settlement is completed later, based on an audit examination of county records to assure the costs claimed by the county are allowable and accurate. 

CalAIM Move to Prospective Fee-Schedule-Based Reimbursement

Under the California Advancing and Innovating Medi-Cal (CalAIM) initiative, and pursuant to Welfare and Institutions Code, Section 14184.403(b), DHCS will replace the current CPE reimbursement methodology with a reimbursement rate methodology using intergovernmental transfer (IGT) funds for the county share of payments. This methodology will result in a single and final payment for services provided to the county, which includes both the federal and non-federal share of the claims. This change will eliminate the requirement for Cost and Audit settlements, reducing administrative efforts for counties and their contract providers. The implementation of an IGT funded prospective reimbursement methodology will be effective for dates of services starting July 1, 2023. 

1.    What is an IGT?

An IGT is a transfer of funds from a public agency to the Medicaid Single State Agency (SSA) that the SSA may use as the non-federal share in claiming Federal Financial Participation (FFP) for Medicaid covered services. In the context of CalAIM behavioral health payment reform, counties will undertake an IGT to transfer funds from a county to DHCS. The funds transferred must be eligible to draw down federal funds in accordance with federal requirements at Subpart B of 42 CFR Part 433 and cannot be federal funds. 

2.    Which Behavioral Health payments will use IGT funds?

IGT Funds will be used to pay electronic (Short-Doyle Medi-Cal 837 claim) claims that require both Federal and County portions to complete a payment.

3.    What Behavioral Health payments will not use IGT funds?

Claims paid with 100% State General Funds (SGF), claims paid with 100% Federal Funds (FF), claims paid with only FF and SGF, and claims that are approved with only county funds will not be included in the IGT process. Counties will not be required to transfer funds to DHCS as the non-federal share of these approved claims and these payments will not be displayed on the monthly County Fund Account (CFA) report. All other aspects of the payment process will apply and DHCS will pay counties with State General Funds and/or Federal Funds for these approved claims. 

Mental Health Medi-Cal Administrative Activities (MH-MAA), County Administrative, Quality Assurance/Utilization Review, and Fee for Service (FFS) Hospital claims paid through the Fiscal Intermediary (FI) will not be included in the IGT process. MH-MAA, County Administrative, and Quality Assurance/Utilization Review claims will continue as a CPE program with Medi-Cal FFP paid based on actual costs. FFS Hospital claims will continue to be paid directly to the hospital with a monthly offset to the county's 1991 Realignment distribution to recover the county share.   

4.    How can IGT funds be transferred?

Each county must elect one of two methods prior to July 31, 2023. The first method is for counties to send DHCS the IGT through a wire transfer/Automated Clearing House (ACH), Electronic Funds Transfer (EFT) or a manual check. The second method is for the State Controller's Office (SCO) to withhold and transfer to DHCS funds from one or more of the following three state funds that are continuously appropriated to the counties:

• Local Revenue Fund (1991 Realignment),
• Local Revenue Fund 2011 (2011 Realignment), and
• Mental Health Services Fund (Mental Health Services Act).  

For both methods, routine (e.g., monthly) transfer of funds is necessary, unless a county has sufficient funds in their CFA as described in FAQ 13 below. For both methods, additional deposits can be made by check, EFT or wire transfer if the county anticipates the need for a higher County Fund Account balance to support claiming.

5.    How will DHCS track each county's IGT balance?

A County Fund Account (CFA) will be established as a tracking account in the Short Doyle Medi-Cal accounting systems and used to store and track the IGT deposits and claim payments from the CFA. A CFA will be established for each MHP, DMC county, and DMC-ODS county (i.e., there will be a separate mental health CFA and a substance use disorder CFA for each county). Beginning September 15, 2023, a monthly report will be posted to the DHCS portal by the 15^th of each month to each MHP, DMC county, and DMC-ODS county that outlines the beginning balance, any deposits and payments from the account, and an ending balance for the period. The report will also have a recommended IGT deposit amount for the next period. The CFA report should be used to reconcile the accounts and report discrepancies.

6.    How much money will counties need to transfer to DHCS?

DHCS completed an analysis of Short Doyle Medi-Cal (SDMC) claims from September 2019 to March 2023 to determine the monthly average for the county share of approved claims. DHCS shared the analysis on the SDMC Portal at the end of April 2023. DHCS is recommending that each county maintain a IGT balance with DHCS that is equal to at least three times the average monthly county share of approved specialty mental health, DMC, and DMC-ODS claims from the prior fiscal year. This amount will be tailored to each county and based on prior year actual claims data.

7.    How will DHCS inform counties of their IGT balance and transactions?

DHCS will provide counties a monthly CFA report via email that shows their monthly IGT balance as described in FAQ 5 above. The balance will be equal to the IGT balance at the beginning of the month, plus any transfers received during the month, less any payments made during the month. The report will also provide a recommendation for how much money the county should transfer to DHCS to ensure there is sufficient IGT funds to cover the county share of approved claims during the next month.

8.    How long will it take to post an IGT deposit?

Using the SCO withholding process, funds generally post to the CFA within a day of receipt by DHCS accounting. Wire Transfer IGTs will be the fastest manual method to have funds added to the CFA balance (usually 2 business days after receipt), EFTs are the next quickest (generally 4-8 business days after receipt), and manual checks will normally take 6-11 business days after receipt to be posted to the CFA.

9.    How will DHCS pay counties under the IGT process?

DHCS' payment to the county will be based on the prospective fee schedule reimbursement rates applied to approved Medi-Cal claims. Payments will include the federal financial participation (FFP), any applicable state share, and the county share amount. The county share amount will be drawn out of the CFA, and the associated reduction in the CFA balance will be reflected in the 835 response file.   

10.  How will counties need to account for restricted funds transferred to DHCS and paid to counties through the IGT payment process?

To the extent that a county transfers funds to DHCS that are restricted to purposes specified in State statute, the county must ensure compliance with requirements attached to those restricted funds. 

Whether a county makes routine transfers to DHCS or authorizes the SCO to withhold funds from one or more restricted State funds, the county must ensure those funds, including interest earned on those funds, are used for the purposes set forth in State law. Counties must ensure that the use of restricted funds for allowable expenditures are appropriately documented, to demonstrate the appropriate use of restricted funding sources.

11.  Can you explain the SCO withholding process and how much will be withheld?

DHCS, via the requesting county, will notify the State Controller's Office (SCO) of a county withhold, on a monthly basis, a fixed percentage from each of the three continuously appropriated funds (identified in FAQ 4) and transfer those funds to DHCS. The fixed percentage may be different for each of the continuously appropriated funds. DHCS completed an analysis of county funding with data from September 2019 to March 2023 to determine the average monthly distribution to county behavioral health departments from the three state funds. 

DHCS will provide the data from the analysis, combined with the claiming analysis and the target IGT balance. DHCS will provide a form that provides the data and a tool for counties to develop percentages to withhold that can be submitted to DHCS for review and acceptance. DHCS posted this analysis on the SDMC Portal at the end of April 2023.

For those counties that choose the withholding option for IGT funding, DHCS proposes that the SCO display the amount withheld from each county's monthly allocation on the monthly allocation schedule posted to the SCO website.

12.  How often can withholding percentages be adjusted by the counties?

The withholding percentages are fixed for the term of the county's IGT agreement, unless the conditions that allow the percentages to be adjusted are met (see question 13 below). Counties may make additional deposits by check, EFT or wire transfer if the county anticipates the need for a higher CFA balance to support claiming.

13.  What happens if the CFA balance gets too low or too high?

DHCS understands that claiming is not the same each month and that adjustments to IGT transfers may occasionally be needed based upon increases or decreases in claiming averages. 

If the IGT balance drops below 1.5 times the monthly average county share of approved claims, either a manual IGT transfer will be requested from the county or adjustments to the withholding percentages will be implemented to bring the IGT balance above the minimum threshold.  The IGT agreement for the withhold method authorizes DHCS to instruct the SCO to withhold an additional 5% from each of the three funds (1991 Realignment, 2011 Realignment, and MHSF) if the IGT balance drops below 1.5 times the monthly average county share of approved claims in the prior fiscal year as reported on the monthly CFA report. The withhold percentages will be reduced to the original percentages once the CFA balance reaches 3 times the monthly average county share of approved claims in the prior fiscal year as reported on the monthly CFA report. DHCS will notify county staff when the withhold percentage is increased and when the withhold percentage is reduced.   

If a county's IGT balance grows to exceed five times the monthly average county share of approved claims, counties that provide manual IGT transfers will not have a recommended IGT amount on the monthly CFA report. For entities using the SCO withholding process, the IGT Agreement authorizes DHCS to instruct the SCO to pause withholdings until the balance is below three times the expected monthly average of the county share of approved claims.

14.  What does DHCS recommend for IGT funding?

DHCS recommends using a process by which the SCO withholds and transfers to DHCS funds from one or more of the three funds outlined above to ensure a steady transfer of IGT funding and to reduce county administrative burden.

15.  How will DHCS inform counties of the balance of funds transferred to DHCS?

Beginning September 15, 2023, on a monthly basis, by the 15^th of the month, DHCS post a CFA report to the DHCS portal that will show the beginning CFA balance, the amount of any county funds received, any decrease in county funds resulting from the funds being used as the county share of claims paid to the county, and an ending IGT balance. The report will also show a target IGT balance that is three times the monthly average county share of approved claims. Counties should use the CFA report to reconcile and identify any errors. Errors and questions should be reported to BH-IGT@dhcs.ca.gov.

16.  Will counties be able to dispute the balance of funds transferred to DHCS?

Per BHIN 23-026, a county may file an appeal with DHCS if the county does not agree with the beginning balance, itemized list of transfers received, itemized list of payments approved to be made or that have been made to the county, the ending balance in the CFA Report, and/or any other transactions reflected on the CFA. The appeal must be submitted within 120 days following the date the CFA Report is posted to the county folder in the SD/MC section of the DHCS Portal. The appeal must clearly identify the county submitting the appeal, a contact person for the appeal, the contact person's e-mail address and phone number, the CFA Report(s) being appealed, the date of the CFA Report(s) being appealed, and the reason for the appeal. The reason for the appeal must include evidence supporting the alleged error in the CFA Report(s).

DHCS shall e-mail a decision regarding the appeal to the county's contact person within 60 days of receiving the appeal. The decision shall clearly identify the county that submitted the appeal, the date the appeal was received, the CFA Report(s) that was appealed, a summary of the reason for appeal, and an explanation of the basis for the decision. The 60-day time period may be extended if the county and DHCS agree in writing on an extension of time to evaluate and resolve the dispute

17.  Will DHCS send an invoice for IGTs to the counties?

DHCS will provide the monthly CFA statement that the county could pay from if a withholding process is not an option. DHCS is not proposing to create and process invoices through the accounting system and create receivables. DHCS would like counties to maintain a balance that is equal to three times the monthly average county share of approved claims from the prior fiscal year.

In the event a county's CFA balance is insufficient to fund the county share of a county's claims, DHCS will not be able to reimburse a county's claims until the necessary funds have been transferred by the SCO or through an IGT and updated in the county CFA balance. An entire claim file will be looked at as a batch. For example, if the CFA balance is $1,000 and the claim file requires $1,000 in county funds, the claim file will be paid. However, if the CFA balance is $1,000 and the claim file requires $1,001 in county funds, the claim file will be pended until the county transfers additional money to the CFA account to meet the claim batch amount.

18.  Can the 835 file name also be on the CFA report along with the warrant number?

The 835 file name will not be on the CFA report. Only the warrant number will be on the report. There is a one-to-one relationship between the warrant number and the 835 file name; currently, the 835 file name is not in the system that will be producing the CFA report. A system change to add this is not possible before implementation.

19.  Will DHCS need to execute an agreement with Counties to implement the IGT methodology?

DHCS will need to execute an agreement with each county and program to implement the IGT methodology.  The IGT agreement will include much of the detail addressed in this FAQ.

20.  The top-right of the IGT agreement has a field for entering the “Contract #." What is this referring to?

Please list the SMHS or DMC Contract number in the “Contract #" field of the IGT Agreements.

21.   What should be entered as the [DATE] in Section 1.1 of the IGT Agreements?

The date in Section 1.1 should match to the Terms of the Agreement listed in Section 10 (July 1, 2023 through December 31, 2026).

22.  Who may sign the IGT Agreements?

The IGT agreements may be signed by the county's Chief Financial Officer, Behavioral Health Program Director, or anyone above these positions.

23.  How may we sign the IGT Agreements? Is a wet signature needed on the IGT Agreements?

DHCS will only accept verified signatures in the IGT Agreements. This may include a wet signature or a verified digital signature.

DHCS has an existing internal process for accepting digital signatures (i.e. ones that are self-authenticating like Adobe Acrobat Pro DC Self-signed with Digital ID function and DocuSign) and recommend counties follow a similar process.  If the county prefers, DHCS can initiate the Electronic Signature process through DocuSign, sending the appropriate agreement to the county signer for county signature and electronic return to DHCS.  DHCS would then execute the agreement and return an executed copy to the county. Please reach out to BH-IGT@dhcs.ca.gov with the requested agreement type (manual or withhold), the name and email address of the authorized staff that will sign the agreement and DHCS will initiate the signing process.  

24. For Drug Medi-Cal, what funds are appropriate to use for funding IGT Transfers or Withholds?  

For Drug Medi-Cal, of the three state funds that are continuously appropriated, only the 2011 realignment fund is identified as funding Drug Medi-Cal services and is the only realignment fund that can be used for IGT withhold or transfers. The Local Revenue Fund (1991 Realignment) is specifically allocated to provide Mental Health Services and the Mental Health Services Fund (MHSA) is restricted to specific Mental Health Services and activities and cannot be used as funding for DMC IGT allocations or transfers.

25.  Is the county required to include notice in their MHSA three-year plan and/or annual update if they intend to use MHSA funds as the IGT?

Counties do not need to notice their stakeholders that they are funding the IGT with MHSA funds. 

26.   Does the CFA earn interest? If not, is the IGT process in compliance with the  MHSA which requires funds to be invested and earn interest?

Yes, Welfare and Institutions Code, Section 14184.403(e) established the Medi-Cal County Behavioral Health Fund and paragraph 5 requires interest earned on moneys in the fund to remain in the fund and be used only for the purpose of implementing Section 14184.403.  Section 2 of BHIN 23-023, addresses how interest earned on moneys in the fund will be allocated among counties and programs. 

27.  If the withhold process is used, when are funds considered allocated to the county (i.e., when withheld or when received as part of the IGT)?

Funds are allocated to the county when withheld by one of the three continuously allocated funds 2011, 1991, and MHSA.

28.  If MHSA funds are transferred to the state for the IGT process, are the funds considered expended for purposes of reversion once they are transferred?

Per BHIN 23-026, section 6, while counties can transfer MHSA funds as the County Share of payments for Medi-Cal covered MHSA allowable services, DHCS does not consider the funds to have been expended by the county for MHSA allowable services at the time of the transfer to DHCS. If MHSA is used for the IGT as the non-federal share, the non-federal share must be equal to or less than the gross payments to the providers to count as the MHSA expenditure.

29.  How is a county supposed to report funds on deposit with the state as part of their Annual Comprehensive Financial Report?

Per BHIN 23-026, section 5: “To the extent that counties will transfer funds to DHCS that are restricted to purposes specified in State statute, counties must ensure compliance with requirements attached to those restricted funds.

Whether a county makes routine transfers to DHCS or authorizes the SCO to withhold funds from one or more restricted State funds, the county must ensure those funds, including interest earned on those funds, are used for the purposes set forth in state law. Counties must ensure that the use of restricted funds for allowable expenditures are appropriately documented, to demonstrate the appropriate use of restricted funding sources."

30.  For ongoing funding for CFAs, would it be possible to have the IGT share to be directly deposited back into the CFA instead of coming to the counties? This way the account would essentially remain funded.

No, the county funds need to be returned to the county as part of payment of claims.

 31.  Does the IGT process apply to NTP claims? 

IGT applies to any electronic claims that have a federal share (FFP) and a county share. As with other claiming, if there is a federal and a county portion on an NTP claim, IGT would be used for the county share.

34.  How will County Administrative and Quality Assurance/Utilization Review (QAUR) claims be paid under the IGT process?

For Fiscal Year 23/24 the IGT process will not be used for Admin claiming, including Administrative and QAUR claiming for SMHS and DMC.  For Fiscal Year 23/24, both admin claiming will be settled to cost.

35.  Will the 835 identify the sources of funding that were used for the IGT?

No, the IGT funds are not tracked by county source.

36.  Are the prospectively determined rates considered “patient care revenue" when it is received by the county and the revenue is a permissible source of the non-federal share?

As stated in each county's IGT agreement, payments made to Mental Health Plans, DMC-ODS Counties, and DMC Counties using Intergovernmental Transfers (IGTs) are considered patient care revenue. Patient care revenue is a permissible source of funding for an IGT to the extent the program revenue is not obligated to the State.

37.  Under the CPE based system, when counties received only the FFP portion of revenue for Medi-Cal claims, it was not considered federal revenue or grant revenue for purposes of the Schedule of Expenditures of Federal Awards (SEFA). (This is a report that counties are required to prepare as part of their annual financial statements recognizing federal awards over a certain amount.) Does this change with the shift to IGT funded payments?

DHCS does not administer the Single Audit Act. Counties should seek legal counsel regarding preparation of the Schedule of Expenditures of Federal Awards under the Single Audit Act. 

38.  When a payment is received for the Medi-Cal claim, can counties treat the full payment as revenue and book it as such (i.e., to one account), without having to differentiate between the FFP and non-federal share or book the revenue into separate accounts? (Updated 2/5/2025)

The total amount paid from the Medi-Cal program to the county behavioral health delivery system is considered Medicaid revenue (also called Patient Care Revenue) and may be booked into one account if a county chooses. As provided in Welfare & Institutions Code § 14184.403(c), the county behavioral health delivery system may use this revenue to cover their costs, reimburse their contractors, or for    other uses that support behavioral health-related services and activities that benefit the patients served by the delivery system. At the discretion of the county and consistent with federal law, Medicaid revenue may also be used to provide intergovernmental transfers.
 

39.  Per the IGT Agreement: “The Governmental Funding Entity must, in accordance with applicable federal regulations, maintain all documentation necessary to verify that the funds transferred meet the requirements of Section 1.5. This documentation must include any records required for Medi-Cal field audits." What “documentation" is required for counties to maintain? Are county's answers to this set of CMS Funding Questions provided on an annual basis constituted as appropriate documentation? (Updated 2/5/2025)

Medi-Cal field audits may include a review of funds manually transferred as IGTs for use as state match to confirm whether the transferred funds meet applicable requirements and certifications. As part of these audits, the Governmental Funding Entity may be asked to identify the accounts from which the transfers were made and the sources of funding for those accounts. Governmental Funding Entities should be able to demonstrate that the accounts from which the funds were transferred consisted solely of permissible sources for the intergovernmental transfer or had sufficient funding from permissible sources to make the transfer.

 40.  Is SGF that is directly deposited into the CFA accounts presumed to be expended first as the IGT non-federal share?  For example, a county may specify in its internal records that the SGF is prioritized for services that are not MHSA eligible, for which the associated IGT and claims payments would not necessarily occur first.

DHCS confirms that the SGF deposited into each counties CFA account is expended first as the IGT non-federal share. 

41.  BHIN 23-026 describes how counties can account for Medi-Cal services on the Annual Revenue and Expenditure Report (ARER) when MHSA funds are used for the non-federal share via the IGT. However, it does not describe how a county should report direct payments using MHSA for Medi-Cal services to the provider if MHSA was not used as the IGT for the non-federal share of the associated claim payment to the county. If a county does not use MHSA to fund the IGT associated with its Medi-Cal claim for an MHSA covered service, is it appropriate to show the amount paid to the provider for a Medi-Cal service as the expenditure on the Annual Revenue and Expenditure Report?

DHCS confirms that counties must report the amount paid to the provider on the ARER if the county does not use MHSA to fund the IGT associated with its Medi-Cal claim for an MHSA covered service. The county must continue to report the expenditure for the services on the ARER under the fund source(s) used.

Appendix

 Sample CFA Report:

Process Steps:

1. Behavioral health claims are adjudicated in the SDMC claiming system, and approved claims data is transferred to SDMC's accounting systems.
2. In the accounting systems, a County Fund Account (CFA) will be established for each county to track the receipt and disbursement of all IGTs and manage each county's IGT balance.
3. DHCS will establish an account threshold for each county that will be equal to approximately three months of County Fund payments based on historical claims data.  
4. When payments arrive from county sources that are for a specific county, the DHCS accounting team will add the funds to the CFA for that county to the SDMC accounting system.
5. When SDMC approves claims and processes payments, the accounting systems will adjust the CFA balance by the county fund amount of the claims. The transaction that will impact the CFA balance will be at the payment/warrant level (the amount of county fund paid on a warrant).  
6. If claims are received that exceed a CFA balance, claims will not be paid until the CFA balance is sufficient to pay the county share. 
7. On a monthly basis, by the 15^th of the month by email, DHCS will provide the county entity a report that identifies the starting balance of the CFA, the month's transactions (inbound IGTs and outbound payments), an ending balance, and a recommended IGT amount that is needed to maintain needed CFA balance.       
8. The 835 claim response file that SDMC currently produces will continue to provide the claim file summary and breakdown by claim line that is provided today. There is a one-to-one relationship between the 835 and the warrant number.

See IGT Process Flow Chart​​​

• ​​IGT Process Flow Chart​​​​

​​ 

​