California Is Billing Medicaid $826/Day for Shamanic Drum Circles.

Under CalAIM — California’s Medi-Cal transformation initiative approved by CMS on October 16, 2024 — the state Department of Health Care Services established billing codes for “Traditional Healer Services,” which include shamanic ceremonies, drum circles, and sweat lodge rituals as covered behavioral health interventions for Medicaid enrollees. The daily rate for residential traditional healing programs: $826.

On June 4, 2026, Vice President JD Vance announced a $1,300,000,000 Impoundment Control Act deferral of CalAIM Traditional Healer Services reimbursements pending a federal audit. Sen. John Kennedy (R-LA) had questioned California DHCS Director Michelle Baass under oath the day before about the rate structure.

• $826 — per day — California Medicaid billing rate for residential Traditional Healer Services under CalAIM · Source: DHCS Rate Notice 2025-THS-01
• $1,300,000,000 — deferred by Vance on June 4, 2026 pending federal audit of CalAIM traditional healing reimbursements · Source: White House OMB
• Oct 16, 2024 — CMS approved CalAIM 1115 waiver extension, authorizing Traditional Healer Services as covered Medicaid behavioral health benefits · Source: CMS press release

The California DHCS Traditional Healer Services rate notice covers four distinct service categories: individual ceremonial healing sessions ($206/session), group drum circle and chanting sessions ($112/session), sweat lodge ceremonies ($185/session), and residential traditional healing programs — the most expensive tier at $826/day, inclusive of lodging, meals, and continuous ceremonial programming.

The services are classified under CalAIM as “Enhanced Care Management — Culturally Specific Interventions.” DHCS Director Michelle Baass told the Senate Finance Committee that traditional healing has “demonstrated efficacy in mental health and substance use disorder recovery for Native American and Indigenous populations.” She did not cite a peer-reviewed study.

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CalAIM — California Advancing and Innovating Medi-Cal — is a multi-year Medi-Cal transformation program authorized under an 1115 Research and Demonstration Waiver. The Biden administration’s CMS approved the waiver extension on October 16, 2024, which added Traditional Healer Services to the list of covered “in lieu of services” — meaning they can substitute for standard mental health or substance use disorder treatment.

Gov. Gavin Newsom (D-CA) championed CalAIM as a model for “whole-person care.” DHCS estimates that approximately 14,200 Medi-Cal enrollees qualify for traditional healing services based on self-identified Indigenous heritage. Critics, including the Senate DOGE Caucus, note that CalAIM contains no eligibility verification mechanism to confirm tribal enrollment or Indigenous ancestry before approving billing.

At the June 3, 2026 Senate Finance Committee hearing on Medicaid oversight, Sen. John Kennedy (R-LA) displayed a copy of the DHCS rate notice and asked Director Baass to confirm the $826/day residential rate. Baass confirmed it. Kennedy then asked how many non-Indigenous Californians had billed under the program. Baass said she did not have that figure. Kennedy: “So you’re billing taxpayers $826a day for a drum circle and you don’t know if the people in the drum circle are actually Native American?”

“You're billing taxpayers $826 a day for a drum circle and you don't know if the people in the drum circle are actually Native American?”

Sen. John Kennedy (R-LA) · Senate Finance Committee · June 3, 2026

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On June 4, 2026, Vice President JD Vance directed OMB to issue an Impoundment Control Act deferral of $1,300,000,000 in federal Medicaid funds allocated to CalAIM Traditional Healer Services through fiscal year 2027. The deferral directs CMS to conduct an independent audit of eligibility verification, outcomes data, and per-unit cost-effectiveness before any reimbursements are processed.

The White House statement read: “American taxpayers are not in the business of funding experimental shamanic ceremonies at nearly a thousand dollars a day. We are pausing these payments until California can prove the program does what it claims, reaches who it claims to reach, and is not being exploited by non-Indigenous enrollees with no verifiable connection to traditional healing practices.”

The $826/day CalAIM residential traditional healing rate is higher than the federal Medicaid benchmark rate for evidence-based residential substance use disorder treatment ($614/day, SAMHSA national median), and substantially higher than the per-diem cost of a standard psychiatric inpatient stay in a California community hospital ($710/day, OSHPD 2024 data).

California’s total CalAIM spending in FY2024-25 was $3,700,000,000, of which DHCS acknowledged approximately $420,000,000went to “culturally-specific alternative interventions,” which include traditional healer services alongside other non-clinical programs. No outcomes data comparing traditional healing to standard behavioral health treatment has been published by DHCS.

The OMB deferral directs CMS to answer five questions before releasing funds: (1) What percentage of traditional healing service recipients are enrolled members of a federally recognized tribe? (2) What outcomes data exists comparing traditional healing to control groups receiving standard behavioral health treatment? (3) What credentialing requirements apply to traditional healers who bill Medicaid? (4) Are any residential traditional healing facilities licensed by DHCS or CDPH? (5) How many unique billing entities have submitted claims under the new codes?

California has 45 days to respond with documentation before the deferral converts to a rescission. If CMS grants the audit, the $1,300,000,000remains frozen while findings are reviewed. If California refuses to cooperate, HHS can initiate a formal recoupment proceeding under the Social Security Act § 1903(a) matching rate dispute mechanism.

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