qotd: How deficient is California’s Medicaid program?

California State Auditor
Report 2014-134
June 2015
California Department of Health Care Services
Improved Monitoring of Medi-Cal Managed Care Health Plans Is Necessary
to Better Ensure Access to Care

Cover letter of report:

June 16, 2015

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814

Dear Governor and Legislative Leaders:

As requested by the Joint Legislative Audit Committee, the California
State Auditor presents this audit report concerning the California
Department of Health Care Services' (Health Care Services) oversight of
California Medical Assistance Program (Medi-Cal) managed care health
plans (health plans).

This report concludes that Health Care Services did not verify that the
provider network data it received from health plans were accurate.
Therefore, it cannot ensure that the health plans it contracts with had
adequate networks of providers to serve Medi-Cal beneficiaries. Health
Care Services' contracts with health plans to provide medical services
to Medi-Cal beneficiaries generally require the plans, among other
things, to maintain a network of primary care providers that are located
within either 30 minutes or 10 miles from a member's residence. To
determine whether the health plan has an adequate provider network to
meet these standards, Health Care Services receives provider network
data from each of the health plans. However, for the health plans we
reviewed, Health Care Services did not verify the accuracy of these data
before certifying the health plans' network adequacy during the Healthy
Families Program transition to Medi-Cal and did not verify data for
another health plan at the time the health plan entered the Medi-Cal
program. Similarly, it does not verify the accuracy of the data it
receives from health plans and that it provides to the California
Department of Managed Health Care (Managed Health Care), with which it
has an agreement to conduct quarterly network adequacy reviews.
Furthermore, it has not ensured that Managed Health Care performed all
quarterly reviews of health plans' provider networks required pursuant
to the agreement.

In addition, flaws in Health Care Services' process for reviewing
provider directories have resulted in it approving provider directories
with inaccurate information. Specifically, our review of provider
directories for three health plans — Anthem Blue Cross, Health Net and
Partnership HealthPlan — found many errors in directories, including
incorrect telephone numbers and addresses, or information about whether
they were accepting new patients. However, Health Care Services' review
of these same directories had not identified these inaccuracies before
it approved the directories for publication. Furthermore, we noted that
thousands of calls from Medi-Cal beneficiaries seeking assistance
through Health Care Services' Medi-Cal Managed Care Office of the
Ombudsman have gone unanswered. Specifically, each month between
February 2014 and January 2015 an average of 12,500 calls went
unanswered. Finally, Health Care Services has not performed all
statutorily required annual medical audits of Medi-Cal managed care
health plans to determine whether the health plans meet their
beneficiaries' needs.

Respectfully submitted,

ELAINE M. HOWLE, CPA
State Auditor

Full report:
https://www.auditor.ca.gov/pdfs/reports/2014-134.pdf

Summary of report:
https://www.auditor.ca.gov/reports/summary/2014-134

Fact sheet:
https://www.auditor.ca.gov/pdfs/factsheets/2014-134.pdf

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Comment by Don McCanne

Medicaid patients throughout the nation are being transferred into
Medicaid managed care plans, allegedly to provide more coordinated care
at a lower cost. There has been some justifiable concern that these
plans may not be delivering on their promises. This auditor's report of
California's Medi-Cal managed care plans provides some limited insight
into the performance of these plans.

Medi-Cal is California's Medicaid program for low-income individuals and
families. Three-fourths of the 12 million Medi-Cal patients are already
enrolled in the Medi-Cal managed care plans (state population 39
million). Astonishingly nearly half of all children in California are
enrolled in Medi-Cal managed care, especially since those previously
enrolled in CHIP were transferred to Medi-Cal. It is a massive program.

The auditor did not look at the adequacy or the quality of the health
care services that are being delivered. Rather she looked at the plans'
reports submitted to the Department of Health Care Services on the
adequacy and accessibility of their networks, the accuracy of the
provider directories, and the effectiveness of the Medi-Cal Managed Care
Office of the Ombudsman - basically just whether or not the
infrastructure was adequate to provide the promised services.

The auditor found that the reports from the plans were inadequate and
the oversight provided by the California Department of Health Care
Services and the Department of Managed Health Care was also inadequate.
It was not possible to determine the degree of the failures, but enough
information was gathered to know that the system fell far short of the
requirements. Some perspective of the extent of this problem is
demonstrated by the fact that each month about 12,500 calls to the
Office of the Ombudsman went unanswered. The Medi-Cal system wasn't
working for the patients, and the calls for help overwhelmed the
telephone system.

Some have suggested that the funding was inadequate. Medicaid has been
chronically underfunded, and Medi-Cal is near the bottom of all states
in its level of funding. Also governments chronically underfund their
own agencies. In a health care system that is infamous for its
administrative excesses, under the Affordable Care Act we have expanded
the need for yet more administrative services for both the health plans
and for the government bureaucracies that provide oversight (not to
mention the providers), yet our federal and state legislators do not
authorize adequate funds to carry out their requirements.

Although the auditor attributed most of the blame to failures of the
California Department of Health Care Services, the real blame lies with
those who devised these expensive and inefficient programs and then
failed to fund them adequately. The agencies cannot do their job if they
are unable to hire the personnel that they need.

Although this report raises serious concerns about the infrastructure,
much more important is whether or not the actual health care services
are adequate in both quantity and quality. Though this report does not
address that, there is reason to be concerned. Are the health plans
really delivering more integrated care at a lower cost? Is the funding
enough for the dedicated health care professionals to deliver on this
promise? Unlikely, based on preliminary information. It is unfortunate
that we will have to wait longer until the severity of the deficiencies
is exposed.

If nothing else, it does appear that, through Medicaid, we have
institutionalized a lower tier of a two-tiered health care system. The
Affordable Care Act perpetuates a mediocre system for middle-income
individuals and families and a substandard system for those with low
incomes. Most other wealthy nations have a single higher health care
quality standard for all of their people, delivered at a much lower
cost. What is our resistance to learning from them?