August 6, 2019
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As directed by the Joint Legislative Audit Committee, the California State Auditor performed an audit of the oversight by the Department of Health Care Services (DHCS) of the Regional Model, a form of administering managed care to beneficiaries of the California Medical Assistance Program (Medi-Cal) in 18 counties.
This report concludes that DHCS has not ensured that some Medi-Cal beneficiaries in the Regional Model received an acceptable level of care, which we define as adequate access to care combined with adequate quality of care. Specifically, DHCS did not enforce state requirements that limit the distances health plans may direct their Medi-Cal beneficiaries to travel to receive health care. By approving health plans’ requests for exceptions to the requirements without validating the reasonableness of those requests, DHCS allowed the health plans to require some of the Regional Model beneficiaries to travel excessive distances to receive care. DHCS’ actions also reduced the health plans’ incentives to expand their provider networks to include providers within reasonable distances of their beneficiaries. The Regional Model beneficiaries also generally received a lower quality of care than beneficiaries in other areas of the State, although that quality has recently improved as a result of DHCS’ enforcement of the health plans’ quality-of-care requirements.
When transitioning the Regional Model counties in 2013 from a fee-for-service delivery system to managed care, DHCS did not adequately assist the counties in identifying the options available to them, despite some counties expressing interest in joining a county organized health system (COHS). The COHS Model, used in 22 other counties in the State, may provide beneficiaries in the Regional Model counties with better access to care than they receive through their current health plans. Establishing a COHS would likely provide the beneficiaries with access to a greater proportion of the Medi-Cal providers in their geographic areas, thereby reducing the distances that the beneficiaries would need to travel to receive care. Because DHCS plans to establish new managed care contracts with the health plans currently serving the Regional Model counties after its current contracts expire in 2023, it is an ideal time for DHCS to evaluate whether the COHS Model would be better suited to provide reasonable access to care and to assist counties with making such a transition if they desire to do so.
ELAINE M. HOWLE, CPA
California State Auditor