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California State Auditor Logo COMMITMENT • INTEGRITY • LEADERSHIP

Department of Health Care Services
It Has Not Ensured That Medi-Cal Beneficiaries in Some Rural Counties Have Reasonable Access to Care

Report Number: 2018-122


Department of Health Care Services

Ms. Elaine M. Howle
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814

Dear Ms. Howle:

The California Department of Health Care Services (DHCS) hereby provides response to the draft findings of the California State Auditor’s (CSA) report entitled, Department of Health Care Services: It Has Not Ensured That Medi-Cal Beneficiaries in Some Rural Counties Have Reasonable Access to Care. The CSA conducted this audit and issued 13 recommendations.

DHCS agrees with nine of the recommendations, disagrees with three of the recommendations, and believes they are already in compliance with the remaining recommendation. DHCS has prepared corrective action plans to implement the nine recommendations we agree with. DHCS appreciates the work performed by the CSA and the opportunity to respond to the findings. If you have any questions, please contact Ms. Nicole Jacot, External Audit Coordination Manager, at (916) 713-8812.

Sincerely,

Jennifer Kent
Director

Enclosure



Department of Health Care Services’ Response to the California State Auditor’s Draft Report,
Department of Health Care Services:
It Has Not Ensured That Medi-Cal Beneficiaries
in Some Rural Counties Have Reasonable Access to Care

Report Number: 2018-122 (19-06)


Finding 1: The Department of Health Care Services (DHCS) has allowed health plans to require their Medi-Cal beneficiaries to travel hundreds of miles to receive care.

Recommendation 1
To ensure that beneficiaries in Regional Model counties have adequate access to care, DHCS should identify by August 2020 the locations requiring additional providers and the types of providers required. It should also develop strategies for recruiting and retaining providers in those locations. If it requires additional funding to complete this assessment or to implement actions to address its findings, DHCS should determine the amounts it needs and request that funding from the Legislature.

Current Status: Will Not Implement

Estimated Implementation Date: N/A

1

Implementation Plan:
As previously stated in the responses to the audit conducted by the California State Auditor titled: “Department of Health Care Services: Millions of Children in Medi-Cal Are Not Receiving Preventive Health Services,” DHCS does agree increasing the number of physicians who practice in California is beneficial for all health care delivery systems; however, such statewide assessment is not something that DHCS is the subject matter expert in given that Medi-Cal is responsible for about 30% of the health care coverage. DHCS suggests that this would be better suited for the Office of Statewide Health Planning and Development (OSHPD) and the California Workforce Investment Board and DHCS would support OSHPD in addressing this important matter. However, we do note that within DHCS’ purview, DHCS has been actively involved in implementing a physician and dental provider loan repayment program using Proposition 56 funds as authorized and approved in the Budget Act of 2018. These loan repayments were targeted specifically at newly-practicing providers that agree to see a specific percentage of Medi-Cal patients in their practice (at least 30 percent) and maintain that commitment for at least five years. The loans were open to both pediatric and adult providers and additional criteria will include providers that are practicing in high-need specialty areas such as child psychiatry or practicing in a medically underserved area. On July 2, 2019, DHCS announced that it paid $58.6 million in student loans for 247 physicians through the loan repayment program. These efforts are specifically targeted at increasing participation in Medi-Cal within the state’s existing workforce.

Recommendation 2
To obtain assurance that health plans throughout the state exhaust all of their reasonable options to meet the access requirements, DHCS should immediately begin doing the following: Develop written guidance that specifies the conditions under which staff should approve, deny, or contact health plans for clarification regarding their alternative access requests.

Current Status: Not Fully Implemented

Estimated Implementation Date: July 2020

2

Implementation Plan:
DHCS currently has written guidance that is used to process alternative access requests. DHCS ensures that the alternative access requests are being process correctly through a secondary review process that includes multiple levels of management. DHCS will continue to expand on the existing guidance, including information on process changes that will be put into place for the July 1, 2020, annual network certification process.

Recommendation 3
To obtain assurance that health plans throughout the state exhaust all of their reasonable options to meet the access requirements, DHCS should immediately begin doing the following: Determine a specific minimum number of providers that health plans must attempt to contract with prior to requesting an alternative access standard.

Current Status: Not Fully Implemented

Estimated Implementation Date: July 2020

3

Implementation Plan:
DHCS is in the process of modifying the alternative access request process for the July 1, 2020, annual network certification. The health plans will be required to search the same databases that DHCS uses when reviewing alternative access requests. If a provider is identified that is in closer proximity to what has been requested, the health plan will be required to submit contracting efforts to DHCS. DHCS would note that the amended process will be more stringent than what the CSA is suggesting. Previously, DHCS had a process that required the health plans to attempt to contract with a minimum number of providers and report that information to DHCS. DHCS was unable to process the requests in a timely fashion due to health plan errors. The enhancements that DHCS has made to date and is in the process of operationalizing for the July 1, 2020, annual network certification are both stricter and more efficient that what has been done in the past.

Recommendation 4
To obtain assurance that health plans throughout the state exhaust all of their reasonable options to meet the access requirements, DHCS should immediately begin doing the following: Require health plans to report on their attempts to contract with providers when submitting their alternative access standard requests, including providing evidence of their efforts, such as the contact information for each provider with which they have attempted to contract.

Current Status: Not Fully Implemented

Estimated Implementation Date: July 2020

Implementation Plan:
DHCS is in the process of modifying the alternative access request process for the July 1, 2020, annual network certification. The health plans will be required to search the same databases that DHCS uses when reviewing alternative access requests. If a provider is identified that is in closer proximity to what has been requested, the health plan will be required to submit contracting efforts to DHCS that would demonstrate why a health plan was unable to enter into such contracts.

Recommendation 5
To obtain assurance that health plans throughout the state exhaust all of their reasonable options to meet the access requirements, DHCS should immediately begin doing the following: Establish a process for periodically verifying the health plans’ efforts, such as contacting a sample of the listed providers and determining whether the plans attempted to contract with them.

Current Status: Not Fully Implemented

Estimated Implementation Date: September 2019

Implementation Plan:
DHCS has already established a process to select a random sample of alternative access approvals and verify health plan contacting efforts. This process is currently underway for the approvals issued for the annual network certification process that was completed on
July 1, 2019. DHCS aims to complete the sampling and analysis by September 2019.

Recommendation 6
To obtain assurance that health plans throughout the state exhaust all of their reasonable options to meet the access requirements, DHCS should immediately begin doing the following: Require health plans to authorize out-of-network care if they do not demonstrate they have exhausted all of their reasonable options to meet the access requirements, unless the health plans can demonstrate that closer providers are demanding unreasonably high rates or have documented deficiencies in quality of care.

4

Current Status: Will Not Implement/Already In Compliance

Estimated Implementation Date: N/A

4

Implementation Plan:
This is a current requirement in the health plan contract. The health plan contract requires that health plans allow beneficiaries to obtain medically necessary covered services from out-of-network providers if the services cannot be provided in-network. A link to the current health plan boilerplate contract is listed below, but this requirement can be found in Exhibit A, Attachment 9 - Out of Network Providers. If DHCS denies an alternative access request, the health plan will be held to the contractual requirements prescribed in their contract and state and federal law. DHCS will deny alternative access requests when the department determines that there are potentially willing providers and a health plan has not sufficiently demonstrated that it made efforts to contract and providers were not willing to contract for reasonable rates.

https://www.dhcs.ca.gov/provgovpart/Pages/MMCDBoilerplateContracts.aspx

Recommendation 7
To ensure that it promptly and sufficiently notifies counties and other stakeholders about health plans’ quality of care deficiencies, DHCS should immediately do the following: (a) Post its medical audit reports to its website within one month after it issues the audit to the health plan. (b) Include information about its recently published medical audit reports and other monitoring efforts in its communication with counties and other stakeholders on its mailing list. (c) Ensure that relevant county officials are included on its mailing lists.

Current Status: Not Fully Implemented

Estimated Implementation Date: September 2019

5

Implementation Plan:
DHCS is currently in compliance with its state law requirements to post annual medical audits and their corrective action plans to its website once they have both been completed. DHCS does post its audit reports to its website once they have been completed and meet various requirements for public posting, such as accessibility. DHCS will include additional information on its monitoring efforts in its communications with stakeholders through its mailing lists.

Finding 2: DHCS has not ensured that all Medi-Cal beneficiaries in the rural expansion counties receive services through a model that best meets their needs.

Recommendation 8
To ensure that all counties are aware of the managed care model options available to them and of the steps necessary to implement those models, DHCS should provide by December 2019 information to all counties that clearly defines each managed care model and the steps and legal requirements needed to establish each model.

Current Status: Not Fully Implemented

Estimated Implementation Date: December 2019

6

Implementation Plan:
DHCS already provides via the DHCS website, the various Plan Model types and a description of each model. However, DHCS agrees to post additional information on the DHCS website for counties to access, that provides information on the steps and legal requirements to establish each model. In addition, DHCS has been willing to meet with counties when requested to discuss issues about managed care and answer questions regarding the models.

Link to current DHCS website for Plan Model Type Information:
https://www.dhcs.ca.gov/services/Documents/MMCD/MMCDModelFactSheet.pdf

Recommendation 9
To ensure that it makes informed decisions regarding the extension or renewal of its contracts with managed care health plans, DHCS should immediately begin the practice of requesting annual feedback from the counties that the health plans serve and of using that feedback in its decision-making process.

Current Status: Not Fully Implemented

Estimated Implementation Date: July 2020

Implementation Plan:
DHCS agrees to implement a practice of requesting annual feedback from the counties that the health plans serve and use that feedback in its decision-making process when extending or re-procuring health plan contracts.

Recommendation 10
To ensure that beneficiaries in the Regional Model counties have reasonable access to care, DHCS should do the following by June 2020: Determine the specific causes of Anthem’s and Health and Wellness’s inabilities to provide reasonable access to care in the Regional Model counties.

Current Status: Not Fully Implemented

Estimated Implementation Date: June 2020

Implementation Plan:
DHCS will conduct an analysis of access in the Regional Model using available data, existing workforce shortages information, alternative access standard requests, the independent Access Assessment required under the Special Terms and Conditions of the 1115 Waiver that is being conducted by the DHCS External Quality Review Organization, and other relevant information pertinent to the analysis as its being designed.

Recommendation 11
To ensure that beneficiaries in the Regional Model counties have reasonable access to care, DHCS should do the following by June 2020: Evaluate whether the structural characteristics of a County Organized Health System (COHS) model would be better suited to providing reasonable access to care in the Regional Model counties and notify the counties whether a COHS would improve beneficiaries’ access to care. If some or all of these counties desire to transition to a COHS, DHCS should assist them in making that change after their current contracts expire.

Current Status: Not Fully Implemented

Estimated Implementation Date: Unknown

7

Implementation Plan:
Will implement as needed. As noted in recommendation ten, DHCS will conduct an analysis of access in the Regional Model. Once this analysis has been competed, DHCS will use the results to determine next steps. Additionally, DHCS has and will remain open to meeting with counties and plans to discuss what is necessary to transition to a different model.

Recommendation 12
To ensure that beneficiaries in the Regional Model counties have reasonable access to care, DHCS should do the following by June 2020: Evaluate whether it has the financial resources to provide assistance to counties interested in establishing COHSs or other managed care models after the current Regional Model contracts expire. If DHCS does not have the required financial resources, it should seek an appropriate amount of funding from the Legislature.

Current Status: Will Not Implement

Estimated Implementation Date: N/A

8

Implementation Plan:
DHCS will not implement as DHCS does not have the financial resources to provide direct financial assistance to counties to establish a Health Care Plan. The county interested in establishing a COHS would be responsible for seeking the necessary funding (from any source, whether county, state, or other) and overallcounty support to establish the COHS plan.

Recommendation 13
To ensure that beneficiaries in the Regional Model counties have reasonable access to care, DHCS should do the following by June 2020: Provide counties with reasonable opportunities to decide whether to change their managed care models after the expiration of the Regional Model health plan contracts. DHCS should provide counties who choose to do so sufficient time to establish their new models. DHCS should also include language in the 2020 request for proposals (RFP) to allow Regional Model counties that can demonstrate their ability to implement a COHS model in their county by 2023 to opt out of the RFP process.

9

Current Status: Will Not Implement

Estimated Implementation Date: N/A

9

Implementation Plan:
The RFP release and the dates of implementation will not preclude counties from seeking a COHS model in those counties that are a part of the RFP. We would expect counties and plans interested in switching to a COHS model in any of the RFP counties to make DHCS aware during the RFP process, which should provide them a reasonable amount of time to choose to opt out of the RFP process and take the necessary steps to implement a COHS model.


Comments

CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM THE DEPARTMENT OF HEALTH CARE SERVICES

To provide clarity and perspective, we are commenting on DHCS’ response to our audit. The numbers below correspond to the numbers we have placed in the margin of DHCS’ response.

1

We stand by our recommendation. As we state here, given DHCS’ critical role in overseeing the State’s provision of Medi‑Cal services, we believe that it is well positioned to perform the assessment of locations requiring additional providers and strategies for recruiting those providers we describe. If DHCS believes that it would benefit from collaborating with other state agencies, we would encourage it to do so while still maintaining overall responsibility for performing this assessment.

2

Contrary to its assertion, the written guidance DHCS currently uses to process alternative access requests, which we evaluated during the audit, is inadequate. As we state here, DHCS lacks formal guidance specifying the conditions under which its staff should approve or deny a request. Consequently, DHCS cannot ensure that its staff approve only those requests in which health plans have demonstrated that they exhausted all reasonable options to obtain closer providers so that beneficiaries are not required to travel excessive distances to receive care.

3

DHCS’ statement is incorrect. As we state here, DHCS has not established a minimum number of providers that health plans should attempt to contract with in a designated location before it considers an alternative access standard request. By not requiring health plans to demonstrate that they have attempted to contract with a minimum number of providers before approving their alternative access standard requests, DHCS cannot ensure that the health plans have exhausted all reasonable efforts to seek providers that are closer to beneficiaries.

4

We disagree with DHCS’ statement that it is already in compliance with our recommendation. We acknowledge that the current contracts for Anthem and Health & Wellness contain a requirement that the health plans must allow beneficiaries to obtain medically necessary covered services from out‑of‑network providers if they cannot provide the services in‑network. However, we did not observe DHCS sufficiently enforcing this requirement during our audit. As we report here, DHCS initially placed health plans on network certification CAPs in 2018 to enforce the requirement but closed those CAPs after approving alternative access standard requests for those health plans that were still unable to meet access requirements. However, DHCS approved those requests even when health plans did not demonstrate that they had exhausted all reasonable options to obtain closer providers. We look forward to reviewing DHCS’ 60‑day response to the audit recommendations to learn about the steps that it will implement to enforce this contract requirement when it determines that health plans have not made sufficient efforts to contract with providers.

5

DHCS misses the point of our recommendation, which is to ensure that it promptly and sufficiently notifies counties and other stakeholders about health plans’ quality of care deficiencies. Although state law allows DHCS to delay the publication of health plan audits until the health plans complete the medical audit CAPs, which we acknowledge here, we believe counties could better assist their beneficiaries if DHCS informed them of performance issues more promptly. Therefore, to provide this important information in a more timely manner to counties, we recommended DHCS post its medical audit reports to its website within one month after it issues the audit to the health plan, which state law allows.

6

We look forward to reviewing DHCS’ 60-day response to learn about the progress it has made to post additional information regarding the steps and legal requirements to create each model. However, DHCS also needs to send this information directly to counties—especially rural counties that lack resources and ability to seek such information—to ensure that they are informed of their managed care options. Simply posting or updating information on DHCS’ website does not necessarily ensure that counties become aware of such information; we cite examples here of counties that find DHCS’ website overwhelming or that experience difficulties finding information on DHCS’ website about health plans.

7

DHCS’ approach to implement this recommendation does not sufficiently address the issues we identified with access to care. As we state starting here of the report, there are structural aspects of the COHS Model that may provide better access to care for beneficiaries in the Regional Model counties than those beneficiaries currently receive. However, the analysis that DHCS refers to, which is described in its implementation plan for recommendation 10, does not include an evaluation of whether the COHS Model would be better suited to provide reasonable access to care in the Regional Model counties. Until DHCS performs the evaluation we recommend and proactively assists counties that desire to transition to a COHS, those counties with limited resources may not be able to establish the health care systems that could best serve their beneficiaries.

8

We disagree with DHCS’ perspective. Because the Regional Model includes many counties that may desire to transition to a single multicounty COHS, we believe that it would be more effective for DHCS to submit a consolidated funding request to the Legislature rather than for each county to submit its own individual request. As we state here, DHCS is the state agency responsible for administering Medi-Cal. By submitting a single request, DHCS would help expedite authorization of such funding and would also help ensure that all of the counties are treated equitably, despite differences in their size and resources. As we characterize here, small and rural counties may not be able to develop the infrastructure required to change their managed care models without DHCS’ assistance.

9

We disagree with DHCS’ determination that it does not need to implement our recommendation. Although DHCS acknowledges that the release of the RFP and the dates of implementation will not preclude affected counties from seeking a COHS Model, it did not specify that it would include that provision in the RFP. By implementing our recommendation to include language in the 2020 RFP to allow counties to opt out of the Regional Model if they can demonstrate their ability to implement a COHS Model, DHCS would demonstrate its commitment to helping small and rural counties improve the access to care for their beneficiaries.






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