State Auditor Releases Report on DHCS Oversight of Regional Model Health Plans

On Tuesday, California State Auditor Elaine Howle released the audit report, “Department of Health Care Services: It Has Not Ensured That Medi-Cal Beneficiaries in Some Rural Counties Have Reasonable Access to Care.” The audit came at the request of Senator Jim Nielsen and was approved by the Joint Legislative Audit Committee in August 2018. The audit examined DHCS’ oversight of managed health care in the 18 small and rural counties under the Regional Model. In these counties, two commercial health plans contract with DHCS to provide health coverage to Medi-Cal beneficiaries. Further, the report explores whether Regional Model beneficiaries have received an acceptable level of care and evaluates how that care compares to the care beneficiaries in other models have received.

In the 67-page report, Auditor Howle determines that Regional Model health plans have not provided all Medi-Cal beneficiaries with adequate access to care and DHCS has not adequately conducted oversight activities of the health plans. Specifically:

  • DHCS did not enforce state requirements that limit distances health plans may direct their Medi-Cal beneficiaries to travel to receive health services.
  • DHCS failed to hold Regional Model health plans accountable for improving beneficiaries’ access to care.
  • Regional Model beneficiaries have generally received a lower quality of care than beneficiaries in other areas of the state.
  • DHCS did not adequately educate Regional Model counties about the options available to them regarding their transition to managed care. DHCS was found to not have assisted Regional Model counties that wanted to create or join a County-Organized Health System (COHS), which may have provided beneficiaries with better access to care.

Auditor Howle details a series of recommendations for DHCS to ensure beneficiaries have adequate access and proper oversight of health plans is conducted. Among the recommended actions:

  • DHCS should immediately do the following to obtain assurance that health plans throughout the state have exhausted all options to meet access requirements before seeking exceptions:
    • Develop written guidance that specifies conditions under which staff should approve, deny, or contact health plans for clarification regarding their requests for exceptions.
    • Determine a specific minimum number of providers health plans must attempt to contract with before requesting an exception.
    • Require health plans to authorize out-of-network care if they do not demonstrate they have exhausted all of their reasonable options to meet access requirements.
  • DHCS should do the following by June 2020 to ensure Regional Model beneficiaries have reasonable access to care:
    • Determine specific causes of Anthem and California Health & Wellness’s inabilities to provide reasonable access to care in Regional Model counties.
    • Evaluate whether structural characteristics of a COHS model would be better suited to providing reasonable access to care in these counties and notify the counties of its conclusions. If some or all of the counties desire to transition to a COHS, DHCS should assist them in making that change after their current contracts expire.
    • Evaluate whether it has the financial resources to provide assistance to counties interested in establishing a COHS or other managed care model 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.
    • Provide counties with reasonable opportunities to decide whether to change their managed care models after the expiration of their current contracts. DHCS should provide counties that choose to do so sufficient time to establish their new models before the expiration of their current agreements to ensure continuity of service.

In responding to the audit, DHCS Director Jennifer Kent indicated that the department agreed with nine of the 13 recommendations, disagreed with three of the recommendations, and believed they are already in compliance with the remaining one recommendation. DHCS has indicated that it has prepared corrective action plans to implement the recommendations with which they agree. The full audit report is available here.