Medicaid Managed Care:

More Competition and Oversight Would Improve California's Expansion Plan

HEHS-95-87: Published: Apr 28, 1995. Publicly Released: May 15, 1995.

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Pursuant to a congressional request, GAO reviewed California's Medicaid managed care program, focusing on: (1) state oversight of managed care contractors; (2) state plans for expansion; and (3) key issues in implementing the expanded program.

GAO found that: (1) California plans a major expansion of its Medi-Cal managed care program in selected counties; (2) by the end of 1996, the number of enrollees in California managed care plans will total over 3.4 million, almost four times the number currently enrolled; (3) enrollment will be mandatory for women and children, who will choose from one of two plans, unlike the current voluntary system with several choices; (4) mandatory enrollment could magnify the problems already associated with California's Medi-Cal program, such as availability and quality of services, capabilities of management staff, and providers' financial incentives to limit care; and (5) any benefits of competitive managed care could be lessened by California's decision to limit beneficiaries to two health plans.

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