Medicaid Managed Care:

Delays and Difficulties in Implementing California's New Mandatory Program

HEHS-98-2: Published: Oct 1, 1997. Publicly Released: Nov 3, 1997.

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Pursuant to a congressional request, GAO reviewed California's Medicaid Program, Medi-Cal, focusing on: (1) the implementation status of California's managed care expansion, including identifying the primary causes of delays; (2) the degree to which state efforts to educate beneficiaries about their managed care options and enroll them in managed care have encouraged beneficiaries to choose a plan; (3) the management of the state's education and enrollment process for the new program, including state and federal oversight of enrollment brokers that the state contracted with to carry out these functions; and (4) the impact of the managed care expansion on current safety-net providers, such as community health centers, that serve low-income beneficiaries.

GAO noted that: (1) despite California's extensive planning and managed care experience, implementation of its 12-county expansion program is more than 2 years behind its initial schedule and is still incomplete; (2) California originally had planned to implement the program simultaneously in all affected counties by March 1995; (3) however, as a number of unforeseen difficulties arose, the state began to stagger implementation as it became clear that some counties would be ready before others; (4) still, as of July 1997, the program had been fully implemented in only seven counties; (5) the most recent schedule estimated complete implementation in all 12 counties by December 1997, at the earliest; (6) the state's efforts to encourage beneficiaries to choose a health plan have been undermined by problems in the process for educating and enrolling beneficiaries; (7) according to the Health Care Financing Administration (HCFA), beneficiary and provider advocates, and managed care plans, a number of problems contributed to confusion for many beneficiaries, including incorrect or unclear information about the mandatory Medi-Cal program and participating plans as well as erroneous assignments of beneficiaries to plans; (8) available data show that, on average, almost half of affected beneficiaries have not actively chosen their own plan but instead have been automatically assigned to one by the state; (9) other problems were evident in California's Department of Health Services' (DHS) management of the program, including insufficient performance standards for enrollment brokers and poor internal communication and weak ties with advocacy and community-based organizations; (10) California has taken a number of actions to improve the implementation and administration of its mandatory expansion program; (11) DHS also has taken steps to work more closely with community-based organizations to improve outreach efforts; (12) however, these actions were taken too late to benefit the many beneficiaries who have already enrolled in the seven counties where full program implementation has been completed; (13) HCFA is in the process of developing federal guidelines on designing and implementing an education and enrollment program; and (14) despite the fact that the state's 12-county expansion program was designed to help ensure that federally qualified health centers, community and rural health centers, and other safety-net providers participate in the provider networks, some safety-net providers have reported difficulty maintaining their patient base.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: CMS has issued final managed care regulations, which address some issues of quality and guidelines regarding education and enrollment programs.However, CMS has no plans to take further action in issuing guidelines on education and enrollment in the near future. CMS noted that there are other Managed Care priorities at this time, such as revising the Contract Review checklist and ratesetting guide, revising section 1915(b) waiver applications, revising the State Medicaid Manual, and revising the monitoring guide that take higher priority. CMS further stated that it is not sure when or if the agency will get to the enrollment guide, but that it won't be soon. Some of the efforts noted above will touch on enrollment broker policies, but it is not the same as a separate guide.

    Recommendation: To help states design and implement Medicaid managed care programs that ensure beneficiaries who enroll, especially those who are mandated to do so, are able to make an informed choice in selecting a plan, the Secretary of Health and Human Services should direct HCFA to promptly finalize guidelines for developing and operating an education and enrollment program. To help ensure accountability, these guidelines should include considerations regarding appropriate performance standards and measures and monitoring mechanisms, especially when a state contracts out these functions to an enrollment broker.

    Agency Affected: Department of Health and Human Services


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