Medicaid Managed Care

In fiscal year 1996, California's Medicaid program (Medi-Cal) served 5.2 million beneficiaries--almost one-seventh of Medicaid beneficiaries nationwide--at a cost of nearly $18 billion in federal, state, and local funds. Medi-Cal has increasingly turned to managed care to improve the quality of care and reduce program costs. In 1992, California began planning a major expansion of its Medi-Cal managed care program--one that would eventually require more than 2.2 million beneficiaries in 12 counties to enroll in one of two managed care plans. A 1995 GAO report (GAO/HEHS-95-87) questioned California's ability to successfully carry out such an expansion because of several weaknesses in the Medi-Cal managed care program, including the state's potential inability to effectively monitor its contracts with managed care plans and to ensure that the plans actually delivered promised services. This report follows up on GAO's earlier study and (1) discusses the status of California's managed care expansion, including the leading causes of delays; (2) assesses 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) evaluates 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 had contracted with to carry out these duties; and (4) makes an initial assessment 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.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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