HomeMy WebLinkAboutMINUTES - 02091993 - 1.55 RECEIVED AN 2 5 1993
STATE OF-CALIFORNIA—HEALTH AND WELFARE AGENCY PETE WILSON, Governor
DEPARTMENT OF HEALTH SERVICES
714/744 P STREET e
P.O. BOX 942732 '
SACRAMENTO, CA 94234-7320
(916) 657-1425 January 15, 1993
RECEIVE®
FEB - 21993
CLERIC BOARD OF SUPERVISORS
Thomas Torlakson, Chair CONTRA COSTA CO.
Board of Supervisors
County of Contra Costa
300 E. Leland Avenue, Suite 100
Pittsburg, CA 94565
Dear Supervisor Torlakson:
Enclosed is a copy of the Department of Health Services' draft of
California Strategic Plan for the Transition of Medi-Cal to Managed Care to
implement Senate Bill 485, Statutes of 1992.
I have had the opportunity to meet with several of your representatives
over the last two weeks to discuss the Department's implementation strategies.
However, I want you to have a first hand review of the plan and I encourage
your comments. I have also scheduled five public meetings across the State to
receive comments from all those interested in services to Medi-Cal
beneficiaries. The schedule is enclosed.
I look forward to working collaboratively with you and your
representatives. Please feel free to contact me at (916) 657-1425.
Mr. Jim Parks, Chief, Managed Care Division, (916) 657-3672 or
Charleen M. Milburn, Deputy Director, Legislative and Governmental Affairs,
(916) 657-2843 are both available to answer any specific questions you may
have regarding the plan.
Sincerely,
Molly Joel Coye, D. , M.P.H.
Director
Enclosure
cc: Phil Batchelor
Chief Administrative Officer
Contra Costa County
651 Pine Street, 11th Floor
Martinez, CA 94553
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STATE OF CALIFORNIA—HEALTH AND WELFARE AGENCY PETE WILSON, Govsmor
DEPARTMENT OF HEALTH SERVICES -
714/744 P•STREET
P.O. BOX 942732
SACRAMENTO, CA 94234.7320
(916) 657-1425
January 13, 1993
TO ALL INTERESTED PARTIES
Dear Colleague:
I am pleased to forward the Department of Health Services' (DHS) draft
strategic plan for expanding managed care in the Medi-Cal program.
: This document is intended to let all Medi-Cal program "stake-holders"
including beneficiaries, providers, the public, and the Legislature know the
course this Department will pursue in its expansion of managed care programs.
As we all know, the way in which managed care programs are pursued can and
will have a significant impact on the delivery of health care in local areas,
and will affect, and hopefully, facilitate the development of local health
delivery systems. Accordingly, I am sending this document in "DRAFT" form to
the widest possible audience to solicit your comments prior to making final
decisions.
Because significant numbers of Medi-Cal beneficiaries were expected to
be enrolled into managed care programs as part of the budgetary process, we
need to move quickly to implement this strategic plan. To facilitate the
receipt of comments, the DHS, in conjunction with the California Medical
Assistance Commission, is holding five public meetings. Please refer to the
attached for specific dates and locations. Those persons who provide comments
at these public meetings should provide written copies of their statements.
Those not able to attend either of these meetings may direct your
comments, in writing, to Mr. Jim Parks, Chief, Medi-Cal Managed Care
Division, no later than February 1, 1993. Jim and staff will review your
responses and make final recommendations to me regarding the strategic plan.
Your written comments should be addressed to him at 714 P Street, Room 650,
Sacramento, CA, 95814. His fax number is (916) 654-6260.
Regretfully, given the already hectic schedule of our staff, which
includes appearances before many of the groups potentially affected by this
strategic plan, only written comments--no telephone calls--can be accepted.
Until I am in a position to review and decide the final course of the
Medi-Cal managed care expansion effort, I am extending the temporary
moratorium on expansion of managed care programs that I announced in early
November through February 8, 1993. Specifically, this means that during the
moratorium, DHS will be signing contracts for managed care expansion only
with: (1) CAHMO plans as part of the agreement negotiated in the budget
process last year; and (2) PCCMs and PHPs in cases where the County Board of
TO ALL INTERESTED PARTIES
PAGE 2
Supervisors support the application. All existing contracts will be allowed
to continue enrolling beneficiaries up to their contractual limits.
I personally want to reiterate that I am very interested in your
comments about this strategic plan, because it will become the blueprint for
our managed care expansion efforts. I know that, working together, we can
devise the most appropriate method for moving forward in a way that will
assure the best results for the people we all are attempting to serve.
Sincerely,
i
Molly Joel Coye, .D. , M.P.H.
Director
Enclosure
STRATDGIC PLAN MEETINGS
Wednesday, January 27, 1993
10:00 A.M. - 2:00 P.M.
Citv Location Seating Capacity
Sacramento Auditorium, 714 P Street 210
San Francisco Auditorium, Edmund G. (Pat) Brown 200
Building
505 Van Ness Avenue
Fresno Art Building 200
Fresno Fair
1121 South Chance
San Diego Auditorium (Room B-109) 160
State Building
1350 Front Street
Thursday, January 28, 1993
10:00 A.M. - 2:00 P.M.
Los Angeles The Olympic Collection Banquet and 500
Conference Center
D
513Gar Olympic Boulevard
West Los Angeles
(5 miles North of LAX, off of I405)
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PROTECTING VULNERABLE POPULATIONS:
CALIFORNIA'S STRATEGIC PLAN
FOR THE TRANSITION OF
MEDI-CAL TO MANAGED CARE
JANUARY 13, 1993
DRAFT DOCUMENT
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DEPARTMENT OF HEALTH SERVICES STRATEGIC DRAFT PLAN FOR EXPANSION
OF MANAGED CARE PROGRAMS ^IN MEDI-CAL
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . i
II. INTRODUCTION . . . . . . . . . . . . . . . . . . . . 1
III. POLICY STATEMENT . . . . . . . . . . . . . . . . . . . 1
IV. PRINCIPLES IN THE TRANSITION TO MANAGED CARE . . . . . . 4
V. DEPARTMENT'S PLANS FOR THE EXPANSION OF THE MEDI-CAL
MANAGED CARE PROGRAM . . . . . . . . . . . . . . . . . 5
A. OVERVIEW OF EXPANSION PLANS . . . . . . . . . . . . 5
B. DESIGNATION OF COUNTIES FOR THE EXPANSION OF
MANAGED CARE . . . . . . . . . . . . . . . . . . . 7
C. OPTIONS FOR PRIORITY A COUNTIES . . . . . 9
D. GEOGRAPHIC MANAGED CARE SYSTEMS . . . . . . . . . . 11
E. COMPETITIVENESS
F. REQUIREMENTS TO SUPPORT TRADITIONAL AND
SAFETY NET PROVIDERS PARTICIPATING UNDER
BOTH HEALTH CONSORTIA AND GEOGRAPHIC MANAGED CARE 14
VII. REVIEW OF DEPARTMENT'S MANAGED CARE PROGRAMS . . . . . . 16
A. TECHNICAL ASSISTANCE . . . . . . . . . . . . . 16
B. COUNTY ORGANIZED HEALTH SYSTEM (COHS) . . . . 17
C. GEOGRAPHIC MANAGED CARE PILOT PROJECT (GMC) 17
D. PRIMARY CARE CASE MANAGEMENT . . . . . . . . 18
E. PREPAID HEALTH PLAN CONTRACTING: THE CAHMO
AGREEMENT . . . . . . . . . . . . . . . . . 19
F. PCCM AND PHP EXPANSION: THE CAPH PROPOSAL 19
G. SPECIAL PROJECT ACTIVITIES . . . . . . . . . . 20
1. MEDICAL CASE MANAGEMENT OF HIGH COST
INDIVIDUALS . . . . . . . . . . . . . . . 20
2 . FEE-FOR-SERVICE CASE MANAGEMENT . . . . . 21
3 . COMMUNITY PILOTS . . . . . . . . . . 21
4 . FOCUSED PROJECTS FOR MANAGING THE CARE OF
DUALLY ELIGIBLE POPULATIONS . . . . . . . 21
H. HEALTH CARE OPTIONS (HCO) . . . . . . . . . 22
VIII. ASPECTS OF MANAGED CARE THAT REQUIRE FURTHER DEVELOPMENT24
A. PREVENTIVE HEALTH CARE SERVICES . . . . . . . 24
B. DATA REPORTING REQUIREMENTS. . . . . . . . 25
C. RATE METHODOLOGY . . . . . . . . . . . . . . . 26
D. CULTURALLY COMPETENT SERVICES . . . . . . . . 26
E. INTERFACE BETWEEN PUBLIC HEALTH PROGRAMS AND
MEDI-CAL MANAGED CARE. . . .. . . . . . . . . . 27
F. COMPREHENSIVE MODELS VS. CARVING OUT SPECIFIED
SERVICES . . . . . . . . . . . . . . . . . . . 28
a. CALIFORNIA CHILDREN'S SERVICES (CCS) . 29
b. FAMILY PLANNING PROVIDERS . . . . . . . 30
C. DENTAL SERVICES . . . . . . . . . . 30
d. MENTAL HEALTH SERVICES . . . . . . . . . 30
e. CALIFORNIA SCHOOL LINKED SERVICES . . . . 31
f. FOSTER CHILDREN . . . . . . . . . . . 32
IX. ROLE OF THE CALIFORNIA MEDICAL ASSISTANCE COMMISSION
(CMAC) . . . . . . . . . . . . . . . . . . . . . . . 33
X. WAIVERS OF FEDERAL STATUTORY REQUIREMENTS . . . . . . . 33
XI. SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 33
DEPARTMENT OF HEALTH SERVICES DRAFT STRATEGIC PLAN FOR EXPANSION
OF MANAGED CARE PROGRAMS IN MEDI-CAL
I. EXECUTIVE SUMMARY
The Department of Health Services (DHS) is committed to the
rapid expansion of managed care within the Medi-Cal program as a
means of improving beneficiary access to quality preventive and
primary health care services in a cost effective manner.,
consistent with directions from the Legislature and Governor, as
embodied in Senate Bill 485 (SB 485) . DHS intends to increase the
number of Medi-Cal beneficiaries enrolled in managed care from the
current level of approximately 600, 000 beneficiaries to
approximately one million by the end of the 1992/93 fiscal year
(see Table 1) , and to one-half of all Medi-Cal beneficiaries by the
end of fiscal year 1994/95.
Table 1. MEDI-CAL MANAGED CARE ENROLLMENT TARGETS
Program Fiscal Additional # of Total # of
Year Beneficiaries Beneficiaries
Current Enrollment 606, 000
(all plans)
CAHMO 92-93 108 , 000* 714 , 000
Current PHP, PCOM 92-93 286, 000 1, 000, 000
Expansion
CAPH 93-94 1, 000, 000 2, 000, 000
New COHS, GMC 93-94 410, 000
* net number of beneficiaries for new plans participating in
Medi-Cal
A. DEPARTMENT'S PLANS FOR MANAGED CARE EXPANSION
1
Expansion efforts will be focused on geographic areas with
large concentrations of Medi-Cal beneficiaries where more efficient
management of services, particularly the elimination of
inappropriate emergency room use and inappropriate specialty
services, provide the greatest opportunity for containing costs
while enhancing access and quality of care. Our general approach
will be to support two alternative methods for the expansion of
managed care into counties or regions of the state: (1) the
development of regional organized health care consortia, which will
purchase care on behalf of Medi-Cal beneficiaries, accept Medi-Cal
capitated rates, and utilize both public and private providers; and
(2) awarding multiple managed care contracts for coverage of Medi-
cal beneficiaries in a county through a process of competitive
bidding (this is also known as the Geographic Managed Care model) .
B. DESIGNATION OF COUNTIES FOR EXPANSION
In order to fulfill its goal of rapid expansion and inclusion
of significant numbers of beneficiaries in managed care, the
Department will initially concentrate its expansion efforts in a
limited number of counties which have a high concentration of Medi-
Cal beneficiaries. The Department will designate 1.1 counties as
priority category A (see Table 2) . Interested parties in these
counties will have the option of participating in the development
of an organized regional health care delivery system--a 'health
care consortium' --to begin operating during the 1993-94 fiscal
year.
C. HEALTH CARE CONSORTIA
The consortium will be comprised of beneficiaries, public and
private providers, and, if the county elects to participate,
representatives of county government. Within 105 days of being
designated an expansion county, the consortium must submit a letter
of intent to contract with the state. This letter must include:
a statement that the consortium will accept the prevailing Medi-Cal
reimbursement rates for managed care providers; that traditional
Medi-Cal providers will be included in the provider network; a
commitment to have the health care consortium accept limited
financial risk within 12 months and to develop a full financial
risk, capitated program within 24 months; a commitment to meet
quality and access standards required of health plans contracting
ii
plan's contractually allowed limits. Finally, the Department will
sign and implement new contracts for Prepaid Health Plans (PHPs,
or full-risk managed care contractors) already committed to
participation in the Medi-Cal managed care program through the
California Association of Health Maintenance Organization's (CAHMO)
agreement of July, 1992 . Beyond existing contracts and new
contracts executed pursuant to the CAHMO agreement, however, no new
managed care contracts will be signed in geographic areas not
designated for expansion in 1993, unless the county approves this
expansion and the contractor has the participation of the
traditional Medi-Cal providers in the county, at prevailing rates.
Moreover, managed care contractors operating in Priority A counties
should expect that if a health care consortium is created in the
county, they will be expected to negotiate with the consortia for
renewal of their contracts after their existing contracts with the
Department expire. To the extent that these contractors meet the
criteria specified in this plan, there will be a reasonable
expectation that the health consortia will contract with these
plans.
In all counties in which the Department has or intends to
execute managed care contracts--including consortia, COHS, and GMC
counties, as well as in any other county where the Department holds
Medi-Cal managed. care contracts--the. Department will aggressively
pursue the implementation of the expanded Health Care Options (HCO)
program. The State will begin implementing HCO in March, 1993 .
Once HCO is in place in that county, managed care plans in those
areas will be allowed only a limited period of time before door-to-
door marketing is eliminated.
In fee-for-service counties, the State may consider
applications from contractors proposing to administer the fee-for-
service program with varying degrees of assumption of financial
risk. Such applications must reflect efforts to involve
traditional providers in the design of the proposed administrative
systems, and will be evaluated based on their efficiency,
assurances of access to care, and minimization of the disruption of
existing patient-provider relationships.
G. ISSUES THAT REQUIRE FURTHER DEVELOPMENT
The Department recognizes that there are aspects of managed
care that require further development, and will anticipate working
v
r
with interested parties to further define clinical preventive
services, health .data, and requirements for . cultural competence
appropriate to managed care, and to develop options for the
coordination of managed care with public health programs and
categorically-funded public medical services programs. In
addition, the Department intends to revise the rate methodology
used for reimbursing managed care contractors. The Department
envisions moving to a negotiated rate process in the near future.
H. ROLE OF CMAC
The California Medical Assistance Commission (CMAC) will
continue to be the Department's principal partner in negotiating
contracts.
I. FEDERAL WAIVERS
The Department can proceed to implement health consortia
without federal statutory change, although federal waivers will be
required. The Department will also seek waivers or amendments of
federal statutory requirements in order to permit "lock-in" of
Medi-Cal beneficiaries for a maximum of one year in all managed
care programs.
vi
Table 2. Priority "A" Counties
County Total Medi-Cal Current # Medi-Cal
Beneficiaries Beneficiaries
in County in Managed Care Plans
(Oct. 92)
Alameda 178,000 4, 600
Contra Costa 82, 000 13 ,600
Fresno 192, 000 5, 000
Kern 106, 000 0
Los. Angeles 11500, 000 317, 000
Riverside 162, 000 21,900
San Diego 315, 000 63,700
San Francisco 107, 000 2 , 000
Santa Clara 165, 000 7, 300
Stanislaus 79, 0001 0
San Bernardino 267, 000 41,800
[Totals 3 , 153, 000 476, 900
vii
II. INTRODUCTION
The Strategic plan for the transition of Medi-Cal to managed
care is a planning document for the future, as well as a
description of the past and current activities of the Department of
Health Services ("Department") in the area of managed care. To the
extent it describes the intent of the Department to engage in
future activities, it does so for the purpose of assisting the
public and specific interested communities in providing rapid,
targeted and relevant input into the strategic planning process.
It is neither intended to be nor will it be used as a substitute
for formal rulemaking or contracting procedures.
Because of California's current fiscal circumstances, which
call for rapid and prudent fiscal management conjoined with program
improvement strategies, the Department has been given legislative
authority to act through emergency regulations and accelerated
contracting procedures in many areas. In order to provide for
adequate public input into this expedited process, it is the intent
of the Department to involve the public in the planning process
through pre-rulemaking and pre-contracting public meetings. It is
the Department's expectation that where the process subsequently
requires the use of emergency regulations or expedited contracting,
these methods will be better able to include vital and diverse
input from affected and other interested parties because of the
strategic planning process.
III. POLICY STATEMENT
The Department of Health Services is committed to the rapid
expansion of managed care within the Medi-Cal program as a means of
improving beneficiary access to quality preventive and primary
health care services in a cost effective manner. Consistent with
directions from the Legislature and Governor, the Department
intends to increase the number of Medi-Cal beneficiaries enrolled
in managed care from the current level of approximately 600,000
beneficiaries to approximately one million by the end of the
DRAFT DOCUMENT
Ntnaged Care Strategic Plan Page 2
1992/93 fiscal year (see Table 1) , and to one-half of all Medi-Cal
beneficiaries by the end of fiscal year 1994/95.
Table 1. MEDI-CAL MANAGED CARE -ENROLLMENT TARGETS
Program Fiscal Additional # of Total # of
Year Beneficiaries Beneficiaries
Current Enrollment 606, 000
(all plans)
CAHMO 92-93 108, 000* 714,000
Current PHP, PCCM 92-93. 286, 000 1, 000, 000
Expansion
CAPH 93-94 1, 000, 000 2, 000,000
New COHS, GMC 1 93-94 1 410, 000 2 , 410, 000
* net number of beneficiaries for new plans participating in
Medi-Cal
Senate Bill 485 (SB 485, Chapter 722 Statutes of 1992) and
Assembly Bill 336 (AB 336, Chapter 95 Statutes of 1991) provide the
direction for the Department's expansion efforts into managed care.
Specifically, these bills provide the Department with the ability
to implement various cost-effective approaches for transitioning
the Medi-Cal Program from fee-for-service to managed care. For
example, the bills allow the Department to enroll Medi-Cal
beneficiaries in managed care plans, permit the expansion of
current managed care contracts--such as County Organized Health
Systems, Prepaid Health Plans, and Primary Care Case Management
plans--and provide for the development of new approaches, such as
case-managing high-cost beneficiaries, and piloting fee-for-service
managed care systems. Additionally, SB 485 eliminated the cap on
the number of beneficiaries that could be enrolled in GMC.
What is managed care? Broadly stated, managed care is a
combined clinical and administrative approach in which ongoing,
coordinated health care services are provided, usually for a
capitated fee. Managed care emphasizes the critical roles of
clinical preventive services and primary care, avoids unnecessary
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Nhnaged Care Strategic Plan Page 3
use of emergency departments for ambulatory care, reduces
unnecessary hospitalizations, and re-allocates resources to support
preventive and primary care services. Twenty-four hour access to
coordinated systems of care, with regular audits of the fiscal
status of plans and the quality of care provided, offer greater
assurances of quality and access in managed care than in fee for
service settings. Capitation, or the payment of a set amount per
beneficiary per month, protects the purchaser of services and
allows the provider of care flexibility in the organization and
reimbursement of service.
Managed care is also an important component of cost containment
strategies. Research indicates that managed care systems can
generate short term modest savings in comparison with fee-for-
service systems. In addition, managed care provides greater
assurances that care is necessary and appropriate, eliminating
expenditures on preventable hospital admissions and inappropriate
use of emergency rooms for primary health care services. Even
modest savings can be significant when applied across a population
as large as California's Medicaid program. Perhaps most important,
however, is the prospect that competition among managed care plans
in areas closed to fee for service may in fact moderate the rate of
increase in annual expenditures; this has been the case in the
Public Employee's Retirement System (PERS system) . In short, the
expansion of Medi-Cal managed care meets the twin imperatives of
controlling costs and improving access to quality medical care for
our beneficiaries.
This change--the transition of Medi-Cal to managed care
programs--is a complement to the impending national reforms of the
health care system. National health care reform is expected to
move health care delivery into organized systems of care; to move
payment systems to capitation, with risk assumed by provider
organizations, not purchasers; to place greater emphasis on primary
care and prevention services, with systems evaluated in terms of
clinical outcomes and the health status of populations; and to find
purchasers pooling their resources in order to create systems of
care and control costs.
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K/bnaged Care Strategic Plan Page 4
IV. PRINCIPLES IN THE TRANSITION TO MANAGED CARE
The principles guiding the Department in the transition to
managed care are: .
o Improve beneficiary access to quality health care
and to ensure appropriate continuity of care.
o Ensure that all prospective providers demonstrate
their competitiveness using cost, quality and
access/capacity criteria.
o Encourage local control and new public/private partnerships
in the provision of health care services.
o Maintain the viability of the Intergovernmental Transfer
Program (SB 855) to maximize federal participation in
disproportionate share payments in order to supplement
payments to providers who serve low income populations and
high proportions of Medi-Cal beneficiaries.
o Provide beneficiaries with objective information about the
benefits of and how to use managed care delivery systems;
full disclosure of their rights; an opportunity to make an
informed choice among managed care plans; and the option to
choose among providers within such plans.
o Within managed care contracting, implement a quality
assurance program that is clinically accountable and
measures performance through common data reporting--
including indicators of clinical outcomes, patient health
status and satisfaction--where the use of such indicators
can be demonstrated to be cost-effective.
o Design the expansion of managed care contracting so that it
contributes to the integration of publicly funded
categorical programs for personal health care services with
the ultimate, long term vision of participating a seamless
delivery system.
o Provide traditional and safety net providers with
assurances of opportunities for participation in the
transition to managed care.
o Encourage the use of appropriate primary and clinical
preventive health care services in managed care plans.
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Ntnaged Care Strategic Plan Page 5
o Require that managed care plans provide health care
services in a culturally and linguistically competent
manner.
V. DEPARTMENT'S PLANS FOR THE EXPANSION OF THE MEDI-CAL MANAGED
CARE PROGRAM
The primary goals of the managed care expansion are to improve
access to health care, achieve long-term cost containment, and
potentially, obtain short-term cost-savings in the Medi-Cal
Program.. Therefore, expansion efforts will be focused on
geographic areas with large concentrations of Medi-Cal
beneficiaries where more efficient management of services--
particularly the elimination of inappropriate emergency room use
and inappropriate specialty services--provide the greatest
opportunity for reducing the rate of cost increases while enhancing
access and quality of care. The need to balance both access and
fiscal concerns is reflected in the following expansion plans.
A. OVERVIEW OF EXPANSION PLANS
In order to fulfill its goal of rapid expansion and inclusion
of significant numbers of beneficiaries in managed care, the
Department will initially concentrate its expansion efforts in a
limited number of counties which have a high concentration of Medi-
Cal beneficiaries. Specifically, the Department will designate 11
counties as priority category A, with the intent to close these
counties to fee-for-service care by the end of the 1993 calendar
year.
The Department's first preference will be to encourage the
formation of locally-controlled health care consortia in these
eleven counties. These consortia would include representation from
the public and private provider community, beneficiaries, and, if
the county elects to participate, representatives of county
government. By creating a health consortium, the community
benefits from local control, the formation of new public/private
partnerships and improved beneficiary access to integrated,
coordinated systems of health care. In addition, the state
DRAFT DOCUMENT
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Nbnaged Care Strategic Plan ;„;?, Page 6
benefits from the creation of these consortia, by encouraging the
continuity of existing patient-provider relationships through the
participation of traditional Medi-Cal providers, obtaining the
cooperation of the various provider groups working together on the
consortium board, and achieving effective cost-containment in the
Medi-Cal Program. Finally, the Department believes that these
consortia best reflect the direction that overall health care
reform will take in the coming years, and will prepare Medi-Cal
providers to operate in an environment in which purchasers of care
maximize .their leverage to ensure the provision of quality, cost-
effective care.
In priority A counties, the County Board of Supervisors will
have the option of participating in the development of the health
care consortium, which would begin operating during the 1993-94
fiscal year. If the County Board of Supervisors elects not to
participate, other interested parties have the option to develop
the consortium. However, if there is insufficient interest in the
county in creating a health consortium, the State will implement
Geographic Managed Care.
Under the Geographic Managed Care (GMC) model, the Department
will award a sufficient number of contracts to providers to cover
the county's Medi-Cal population through managed care. Each
contractor will assume financial risk, and will agree to provide
health care services for a capitated rate. Contractors will be
required to make efforts to include traditional providers and will
be selected based on their ability to assure access and to provide
cost-effective, quality health care services to Medi-Cal
beneficiaries in a culturally competent manner.
The Department will also continue to implement the Geographic
Managed Care program in Sacramento, and the three County Organized
Health Systems in Orange, Santa Cruz, and Solano Counties. These
programs are already well underway and the Department's efforts in
these areas are essential to fulfilling the Legislature's
expectations for rapid expansion of managed care programs.
The Department will continue to allow enrollment of Medi-Cal
beneficiaries in existing managed care plans, up to the level
specified in each plan's contract. In addition, the Department
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Nf3naged Care Strategic Plan Page 7
will sign and implement new contracts for PHPs already committed to
participation in the Medi-Cal managed care program through the
CAHMO agreement of July, 1992. Beyond existing contracts and new
contracts executed pursuant to the CAHMO.agreement, however, no new
managed care contracts will be signed in geographic areas not
designated for expansion in 1993, unless the county approves this
expansion and has the participation of the traditional Medi-Cal
providers in the county at competitive reimbursement rates.
Moreover, in counties where health care consortia are created,
existing managed care contractors will be expected to negotiate the
renewal of their contracts with the- consortia, after the terms of
their existing contracts with the state have expired. To the
extent these contractors meet the criteria specified in this plan,
there will be a reasonable expectation that the health care
consortia will contract with these plans.
The Department will aggressively pursue the implementation of
the expanded Health Care Options (HCO) program in all counties
where the Department has or intends to negotiate managed care
contracts. This means that HCO will be implemented in health care
consortia and GMC counties, as well as in any other county in which
the Department holds a managed care contract, beginning in Los
Angeles County in March, 1993 . Once HCO is in place in that
county, managed care plans in those areas will be allowed only a
limited period of time before door-to-door marketing is no longer
available to them. Door-to-door marketing will be unnecessary in
these areas because HCO will provide beneficiaries with an
opportunity to learn about the managed care options available to
them.
In fee-for-service counties, the State may consider applications
from contractors proposing to administer the fee-for-service
program with varying degrees of assumption of risk. Such
applications must reflect efforts to involve traditional providers
in the design of the proposed administrative systems, and will be
evaluated for their cost-competitiveness, efficiency, assurances of
access to care, and the degree to which they minimize the
disruption of existing patient-provider relationships.
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Nf3naged Care Strategic Plan y Page 8
B. DESIGNATION OF COUNTIES FOR THE EXPANSION OF MANAGED CARE
The Department has established three categories that will govern
the direction of its efforts through the end of the next fiscal
year (June .30, 1994) . These categories were developed using
criteria designed to ensure the effective and efficient expansion
of managed care, consistent with the intent of S.B. 485.
Application of the selection criteria to geographic areas,
generally counties, allows the Department to expeditiously assign
all areas of the State (other than those already designated for
County Organized Health Systems [COHS] or Geographic Managed Care
[GMC] ) into one of three priority categories.
Priority category A is counties which the Department can
designate as closed to fee-for-service by the end of the 1993
calendar year. Interested parties in such counties will have the
option of developing locally-controlled, health care consortia, for
the purpose of purchasing health care services for the Medi-Cal
population in the area, beginning in 1993-94. The eleven Priority
A counties targeted for the transition to managed care are listed
in Table 2 (next page) .
Priority category B areas may not have sufficient capacity to
allow closure prior to June 30, 1993 , but are expected to do so by
June 30, 1994 . All other areas of the State will be assigned to
priority category C.
No further expansion of managed care providers in these counties
will be permitted without the consent of the County Board of
Supervisors and the participation of the traditional Medi-Cal
providers in the county, at competitive reimbursement rates.
Priority category A counties were selected in accordance with
the following criteria:
1. Large concentrations of Medi-Cal beneficiaries within the
affected aid codes residing within the area.
2 . Medi-Cal managed care plan capacity within the designated
area will accommodate 110% of the Medi-Cal beneficiaries
within the affected aid categories residing within the area
by the time enrollment of beneficiaries begins.
3 . Most of the elements of a health care delivery system
providing service to Medi-Cal beneficiaries already exist
DRAFT DOCUMENT
iibnaged Care Strategic Plan Page 9
within the county.
Table 2 . Priority "A" ,Counties
County Total Medi-Cal Current # of Medi-Cal
Beneficiaries Beneficiaries
in County in Managed Care Plans
(Oct. 92)
Alameda 178, 000 4, 600
Contra Costa 82, 000 13, 600
Fresno 192, 000 5, 000
Kern 106, 000 0
Los Angeles 1, 500, 000 317, 000
Riverside 162, 000 21,900
San Diego 315, 000 63 ,700
San Francisco 107, 000 2, 000
Santa Clara 165, 000 7,300
Stanislaus 79, 000 0
San Bernardino 267, 000 41i800 . .
[Totals 3 , 153 , 000 476, 900
C. OPTIONS FOR PRIORITY A COUNTIES TO DEVELOP HEALTH CARE
CONSORTIA
When a county is designated, the county Board of Supervisors,
in consultation with other community interests, will have the
opportunity to participate in establishing a county health care
consortium. The purpose of this consortium will be to purchase,
for a capitated rate of reimbursement, health care services for
Medi-Cal beneficiaries in the county. If the county decides to
proceed with this option, the ' State will not contract with new
managed care plans for operation in that county or expansion of
existing plans already operating in the county beyond their
currently contracted capacity limits for the subsequent twelve
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Ntnaged Care Strategic Plan : ,w:_, '` Page 10
months. The State will appoint a liaison from the Department to
assist in the development of the consortia.
The County Board of Supervisors in each county will have the
option of participating in the development of the health care
consortium. In order to exercise this option, the Board in each
county must provide the State, within 45 days of the county being
designated as a managed care expansion county, a letter expressing
its intent to participate in forming a health care consortium in
that county. During this 45 day period, if the county elects not
to participate, other parties in the county may notify the state of
their interest in developing a health care consortium.
Interested parties in the county will have an additional 60 days
in which to form the consortium board, establish its rules of
governance, and submit a letter of intent to contract with the
state. This letter must include: a statement that the consortium
will accept the prevailing Medi-Cal reimbursement rates for managed
care providers; that traditional Medi-Cal providers will be
included in the provider network; a commitment to have the health
care consortium willing to accept limited financial risk within 12
months and to develop a full financial risk, capitated program
within 24 months; a commitment to meet quality and access standards
required of health plans contracting with Medi-Cal; an agreement
that at least 20 percent of Medi-Cal beneficiaries in the county
will be served by non-governmentally operated providers that
subcontract with the consortium; and, an expectation that any rate-
related lawsuits brought against the State by any organization
represented on the board or contracting with the consortium will
be settled before entering into negotiations to become a managed
care contractor.
Concurrent with the 45 day period for interested parties in the
county to provide the State with the letter of intent to form a
consortium, the State will survey all the providers in the
community and private contractors to assess their level of interest
in participating in managed care in that county. If the State
receives a letter of intent to create a consortium, the survey
information will be used to assist in forming the health
consortium.
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Nhnaged Care Strategic Plan Page 11
If there is insufficient interest in the county in creating a
health consortium, the State will use the survey information to
implement a Geographic Managed Care system. Specifically, the
state will begin implementing Geographic Managed Care in a county,
unless the Department receives (1) a letter of intent to form a
consortium within 45 days after the county is designated for
expansion and (2) a letter of intent from the consortium to
contract with the state within an additional 60 days.
If there is a letter of intent to form a consortium, and a
subsequent letter of intent to contract with the state from the
consortium, the health care consortium will then prepare to
contract with the State and will be responsible for organizing and
overseeing the provider network which will provide direct patient
care to Medi-Cal beneficiaries within the geographic jurisdiction
of the consortium. The consortium will be directed by a board
comprised of provider and beneficiary representatives.
Specifically, the board will include representatives designated by
the County Board of Supervisors, if the county elects to
participate, as well as non-county government members representing
the following: hospitals which have a substantial Medi-Cal volume;
Medi-Cal beneficiaries; community based clinics with substantial '
Medi-Cal volume; physicians with a substantial Medi-Cal practice;
pharmacies; private managed care provider operating in that county;
dentistry, and home based, personal care services nursing.
If the county is not interested in exercising its option within
the 45 day period, or, if the consortia is unable to generate
sufficient local support or does not accept the Medi-Cal managed
care rates required by the State within the subsequent 60 day
period, the Department intends to proceed to develop a geographic
managed care system, soliciting applications for contracts to
provide managed care services to Medi-Cal beneficiaries in that
county.
D. GEOGRAPHIC MANAGED CARE SYSTEMS
In priority A counties where health care consortia do not
contract with the state for Medi-Cal managed care services,. the
State will pursue the development of Geographic Managed Care
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Nf3naged Care Strategic Plan ��;T .. Page 12
systems. This approach has several advantages. Within this model,
both public and private providers can compete to. be included; this
will allow the Department to bring together the best that both
types of providers have to offer our beneficiaries. Second, the
Department will be able to make use of existing data to identify
and assure the inclusion of traditional safety net providers, in
order to minimize the. disruption of existing patient-provider
relationships. Third, this model forces all prospective providers
to acknowledge each other's existence and, in many cases, develop
new working partnerships that will benefit the services provided to
Medi-Cal beneficiaries. In summary, the Geographic Managed Care
model provides a healthy partnership between pubic and private
providers.
Under the Geographic Managed Care model, the Department will
award a sufficient number of contracts to providers to cover the
county's Medi-Cal population through managed care. Each contractor
will assume at least some financial risk, and will agree to provide
health care services for a capitated rate. Contractors will be
selected based on their ability to assure adequate access, and to
provide cost-effective, quality health care services in a
culturally competent manner.
State development of a;;Geographic Managed Care (GMC) project in
Sacramento County has provided a good opportunity for identifying
and addressing start-up issues inherent in such approaches. As a
result, the State will:
o provide timely and adequate information to potentially
affected parties about the State's intent to develop a geographic
managed care system in an area, and allow parties with comments or
concerns a reasonable opportunity to be heard.
O encourage and expect local collaboration by all in the
development of GMC systems.
o seek contractors who are prepared to work with county-
operated categorical, preventive and medical care services programs
to minimize short-term disruptions in those programs.
O develop a practical approach to encourage the integration
of other categorical programs, such as California Children's
Services (CCS) , Child Health Disability Prevention (CHDP) , and
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Nbnaged Care Strategic Plan Page 13
Family Planning services into managed care plans in an effective
manner.
O anticipate that county Short/Doyle programs will continue
to be operated by the counties and that Njedi-Cal managed care plans
will not be delegated this function. However, special efforts on
the part of county providers and managed care plans will be
required to coordinate medical, mental health and substance abuse
treatment into an effective continuum of care.
O Ensure that county welfare departments are kept informed of
implementation issues that affect them.
E. COMPETITIVENESS
In order to ensure the effective and efficient implementation
of Medi-Cal managed care, the Department will evaluate contracts on
the basis of competitiveness. Competitiveness does not necessarily
mean selecting the lowest bid in all cases, however.
Competitiveness will be evaluated as the relationship between the
bid price for specified services and the ability of the prospective
bidder to meet criteria for access and quality of care.
Specifically, all prospective contractors for managed care will be
required oto demonstrate their competitiveness in all three of the
following areas:
Cost: All contractors, public and private, must recognize that
until a negotiated rate system is in place, they will receive rates
that are equal to those received by other, existing Medi-Cal
managed care contractors. To assure competitiveness, the
Department will require that in counties in which county-wide
health consortia are developed, at least 20 percent of the Medi-Cal
beneficiaries in that county be enrolled in independent, non-
governmental managed care plans. This will allow the Department to
establish a benchmark for comparing the experience and costs of
managed care systems operated by the consortium (which accepts the
risk from the State for all county Medi-Cal recipients) and the
experiences and costs of individual, private managed care entities.
Quality: The Department will insure that all contractors meet
existing service delivery quality standards. Further, the
Department intends to phase in gradually, where demonstrated to be
DRAFT DOCUMENT
iP
Ntnaged Care Strategic Plan Page 14
cost-effective, more comprehensive preventive and primary health
care standards and data requirements, and these will be applied
equally across all contractors.
Access/Capacity: Contractors will be required to demonstrate
their accessibility to Medi-Cal beneficiaries in total capacity,
including medical personnel, facilities, referral networks and
other current measures, and in cultural and linguistic competence,
according to current and new measures which will be phased in
gradually over the next several years.
F. REQUIREMENTS TO SUPPORT TRADITIONAL AND SAFETY NET
PROVIDERS PARTICIPATING UNDER BOTH HEALTH CONSORTIA AND
GEOGRAPHIC MANAGED CARE
The state is sensitive to the unique role that safety net
providers and traditional providers play in the care of vulnerable
populations, and to the potential difficulties some providers may
face as the state transitions to a managed care environment. In
order to preserve existing clinical relationships between providers
and patients, and to retain providers who are familiar with and
interested in caring f,or _Medi-Cal beneficiaries, it is imperative
that safety net and traditional providers, with appropriate
support, begin this transition and make the commitment to develop
and work within organized health delivery systems. For this
reason, the state will assist in ensuring that these providers are
given reasonable opportunities and assistance to participate in the
transition to managed care in counties where health care consortia
and Geographic Managed Care are implemented.
Thus, the Department will require that consortia and GMC
contractors:
1. Provide a reasonable opportunity for those providers who have
historically served the Medi-Cal population--primary care
providers, community clinics, and disproportionate share hospitals-
-to participate in the managed care plan, as evidenced by good
faith attempts' to negotiate for their participation. Good faith
negotiations are assumed to include offering rates that are the
equivalent of rates offered to all other providers of the same type
by that plan (e.g. , physicians, clinics, home care, etc. ) . Plans
DRAFT DOCUMENT
Nbnaged Care Strategic Plan Page 15
must also comply with the federal requirements regarding the
participation of Federally Qualified Health Centers (FQHC) and
providers of family planning services and supplies which allow
beneficiaries to receive out-of-plan services from these entities.
The Department hopes that in the majority of cases the plans will
make arrangements with health centers and family planning clinics
which will draw them into full participation in managed care
arrangements.
2. Ensure that both health consortia and GMC contracts
incorporate those local providers who traditionally serve the Medi-
cal beneficiaries, to the extent they demonstrate their
competitiveness using the cost, quality, access and cultural
competency criteria outlined in this plan.
3 . Maintain disproportionate share hospital days at no less
than 80 percent of the previous year's days, for a two year period.
It is in the interest of the State, the counties, hospitals in the
state, and of Medi-Cal beneficiaries and the medically indigent to
maintain the maximum federal participation in the Medi-Cal program
through disproportionate share payments. A total of approximately
$800 million in federal payments come to California through the
system of intergovernmental transfers established in S.B. 855. It
is the intent of the State to maintain these federal contributions
while continuing to allow changes over time in the disproportionate
share status and payments for specific hospitals. However, it
should be recognized that SB 855 funding is a declining revenue
source over time, based on federal regulations governing the DSH
program.
The State will require health consortia to arrange hospital
contracts in each county adequate to maintain total
disproportionate share hospital (DSH) days in that county at no
less than 80% of their DSH days in the previous year, for a period
of two years. The 80% requirement will be enforced on a county-
wide basis. Health care consortia will not be required to contract
with hospitals that do not participate in the Selective Provider
Contracting Program.
In GMC counties, the contracts for managed care will be
coordinated to provide disproportionate share hospitals with 80% of
DRAFT DOCUMENT
IVhnaged Care Strategic Plan Page 16
their DSH days in the previous year. In GMC counties, the 80.E
requirement will be enforced on a hospital-specific basis.
VII. REVIEW OF DEPARTMENT'S MANAGED CARE PROGRAMS' AND HOW THEY
WILL BE AFFECTED BY THIS STRATEGIC PLAN
Other activities to support the expansion of Medi-Cal managed
care have been ongoing since the early 1970s. Included in these
activities have been provision of technical assistance to
prospective contractors, assisting in the development of COHS,
development of a GMC pilot project in Sacramento County, expansion
of PCCM and PHP enrollments and related special projects.
A. TECHNICAL ASSISTANCE
Technical assistance to prospective managed care contractors
routinely includes:
* Providing in-depth training on Medi-Cal's pre-service
approval requirements;
* Involvement of State medical professional resources to
assist prospective contractors to develop an
appropriate quality assurance/peer review plan and
utilization review policies and procedures;
* Providing assistance in assuring that managed care plan
facilities meet State and local standards
Over the past year, Medi-Cal managed care contract development
staff have responded to numerous inquiries from county hospitals
and health departments, rural and community health centers and a
variety of other safety net and other private providers expressing
interest in Medi-Cal managed care contracting.
The Department is in the process of conducting a series of
eleven technical assistance workshops to assist prospective
contractors meet the required elements of a Medi-Cal managed
contract under the Geographic Managed Care pilot project in
Sacramento County. These highly praised and well-attended
workshops were originally designed for Geographic Managed Care
participants, but because of their relevance to all aspects of
Medi-Cal managed care proposals, they have been opened to
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K/bnaged Care Strategic Plan Page 17
accommodate a wide variety of other interested parties throughout
the State. The sessions are being videotaped and will be available
in the future for review by all prospective contractors.
B. COUNTY ORGANIZED HEALTH SYSTEM (COHS)
Under a COHS, a local agency, with representation from
providers, beneficiaries, local government, and other interested
parties, is created by a county Board of Supervisors to contract
with the Medi-Cal Program. Operating under a federal Medicaid
freedom of choice waiver, the COHS administers a comprehensive,
case managed health care delivery system including utilization
control and claims administration which delivers Medi-Cal covered
health care to all Medi-Cal residents of the county. Beneficiaries
are given a choice of managed care providers and do not have the
option of obtaining Medi-Cal services under the traditional fee-
for-service system unless so authorized by the OOHS.
County Organized health Systems currently exist in San Mateo and
Santa Barbara counties. Federal law allows the Department to enter
into negotiated, capitated, at-risk contracts with three new COHS
projects. Orange, Santa Cruz and Solano Counties have been
designated for development. The target start date for the Solano
County program is January 1, 1994 . The projected start dates for
the Santa Cruz and Orange County programs are July 1994 and
December 1994 , respectively. These three COHS are estimated to
affect up to 300,-000 Medi-Cal beneficiaries. Under .current
federal law, the Department is precluded from creating any
additional COHS.
C. GEOGRAPHIC MANAGED CARE PILOT PROJECT (GMC)
Sacramento county was selected for the development of a
Geographic Managed Care pilot project. Under GMC the Department
enters into negotiated rate contracts with managed care plans to
cover the entire AFDC-linked population in a geographic area on a
mandatory enrollment basis. Aged, blind and disabled beneficiaries
may voluntarily enroll in one of the managed care plans or choose
to obtain their health care through the fee-for-service system.
Beneficiaries are provided a presentation on the available plans
DRAFT DOCUMENT
w
IVbnaged Care Strategic Plan Page 18
and are asked to indicate their choice for receiving Medi-Cal
services. GMC provides..!a more stable operating environment for
managed care plans with more predictable Medi-Cal membership
volumes and with a significantly reduced need for marketing, with
its associated costs, than is currently experienced in other Medi-
Cal managed care enrollment programs.
Since HCO will be the primary method for enrolling
beneficiaries, there will be no door-to-door marketing and
enrollment and disenrollment of beneficiaries will be closely
monitored. In addition, plans contracting with the Department in
GMC counties will bear risk commensurate with their organizational
structure, i.e. PCCMs will have limited risk and PHPs will have
full risk.
In Sacramento County, the first pilot GMC county, thirty-two
health care entities have submitted an Intent to Contract and have
been provided applications for program contracts which are to be
submitted by January 22 , 1993 .. The application packages describe
the elements necessary for providers to ensure access to and
provision of Medi-Cal covered health care services to Sacramento
County Medi-Cal eligible beneficiaries. Enrollment of
beneficiaries in this project will occur in January 1994.
D. PRIMARY CARE CASE MANAGEMENT
The Primary Care Case Management (PCCM) contracting program
offers individual physicians, physician groups, clinics, and other
qualifying primary care providers the opportunity to enter into
Medi-Cal managed care contracts. Under PCCM arrangements,
contractors provide and assume risk for physician and selected
outpatient services and case management of inpatient and other
services on a non-risk basis. The PCCM contractor is paid at 95%
of the fee-for-service equivalent. Contractors share in program
savings produced by these case management efforts through a savings
sharing agreement. In order to facilitate the participation of
providers interested in entering into managed care arrangements
with the Medi-Cal Program, PCCM contracts are not subject to the
Knox-Keene Act under which comprehensive commercial health care
plans are regulated.
DRAFT DOCUMENT
Nbnaged Care Strategic Plan Page 19
PCCM contracting had experienced accelerated growth in FY 1991-
92 and continues to do so in FY 1992-93. Under State law, one-time
contract development loans of up to $100, 000 are available each
year to non-profit organizations committing to enter into PCCM
contracts in counties where there are no existing PCCM contractors.
The loans are intended to provide "seed" money to non-profit
providers to develop PCCM projects in areas which may have access
problems.
The PCCM program is intended to provide a transitional model for
providers to gain experience in managing patient care in a managed
care environment with limited risk. It is expected by the
Department that PCCMs, over time, will gain the experience
necessary to convert to full risk PHPs.
E. PREPAID HEALTH PLAN CONTRACTING: THE CAHMO AGREEMENT
The Department has had a continuing interest in contracting with
additional comprehensive prepaid health plans and health
maintenance organizations to enroll and provide services to Medi-
Cal beneficiaries. The Department recognizes that these plans have
Y the ability to bring a wealth of experience in developing and
implementing managed care systems to the Medi-Cal Program,._ Under ,
an agreement between the Department and the California Association
of HMOs (CAHMO) in July of 1992 , nineteen commercial HMOs have
submitted proposals to develop new or expanded PHP contracts. This
agreement provides the Department with not only the ability to
expand the enrollment of beneficiaries into experienced, quality
mainstream health care providers, but, it also includes the desire
of CAHMO to provide technical assistance to other managed care
plans. The Department has been working with the HMOs to prepare
for operation of the new or expanded contracts in early 1993 .
These CAHMO proposals are expected to provide cost-effective
managed health care access to over 200, 000 additional Medi-Cal
beneficiaries.
F. PCCM AND PHP EXPANSION: THE CAPH PROPOSAL
The California Association of Public Hospitals (CAPH) also
responded during the summer of 1992 to the Department's interest in
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Ntnaged Care Strategic Plan Page 20
expanding managed care for Medi-Cal. These discussions culminated
in a proposal from the CAPH on August 7, 1992, which represented
the interest of county Boards of Supervisors, county health
directors and county hospital administrators in the development of
managed care systems over the next 18 to 24 months. A total of 16
counties stated their intention to form County Organized Health
Systems or county-wide PCCMs within 18-24 months. All 11 of the
designated "A" counties are members of CAPH and have expressed an
interest in creating managed care plans. The Department has been
working with and providing technical assistance to a number of
these counties.
G. SPECIAL PROJECT ACTIVITIES
The Department is continuously developing new managed care
programs or pilots to test for better ways to assure that
coordinated, culturally competent care is provided to identified
populations to improve their health status and avoid unnecessary
costs. In addition, to gain greater experience in managing the care
of chronic and catastrophic high cost users, the Department will
conduct managed care pilot projects to develop the cost data and
protocols necessary to move large numbers of our highest cost
recipients into capitated agreements: Some of these pilot programs
include:
1. MEDICAL CASE MANAGEMENT OF HIGH COST INDIVIDUALS
The Department intends to continue to augment its current
utilization control programs with more extensive case
management of high cost users within the population remaining
in the fee-for-service care for the next several years. We
believe this effort is appropriate as approximately 17% of the
Medi-Cal populations uses 80% of the total Medi-Cal dollars,
excluding costs for long term care.
Additionally, the Department will continue to develop and
conduct pilot projects for capitated or savings sharing
agreements under which special populations will receive medical
case management (i.e, programs for patients with AIDS, severely
disabled individuals, persons with major brain and spinal chord
injuries. ) When possible, the Department will seek to maintain
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Nhnaged Care Strategic Plan Page 21
both financial and program involvement by current non-Medi-Cal
funding sources in order to coordinate a comprehensive set of
benefits for these individuals.
2 . FEE-FOR-SERVICE CASE MANAGEMENT
For the next several years, a substantial proportion of the. ,
Medi-Cal population will remain in fee-for-service care. To
improve the coordination of their care, and provide them with
better access to, and continuity of care, the Department will
explore models of "fee-for-service managed care". Most of
these models will pay increased rates or an incentive payment
to primary care physicians for the management of ambulatory
care services. These increased rates are paid from savings
generated by the case management aspect of fee-for-service case
management. The Department will pursue the opportunity to
implement a Fee-For-Service Case Management model in rural
areas. By June 1994, the Department intends to enter into one
or more pilot projects with community clinics and private
providers in rural counties to test the merits of this model.
The Department views this model as a transition to capitation
and will place a time limit on how long a contractor can
participate under this model before moving into at least a
partially capitated arrangement.
The Department has incorporated major enhancements of its
claims processing and management information systems to support
this design into the recently awarded fiscal intermediary
contract. Streamlined claims processing systems and technical
assistance for providers will be included as incentives for
provider participation.
3 . COMMUNITY PILOTS
The Department will continue to review proposals that come
in from community and provider organizations to meet the
special needs of their clients. The potential of such
proposals to improve systems of care will be measured against
their complexity in determining whether or not the Department
can provide the technical assistance and other resources
required to undertake a pilot demonstration. This
determination will be made on a case by case basis.
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Nhnaged Care Strategic Plan Page 22
4. FOCUSED PROJECTS FOR MANAGING THE CARE OF DUALLY
ELIGIBLE POPULATIONS
Many of the most vulnerable populations in Medi-Cal are
persons who are dually eligible fQr Medicare and Medi-Cal,
including the frail elderly, and persons who are blind or
disabled. Generally speaking, these individuals receive their
care through fee-for-service programs, where their care remains
episodic and uncoordinated. The Department's alternatives for
managing the costs of dual-eligible beneficiaries are limited
because of Medicare's obligations to pay for hospital inpatient
costs.
The Department is exploring the possibility of entering
into a partnership with the federal government to support a
special demonstration project in this area. Under capitated
and shared savings arrangements with Medicare, the Medi-Cal
program would provide and/or arrange for coordinated services,
_including medical case management. of these individuals in order
to avoid unnecessary and more costly institutional days. As
part of this effort, the Department will continue to pursue
replication of the Programs of All Inclusive Care to the
Elderly (PACE) e.g. On Lok, and other means of providing
comprehensive, life long, medical arrangements for this
population.
H. HEALTH CARE OPTIONS (HCO)
In recent years, Health Care Option (HCO) presentations have
been provided to new Medi-Cal beneficiaries as part of the
eligibility determination and redetermination process in counties
with Medi-Cal managed care contracts. Managed care has not been
emphasized . as a preferred option, and the beneficiary has been
asked to choose between fee-for-service or enrollment in a managed
care plan. Failure to choose resulted in automatic "default" to
fee-for-service and receipt of a monthly Medi-Cal card.
Legislative changes , in 1991 (AB 336) required that HCO
presentations emphasize managed care as the preferred choice for
the delivery of Medi-Cal services, and educate the beneficiary as
to the nature of managed care and how to receive services under
DRAFT DOCUMENT
PAnaged Care Strategic Plan Page 23
this system. The default option was to enroll beneficiaries into
managed care. SB 485, mandates that: 1) beneficiaries must attend
HCO presentations and make a written choice; and 2) counties must
ensure that beneficiaries attend the presentations. Beneficiaries
who select fee-for-service care will be required to identify a
primary care provider. Failure to attend or to make a written
choice will automatically result in the beneficiary's assignment or
"default" to a managed care plan. Plan assignment will be done on
a rotational basis among the available plans with regard to
cultural issues and geographic access. The HCO presentations will
be substantially expanded and improved in order to support
beneficiary understanding of managed care plans and choices among
them.
This shift in emphasis to managed care is intended to improve
access to preventive medical care for beneficiaries, and to enable
the state to generate enrollments in managed care plans without
reliance on door-to-door marketing. These practices have often
been problematic and have occassionally resulted in abuses, such as
misrepresentation, and selective enrollments and disenrollments.
Door-to door marketing will be eliminated in each county shortly
after the revised HCO system is in place.
The Department plans to implement the HCO expansion effort
beginning approximately March, 1993 in Los Angeles County and
expanding eventually to all counties which have existing managed
care plans. HCO will be provided in all areas expanding into
managed care.
Revised HCO presentations, to be done by private contractors,
will help beneficiaries to understand and utilize managed care more
effectively, and will also reduce the current demand on county
welfare departments and managed care plans to educate beneficiaries
and resolve problems.
Every effort is being made to ensure that beneficiary freedom
of choice is protected under this process with appropriate
referral, explanation of alternatives and consequences and
documentation of these efforts. Furthermore, before any assignment
to a health plan is finalized, a 30-day window of opportunity,
following the date of HCO referral, will be provided to all
DRAFT DOCUMENT
Nfanaged Care Strategic Plan Page 24
assigned beneficiaries with notification regarding how to reverse
this process and choose other options should they wish to do so.
Only AFDC aid codes for intake cases will be initially affected,
with redetermination cases phased in later. All other aid code
beneficiaries, such as aged, blind and disabled, will be allowed
voluntary enrollment into managed care plans. Non-English, non-
Spanish speaking populations will be provided HCO presentations and
defaulted into managed care, only when appropriate coordination can
be made with interpreter liaisons and with plan providers competent
in their languages. In all cases, assignment will be toproviders
within a reasonable radius of the residence address. Since
assignment is on a rotational basis, no plan should receive a
disproportionate share of high cost beneficiaries and no disruption
in medical services should occur. Family cases will be assigned to
the same managed care plan unless there is a request or reason to
do otherwise, such as to accommodate a family member who is case-
managed by California Children's Services.
VIII. ASPECTS OF MANAGED CARE THAT REQUIRE FURTHER DEVELOPMENT
A. PREVENTIVE HEALTH CARE SERVICES
The public and private health care sector have recognized the
value of providing preventive health care services as a method of
reducing unnecessary illnesses and expenditures in both the short
and long term. This has resulted in a greater willingness to work
in partnership in developing common definitions of what constitutes
appropriate preventive care and what data must be captured to
enable long term evaluation of the effectiveness of these services.
The Department has a work group reviewing the current state of the
art in clinical preventive health care services, reviewing current
standards for managed care . plans and developing consensus on
standards that can be recommended for integration into managed care
programs. It is anticipated that by March 1993, the
recommendations of the work group will be released for public
comment. The Department intends to insure that the final
recommendations of the group are phased into Medi-Cal managed care
programs as their cost-effectiveness is demonstrated.
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The State also recognizes the need to assure that Medi-Cal
beneficiaries have access to adequate health care. To achieve this
balance, the Department will do the following:
* Institute more focused monitoring and enforcement of
current quality assurance and preventive health care
requirements by June 1993.
* Evaluate the extent to which providing more complete
clinical preventive health services effects provider costs
and propose a plan for the staged incorporation of
services that are deemed cost-effective.
* Over the period June, 1993-June, 1994 pilot the provisions
of technical assistance to contractors to emphasize
preventive health care and medical case management,
techniques that will produce identifiable cost savings.
B. DATA REPORTING REQUIREMENTS.
Data reporting requirements for managed care contractors will
need to be revised to insure that the Department obtains the data
necessary to evaluate the effect of all services, provided in a
managed care context, on the health status of Medi-Cal
beneficiaries. Under current plans, most of the encounter level
data is not readily available. Therefore, the Department, in
consultation with managed care contractors, intends to explore
options for developing a set of minimum data reporting requirements
that would be standardized for all Medi-Cal managed care contracts.
Specific minimum data the Department will consider includes a
unique patient identifier, provider and contractor identification,
traditional (and in many cases expanded) encounter level data,
diagnostic and outcomes data and indicators of patient satisfaction
and access. This type of data would enable the Department to exert
more effective oversight of managed care plans. In the long-term,
the Department would like to develop a uniform and integrated
reporting system for all Medi-Cal programs, as cost-effectiveness
is determined.
The Department is interested in exploring the feasibility of
requiring outcome measurement reports based on encounter data to
monitor the effectiveness of the services provided by managed care
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contractors as a whole.
The substantial progress that was made this year in the area of
uniform claim forms and related data elements, will assist -the
Department in developing options for managed care data systems.
The Department expects to phase in these data requirements
beginning in the Spring and Summer of 1993 . The Department will
also be redirecting resources to make better use of data already
reported by managed care contractors and California's Medicaid
Management Information System (CA-MMIS) to describe and evaluate
the Medi-Cal managed care program, which should be accomplished by
December 1994 .
C. RATE METHODOLOGY
The Department of Health Services intends to establish
negotiated rates and/or competitive bidding as the rate setting
methodology for Medi-Cal managed care programs in closed geographic
areas. Currently rates are negotiated for OOHS and GMC and
actuarially determined for all other plans.
Rates paid to managed care plans have been based primarily on
the average cost of Medi-Cal beneficiaries in the fee-for-service
system. As larger parts of the State transition into managed care,
fee-for-service comparable costs will be more difficult to
estimate. In order to obtain a benchmark for negotiations, the
Medi-Cal program will need to develop a new actuarially based
methodology for assessing the range of reasonable costs for the
provision of managed care services in geographic areas. For
example, the Department must have an actuarial assessment of the
cost of providing Medi-Cal services to ensure that prospective
contractors submit realistic bids.
The timing for changing the rate setting process will include
initiating needed actuarial studies by January 1993; reaching
agreement on interim rate methodologies by May 1993 , introducing
any needed State legislation by June 1993 , implementing interim
rate methodologies in October 1993 and 1994 ; adopting State
regulations and submitting federal waiver requests or state plan
amendments by January 1995; the California Medical Assistance
Commission (CMAC) opening negotiations and/or bidding by March
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1995; and implementation of new rates by October 1995.
D. CULTURALLY COMPETENT SERVICES
The growing ethnic and cultural diversity of California's
population and the cultural identity of its health care providers
and public health workers has been a source of concern to public
health leaders throughout the State. Despite efforts to increase
the recruitment and retention of minority health workers in many
settings, this gap has continued to widen. A great deal has been
written about the need for more culturally sensitive or more
recently, "culturally competent" interventions, including health
education and diagnostic and therapeutic services. As a working
definition, "cultural competence" means the capacity of individuals
or organizations to effectively identify the needs and preferences
of target populations; to design programs, interventions, and
services which effectively address those needs; and to evaluate and
contribute to the ongoing improvement of these efforts.
It is essential, however, that services provided by all types
of managed care plans be required by contract to adhere to broader
standards of cultural competency. This will lead to positive
health outcomes for California's diverse ethnic population by
enhancing health education, prevention, prevention and case
management services offered by managed care plans. The Department
will work with health care providers and community organizations to
develop methods to reflect these broader standards. The Department
plans to phase in . more detailed requirements for cultural
competency in 1993 .
E. INTERFACE BETWEEN PUBLIC HEALTH PROGRAMS AND MEDI-CAL
MANAGED CARE
It is essential that both counties and the State continue to
provide population-based public health services. Measurement and
assurance of the availability, timeliness and effectiveness of
prevention and treatment services under managed care arrangements
will present new challenges for these efforts.
Population-based public health services include activities
directed at preventing illness, injury or death, both among the
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population at-large and in special targeted communities. Principal
population-based public health activities are typically categorized
as assessment, policy development and assurance.
Assessment includes ongoing data collection and surveillance
information on the health status of the population and of the
utilization, cost and quality of health care services provided.
Assessment also includes data analysis and other research to
identify underlying reasons for health problems and barriers to
remedying them.
Population-based health policy development refers to the need
to develop and revise policies to improve the health status of
Californians, including the establishment of guidelines for needed
services and standards of care for providers.
Assurance addresses the need to protect populations and
guarantee that established standards and minimum prevention and
service requirements are met. These responsibilities include
disease prevention and health promotion, quality assurance and
assuring access to care. These responsibilities also include
assuring that culturally competent health care systems and
providers are promoted and supported and that appropriate training
and technical assistance is provided to traditional providers in
the transition to managed care.
New relationships and roles , will have to be defined and
developed carefully so that Medi-Cal managed care arrangements
complement local public health efforts to maintain and improve the
health status of Medi-Cal beneficiaries.
F. COMPREHENSIVE MODELS VS. CARVING OUT SPECIFIED SERVICES
Consistent with the goals articulated in the recently-released
AB 99 Report, the Department's vision for managed care is an
integrated system where the basic Medi-Cal benefit package is
coordinated with the array of services that are currently only
available through categorical or special waiver- programs. While
the majority of beneficiaries enrolled in managed care plans will
only need to draw upon the basic benefit package, there are others
whose health care needs demand a broader array of services.
The Department intends to explore options for effectively
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coordinating Medi-Cal managed care services with those available
through programs such as California Children's Services (CCS) and
Child Health Disability Prevention (CHDP) . In order to facilitate
a high level of coordination, the Department will:
1. Enlist the assistance of the Department's Maternal and Child
Health Branch to help develop guidelines and protocols to
refine the standards and procedures used to monitor and audit
managed care providers. These standards will lead to reducing
costs by providing medical services at the most appropriate
setting for the beneficiary.
2 . Enlist the assistance of representatives from other
Department programs such as CCS and CHDP, which have previously
been available as consultants to Medi-Calls contract monitoring
staff and to our managed care providers. Current Department
efforts are bringing staff from these categorical programs
directly into work on managed care expansion.
The Department will pursue the following specific objectives in
its effort to insure the integration of traditional public health
services with managed care expansion in Medi-Cal, consistent with
the recommendations contained in the AB 99 Report:
a. CALIFORNIA CHILDREN'S SERVICES (CCS)
The Department's concern for Medi-Cal children participating in
managed care is that they have the opportunity to receive the level
of specialized services provided under the CCS program and at the
same time obtain the benefit of coordinated care, including acute
care in a hospital and primary care services in the community.
State CCS staff will develop criteria specifying the pediatric
conditions appropriate for coordination and provision by the
contractors' primary care physicians. Additionally, services will
be defined for which the primary care physician will be required to
utilize CCS panel providers as specialist referral sources. CCS
staff will also assist in the development of quality assurance
criteria and procedures for the review of the care provided to this
population by managed care contractors and will participate in the
quality of care audits as well.
The Department will continue to explore a range of models to
determine the best approach for bringing together primary and
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preventive services and the benefit packages afforded by CCS. Some
models may continue to reimburse CCS level services outside while
others may incorporate full risk for all services.
b. FAMILY PLANNING PROVIDERS _
Under Medicaid statutes, Section 4113 (c) , the right of
individuals to choose a provider for family planning services may
not be restricted,. The Department is anxious to assure the
continued availability and use of family planning services to our
beneficiaries, and at the same time wishes to move toward a
comprehensive approach to managed care that would incorporate all
personal health care services--including family planning--within
the capitated fee. With this in mind, the Department is requesting
that applicants who wish ..to provide managed care services develop
models that incorporate traditional providers of family planning
services, either as specialty referrals from the managed care
system or as direct services operated by the managed care system.
The Department does not plan to request a federal waiver from the
requirement that Medi-Cal reimburse for any family planning
services provided outside of managed care contracts.
C. DENTAL SERVICES
Comprehensive managed care contractors (PHPs/HMOs/PCCMs) have
traditionally been given the option of including dental services in
their benefit package. However, the department does not envision
the inclusion of adult dental services in managed care plans in the
future, given the Governor's budget proposal to eliminate this
optional benefit. To the extent that dental services continue to
be reimbursed as a Medi-Cal benefit, the Department will continue
to pursue models which would integrate medical and dental services
into a comprehensive package of benefits. Proposals currently
under development for dental health care will be reviewed on a
case-by-case basis to determine their potential for integrating
dental services into a comprehensive benefit package.
d. MENTAL HEALTH SERVICES
The goal of the Department is to coordinate mental health and
physical health care services to individuals with chronic mental
health care needs. Those systems that, include the chronically
mentally ill should also accommodate the dually-diagnosed who
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Nbnaged Care Strategic Plan Page 31
require drug or alcohol treatment.
The Department intends to modify its current contractual
arrangements with all managed care providers. Managed care
contractors will continue to be required to coordinate the mental
health, and physical needs of their members by including
considerations for mental health services in their health
assessments. However, the Department plans to restrict the mental
health services provided and paid for by managed care contractors
to those which are preventive and episodic (not chronic) . The
Department, in conjunction with the Department of Alcohol and Drug
Programs and the Department of Mental Health, is interested in
pursuing managed care programs for persons who are both chronically
mentally ill and drug or alcohol addicted.
The Department is particularly interested in pursuing a model
that would require that when assessments or events support a
diagnosis that the managed care plan member is in need of acute or
intensive long-term mental health treatment, the plan would be
required to refer the patient to the county Short-Doyle program. In
addition, the plan would be required to consult with the Short-
Doyle provider to assure easy access for the patient, and to ensure
appropriate coordination of care. Services provided by the Short-
Doyle provider would be billed through the Short-Doyle/Medi-Cal
program and would not be part of the financial obligation of the
plan. This proposal appears to be consistent with the proposal
recently developed by the California Mental Health Director's
Association (CMHDA) , which supports the development of a managed
care Short-Doyle system. The Department will continue to work
closely with the Department of Mental Health and the CMHDA, and
other mental health providers and constituents, in defining the
services that should be provided and paid for through the Short
Doyle Program and how to identify those services in the Medi-Cal
Claims Data for the purpose of rate development.
e. CALIFORNIA SCHOOL LINKED SERVICES
The Department has submitted a state plan amendment
requesting approval by the federal Health Care Financing
Administration to initiate a Medi-Cal School Linked Provider
Category. This will enable local education agencies to claim for
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medically necessary Medicaid covered services which are frequently
provided to eligible children in the school setting. Comprehensive
school linked services will include health and mental health
evaluation and education, physical ther4py, occupational therapy,
speech/audiology, psychology, nursing and school health aide, and
medical transportation. These services will be available to
students in special education as well as to non-special education
students.
The Department is interested in pursuing models in which
medical services for special education students continue to be
provided through the local education agencies. Under this model,
the local education agency would enter into a linkage arrangement
with the plan for the provision of care to non-special education
students, and would either bill the plan or refer the student to
the plan.
The Department has identified areas in which school linked
services programs under the state's Healthy Start program are
becoming operational in areas in which managed care plans are
present or are being targeted for development. The Department will
work with HCFA and with each county to develop appropriate models
for integration of school linked services with managed care
principles of continuity and coordination of care.
f. FOSTER CHILDREN
The Children's Services program of the Department of Social
Services has recently emphasized attempts to place children in
proximity to their natural parents. This policy has helped to
reduce the number of instances in which a child is required to
enroll in a new plan when he/she changes placements by keeping the
child in the original plan's service area. Enrollment in managed
care plans also helps to ensure continuity of health care as a
child moves from one placement to another.
Some counties are now developing alternative models for the
management of health care and other services which have the
potential to provide a much more comprehensive benefit package in
coordination with a broad range of support services. The
Department will work closely with children's services programs and
county social services agencies to support these experiments and to
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determine the best approach to assuring access to health care for
the foster children in each county.
IX. ROLE OF THE CALIFORNIA MEDICAL ASSISTANCE COMMISSION (CMAC)
CMAC's role in the rapid expansion of managed care includes the
following:
1. Using its extensive knowledge of hospital . and general
health care delivery systems throughout the state to help
shape the course of managed care implementation.
2 . Assisting the Department in determining the geographic
areas best suited for development of organized health care
delivery systems.
3 . Negotiating contracts with managed care contractors within
an area that is identified to be closed exclusively to
managed care providers.
4 . Negotiating with hospitals within designated closed areas
in support of managed care.
X. WAIVERS OF FEDERAL STATUTORY REQUIREMENTS OR STATE PLAN
AMENDMENTS
The Department can proceed to implement health consortia without
federal statutory change, although, federal waivers will be
required. The Department will also seek waivers or state plan
amendments of federal statutory requirements in order to permit
"lock-in" of Medi-Cal beneficiaries for a maximum of one year in
all managed care programs, including non-federal, state-certified
health maintenance organizations (HMOs) . Although the State
recognizes the value .of guaranteed eligibility of beneficiaries in
managed care plans, our current fiscal constraints do not allow us
to pursue its implementation at this time.
XI. SUMMARY
This document is intended to let all Medi-Cal program "stake-
holders" including beneficiaries, providers, the public, and the
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Nhnaged Care Strategic Plan Page 34
Legislature know the course this Department plans to pursue in its
expansion of managed care programs. The way in which managed care
programs are pursued can and will have a significant impact on the
delivery of health care in local areas, and will affect, and
hopefully facilitate the development of, local health delivery
systems. Accordingly, this document in "DRAFT" form is being
disseminated to the widest possible audience to solicit your
comments prior to making final decisions.
Because significant numbers of Medi-Cal beneficiaries were
expected to be enrolled into managed care programs as part of the
budgetary process, we need to move quickly to implement this
strategic plan. To facilitate the receipt of comments, the
Department in conjunction with the California Medical Assistance
Commission, is holding five public meetings.
Those persons who provide comments at these public meetings are
also encouraged to provide written summaries of their statements to
facilitate their collection and analysis.
Those not able to attend either of these meetings may direct
your comments, in writing, to Mr. Jim Parks, Chief, Medi-Cal
Managed Care Division, no later than February 1, 1993. Your
written comments should be addressed to him at 714 P Street, Room
650, Sacramento, CA, 95814 : His fax number is (916) 654-6260.
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