Introduction

Background

The federal Medicaid program provides funds to states to pay for the medical treatment of low-income individuals including families with children. The federal Centers for Medicare & Medicaid Services (CMS) administers the Medicaid program by approving state plans, reviewing state-reported expenditures, measuring access to health care, and providing other assistance and oversight. California participates in the federal Medicaid program through its California Medical Assistance Program, known as Medi-Cal. The program, overseen by the Department of Health Care Services (DHCS), provides a safety net of health care services, including preventive services for eligible children. According to DHCS, as of December 2017 over 5.5 million children—more than half of all children in California—were covered by Medi-Cal.

The State provides Medi-Cal benefits through two delivery systems: fee-for-service and managed care. Under fee-for-service, health care providers bill DHCS directly for approved services they provide to eligible beneficiaries. In managed care, DHCS pays a managed care plan (plan) a monthly capitation payment (premium)—a set amount per person covered—and the plan contracts with providers to deliver services for eligible beneficiaries. From December 2013 through June 2018, the number of children who were enrolled in these plans in California increased by 733,000, or 18 percent, while the number of children in the fee-for-service model decreased by 226,000, or 29 percent. As shown in Figure 1, managed care currently covers 90 percent of children in Medi-Cal. According to the chief of DHCS’ Managed Care Quality and Monitoring Division (monitoring chief), DHCS has transitioned away from fee-for-service for several reasons, including cost-effectiveness, accessibility, and direction from the Legislature.

Figure 1
DHCS Oversees Two Medi-Cal Delivery Systems for Providing Care

A chart showing the roles and responsibilities of various entities involved in the delivery of care to children enrolled in Medi-Cal.

Source: DHCS' 2018 pediatric dashboard website.

* As of June 2018.

A Selection of Services in the
Bright Futures Periodicity Schedule

SERVICE CATEGORY	PREVENTIVE SERVICE
Measurements	• Height and weight • Head circumference • Body mass index • Blood pressure
Sensory screening	• Vision • Hearing
Developmental health	• Developmental screening • Autism screening • Behavioral assessment • Drug use assessment • Depression screening
Physical examination
Procedures	• Tuberculosis testing • Immunization • Anemia screening • Lead risk assessment
Oral health	• Fluoride varnish • Fluoride supplementation

Source: Bright Futures Periodicity Schedule from the American Academy of Pediatrics.

Medi-Cal's Preventive Health Care for Children

Federal law requires state Medicaid agencies to provide early and periodic screening, diagnostic, and treatment (EPSDT) services to children under 21 years of age in accordance with a schedule that specifies reasonable standards for child health care. To comply with the requirement, DHCS adopted the American Academy of Pediatrics’ Bright Futures recommended schedule of care (Bright Futures), which includes various health screenings, vision and hearing testing, and dental care, as further highlighted in the text box. EPSDT services are designed to ensure that children receive early detection and care so that health problems are averted or diagnosed and treated as early as possible. For their children to receive preventive services, parents or guardians of eligible children must first enroll the children in Medi-Cal. Under managed care, they choose a plan and then select a primary care physician from the plan’s network who will provide care and coordinate any needed referrals to specialists. Under fee-for-service, parents or guardians can select any Medi-Cal-approved provider.

To assess the quality of care provided through Medi-Cal, DHCS requires plans to report on a set of performance measures, including Healthcare Effectiveness Data and Information Set (HEDIS) measures. HEDIS measures cover a wide range of services for both children and adults, including preventive services. Federal law also requires that each state develop and enforce network adequacy standards that require each Medicaid plan to have an adequate provider network that provides timely services. In addition, state law requires DHCS to implement and monitor time and distance standards to ensure that eligible children have reasonable access to care, including preventive services. State law that took effect in 2018 updated California’s standards to meet the requirements of new federal rules, as shown in Table 1.

Table 1
To Meet the Requirements of New Federal Rules, State Law Specifies Network Adequacy Standards for Medi-Cal Managed Care Plans’ Provider Networks
STANDARD TYPE*	STATE STANDARD FOR PROVIDER NETWORKS^†
*Time and distance*	Primary Care
	All counties	10 miles or 30 minutes from beneficiary’s address
	Specialty Care
	Rural counties	60 miles or 90 minutes from beneficiary’s address
	Small counties	45 miles or 75 minutes from beneficiary’s address
	Medium counties	30 miles or 60 minutes from beneficiary’s address
	Large counties	15 miles or 30 minutes from beneficiary’s address

Timely access (not urgent)	Primary Care
	All counties	Within 10 business days from request for an appointment
	Specialty Care
	All counties	Within 15 business days from request for an appointment

Source: State law and DHCS’ Medicaid Managed Care Final Rule: Network Adequacy Standards compliance report.

* State law includes additional standards not shown here. We list the standards that are most applicable to our audit of children’s preventive services in Medi-Cal.

^† County size is based on population density.

However, it can be difficult for children in Medi-Cal to get doctor’s appointments. A 2017 survey conducted by three children’s advocacy groups¹ looked at appointment availability for Medi-Cal pediatric primary care in managed care in Imperial and Nevada counties, which have 76,000 and 21,000 Medi-Cal beneficiaries, respectively. The survey found that only one-third of attempted calls for a pediatric well-child appointment resulted in an appointment within the State’s timely access standards, and about 40 percent of call attempts did not result in an appointment at all. The survey stated that this was usually because there was not a provider from the plan’s provider directory accepting new Medi-Cal patients. Missed primary care appointments may lead to costly urgent care or emergency room visits.

A Selection of DHCS Oversight Activities Related to Children's Preventive Services

Annual Medical Audit—Conducts annual audits of plans based on risk assessments but only reviews certain audit categories for each plan annually; requires plans to complete corrective action plans to address audit findings.
Performance Improvement Project (PIP) process—Requires plans to conduct in-depth analyses on two relevant health topics over an 18-month cycle. One PIP must be from a focus area selected by DHCS, and the other must be on a health topic on which the plan has demonstrated a need for improvement.
External Quality Review Organization (EQRO) Technical Report—Reviews health services provided by all plans and validates plans' data collection processes.
EQRO Encounter Data Validation Study—DHCS' EQRO compares a sample of beneficiaries' medical records against corresponding records in DHCS' medical record database.
EQRO Health Disparity Report—DHCS' EQRO reports certain performance measures for beneficiaries, including children, by age, race, ethnicity, gender, and primary language.
Fee-for-Service Audit—Audits fee-for-service providers typically on an as-needed basis, such as when addressing whistleblower complaints.
HEDIS Corrective Action Plan process—Places a plan on a plan-do-study-act cycle when it fails to meet improvement thresholds.
Plan-Do-Study-Act (PDSA) Cycle—Requires a plan to report quarterly on improvement progress when a selected HEDIS measure falls below the minimum level.

Source: Analysis of DHCS' policies and procedures and other documentation.

The importance of providing children with preventive health services is backed by several studies. According to the U.S. Centers for Disease Control and Prevention, preventive services significantly reduce the risk of illness, disability, early death, and expensive medical care while providing cost savings. In 2014 the American Academy of Pediatrics published a national report stating that the vaccination of 4.3 million children, a key preventive health service, would prevent approximately 42,000 deaths and 20 million cases of disease, with a net savings of nearly $14 billion in direct costs and $69 billion in total societal costs. A 2015 report published by the National Bureau of Economic Research on the long-term impact of Medicaid expansion analyzed increases in Medicaid spending caused by the expansions and the government’s return on investment. The report found that the government recoups its investment in a child’s preventive care by age 36 through additional tax payments, and preventive services result in the government earning a 550 percent return on investment by age 60.

DHCS' Oversight of Plans

DHCS requires plans to cover and ensure the provision of preventive services. It had contracts with 22 full-service plans during the entire period of fiscal years 2013–14 through 2017–18 that operated in one or more counties to make health care services available to Medi-Cal beneficiaries in each county in California. Some of the plans’ responsibilities include implementing a program to detect underutilization of preventive services, informing eligible recipients of the health services and assistance available to them, and identifying and addressing the cultural and linguistic needs of its members.

To ensure that the plans are meeting these responsibilities, DHCS has various mechanisms in place as outlined in the text box. In addition to audits and corrective action plans, DHCS also contracts with an external quality review organization (EQRO) to prepare an annual report that summarizes findings on accessibility and quality of care related to the health care services that plans provide as well as on each plan’s HEDIS rates. To create a uniform standard for assessing plans on performance measures, DHCS established minimum performance levels for each HEDIS measure that the plans are required by contract to meet. Additionally, DHCS produces an annual written report with strategies for assessing and improving the quality of health services furnished by the plans. For reasons described in the remainder of this report, we have concerns with how DHCS conducts these and other oversight activities.

Footnote

¹ The three children's advocacy groups that conducted the 2017 survey were Children Now, The Children's Partnership, and Children's Defense Fund-California. Go back to text