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Department of Health Care Services
Millions of Children in Medi-Cal Are Not Receiving Preventive Health Services

Report Number: 2018-111


Audit Highlights . . .

Our audit regarding DHCS' oversight of the delivery of preventive services to children in Medi-Cal revealed the following:

Results in Brief

Because of a variety of problems, including a lack of providers willing to accept patients covered by the California Medical Assistance Program (Medi-Cal), an annual average of 2.4 million children who were enrolled in Medi-Cal over the past five years have not received all of the preventive health services that the State has committed to provide them. Nearly half of California’s children receive medical care through Medi-Cal, a program that provides a safety net of health care services—including vital preventive services—to eligible children. According to the Centers for Disease Control and Prevention, providing children with annual preventive health services saves thousands of lives and reduces future health care costs by thousands of dollars per child. Despite the importance of these services, the use—or utilization rate—of preventive services by California’s children in Medi-Cal has been consistently below 50 percent and is ranked 40th in the country—nearly 10 percentage points below the national average. In addition, despite efforts by the Department of Health Care Services (DHCS)—the state agency tasked with overseeing Medi-Cal—the utilization rate in California has not improved since fiscal year 2013–14. Although it is clear that DHCS cannot control all of the factors that influence whether families use preventive services for their children, it is equally clear from our review that DHCS can carry out its oversight responsibilities more effectively and more proactively.

A major cause of California’s low utilization rate is that many of the State’s children do not have adequate access to Medi-Cal providers who can deliver the required pediatric preventive services. Nearly 90 percent of children in Medi-Cal receive services through managed care plans (plans) that receive a monthly premium from DHCS to deliver services to eligible beneficiaries. To ensure that Medi-Cal beneficiaries have access to participating providers that can deliver these services, the U.S. Centers for Medicare and Medicaid Services required the State to develop and enforce standards that specified the maximum time and distance beneficiaries should have to travel for care. However, when California began implementing these time and distance standards in 2018, plans submitted almost 80,000 requests to DHCS proposing exceptions to the State’s new standards, which was significantly more than DHCS anticipated. That number also highlighted the fact that there are many parts of California where Medi-Cal beneficiaries do not have adequate access to the providers they need. Of the 10,000 alternative access standards DHCS approved, 85 percent were for plans that had utilization rates below 50 percent for children’s preventive services. Beyond the sheer volume of these approvals, some of the alternative access standards that DHCS approved do not appear to be reasonable. For example, in San Joaquin County, DHCS-approved access standards would require some families to travel more than six hours, or nearly 250 miles, to see an in-plan pediatric eye specialist instead of the 60 minutes or 30 miles permitted under the State’s time and distance standards. In this and other extreme instances, DHCS could have exercised its option of requiring the plans to allow families to visit a closer out-of-plan provider. However, it did not do so partly because its criteria for evaluating whether alternatives are reasonable focuses primarily on the efforts of the plans to meet the State’s standards and not on whether the resulting times and distances are reasonable for a Medi-Cal beneficiary to travel.

Even so, increasing the number of providers who participate in Medi-Cal to better meet the State’s time and distance standards, and thereby increasing access to and use of children’s preventive services, will be difficult because of California’s low Medi-Cal reimbursement rates. According to a 2017 study by the Kaiser Family Foundation, California’s rates were only 76 percent of the national average, and only two states had lower rates. In addition to advocating for an increase in the State’s reimbursement rates, DHCS could adopt financial penalties for underperforming plans and explore financial incentives for plans that increase utilization rates for children’s preventive services. Although these options may require additional funding and would take time to realize results, similar programs in states with higher utilization rates indicate these efforts may be effective.

These states have implemented some best practices—which we described in Chapter 3—that California may be able to adopt, including statewide incentive programs that encourage providers and families to make sure children receive preventive services. In contrast to the way several high-performing states monitor the costs and benefits of the financial incentive programs they operate, DHCS allows plans to operate financial incentive programs to improve providers’ performance but it does not monitor the costs or benefits of these programs nor does it share information about successful programs among all plans. DHCS believes its approach gives plans the flexibility to institute programs that suit their populations and local differences. However, as evidenced by California’s low utilization rates, this approach does not appear to be working.

In fact, we found a consistent pattern of DHCS delegating responsibilities to plans but not providing a commensurate level of oversight. For instance, DHCS requires plans to provide a particular schedule of preventive services for children but it has not clearly informed plans, providers, and beneficiaries about these services. Federal law requires state Medicaid agencies to provide children under 21 years of age with early and periodic screening, diagnostic, and treatment (EPSDT) services in accordance with a schedule that specifies reasonable standards for care. To comply with this requirement, in 2014 DHCS adopted the American Academy of Pediatrics’ Bright Futures recommended schedule of care (Bright Futures), a schedule of children’s preventive services. However, DHCS’ contracts with plans continue to contain confusing language regarding a previously required schedule. Further, DHCS does not ensure that plans clearly communicate the required Bright Futures services to their providers and beneficiaries. Other examples of DHCS’ lack of adequate oversight of the plans include the following:

In addition to the problem of a lack of providers, available data show that California’s diverse cultures—represented by a broad spectrum of ethnicities and languages—have dramatically different utilization rates. Rather than regularly analyzing these differences and conducting outreach targeted to specific communities with lower utilization rates on its own, DHCS delegates certain responsibilities for mitigating health disparities among children of differing racial and ethnic backgrounds to the plans. Specifically, DHCS requires plans to produce a report once every five years to identify health disparities and the cultural and linguistic needs among their beneficiaries; however, DHCS does not consistently follow up on the findings of these reports to ensure that plans actually make an effort to mitigate identified needs. Further, DHCS has done little to ensure that families are aware of available language services so as to minimize the use of children as interpreters.

Although it is the largest, Medi-Cal is not the only program DHCS oversees; and children’s preventive services is only one component of the vast and complex Medi-Cal program. Thus, DHCS has many other competing priorities. However, each year millions of children in Medi-Cal are not receiving the preventive services that have been proven to promote better health outcomes and to avoid future medical expenses. As described earlier, most if not all the innovative programs for increasing utilization rates that DHCS may propose will likely require some level of additional funding from the Legislature. However, DHCS should not continue to entrust all progress to the plans and provide very little proactive oversight. California needs DHCS, as the state agency in charge of Medi-Cal, to fundamentally change its approach to overseeing the delivery of children’s preventive health services and to actively propose and administer new efforts that will increase utilization rates.

Summary of Recommendations


To improve children’s access to preventive health services, the Legislature should amend state law to do the following:

To improve the health of California’s children, the Legislature should direct DHCS to implement a pay-for-performance program targeted specifically at ensuring that plans are more consistently providing preventive services to children in Medi-Cal. To the extent DHCS can demonstrate that additional funding is necessary to operate such a program, the Legislature should increase funding specifically for that purpose.


To increase access to preventive health services for children, DHCS should propose to the Legislature funding increases to recruit more providers in the areas where they are needed most.

To improve access and utilization rates, DHCS should establish performance measures for Bright Futures services for all age groups and require plans to track and report the utilization rates on those measures.

To ensure that health plans and providers are adequately delivering children’s preventive services, DHCS should conduct audit procedures through its annual medical audits that address the delivery of EPSDT services to all eligible children for all plans.

To ensure that plans’ provider directories are accurate, DHCS should improve its processes for validating the accuracy of the directories that Medi-Cal beneficiaries use to access services.

To ensure that plans are effectively mitigating child health disparities related to cultural and linguistic needs in their service areas, DHCS should require plans to take action to address the most significant findings cited in their required reports on this issue and to regularly follow up to ensure that the plans have addressed the findings.

To help increase utilization rates, DHCS should monitor and identify effective incentive programs at the plan level and share the results with all plans.

Agency Comments

DHCS agreed with most of our findings and recommendations and partially agreed with others because it believes it has already undertaken the activities associated with these particular recommendations. Finally, it disagreed with our recommendation that it should propose funding increases to recruit more providers to areas that lack physicians serving children in Medi-Cal, pointing to a loan-repayment program it recently implemented for newly practicing physicians that are willing to serve Medi-Cal patients in underserved areas.

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