Report 2023-115 Recommendation 17 Responses

Report 2023-115: Department of Health Care Services and Department of Managed Health Care: Children Enrolled in Medi-Cal Face Challenges in Accessing Behavioral Health Care (Release Date: November 2023)

Recommendation #17 To: Health Care Services, Department of

To more effectively encourage plans to comply with network adequacy standards, by May 2024, DHCS should develop and implement a policy outlining when noncompliance with network adequacy standards by a Medi-Cal managed care plan, county mental health plan, or county Drug Medi-Cal program justifies financial penalties.

Annual Follow-Up Agency Response From December 2025

To strengthen enforcement of network adequacy standards, DHCS released APL 25-007, outlining potential actions such as corrective action plans, administrative penalties, and monetary sanctions. These measures support compliance with MCP contractual requirements and applicable state and federal laws.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

DHCS has issued an All-Plan Letter (APL) that states that it may impose enforcement actions including administrative and monetary sanctions for noncompliance, but the APL falls short of full implementation of the recommendation. The recommendation is for DHCS to outline-specifically-when noncompliance justifies financial penalties. Further, the APL appears limited to managed care plans and does not address county mental health plans or county Drug Medi-Cal programs.

1-Year Agency Response

DHCS developed an internal policy and procedure to address CSA's recommendation, including when noncompliance with network adequacy standards justifies financial penalties. As part of DHCS' review and approval process for the procedure, it was determined All Plan Letter (APL) updates are required to operationalize the procedure. DHCS has conducted internal discussions to determine the scope of APL update(s) required to operationalize the policy. DHCS is targeting to disseminate the draft APL(s) for stakeholder comment in Fall 2024.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

DHCS is finalizing the enforcement action policy for MCP performance regarding network adequacy standards and is working on alignment across delivery systems to the extent possible. DHCS will implement the policy for Managed Care Plans by May 2024.

California State Auditor's Assessment of 6-Month Status: Pending

DHCS did not provide a copy of its policy upon our request and instead clarified that it is considering an all-plan letter that will operationalize the policy recommended in the report. It is targeting Fall 2024 to disseminate the all-plan letter for public comment.

60-Day Agency Response

DHCS collaborates internally regarding MCP performance concerns and builds a consensus on the appropriate enforcement actions across program areas. DHCS discussed the policy in November 2023 and began the development of the policy. DHCS will implement the policy by May 2024.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2023-115

Agency responses received are posted verbatim.