Report 99102 Summary - July 1999

Department of Health Services: Despite Shortcomings in the Department's Monitoring Efforts, Limited Data Suggest Its Two-Plan Model Does Not Adversely Affect Quality of and Access to Health Care


The Department of Health Services (department) has shown deficiencies in its monitoring of health plans that contract with the California Medical Assistance Program (Medi-Cal), and these shortcomings could potentially undermine the State's delivery of medical services to the financially needy. Nonetheless, limited data indicate that the department's recently developed model for managed care gives Medi-Cal beneficiaries adequate access to quality health care. Under the Medi-Cal Managed Care Two-Plan Model (two-plan model), each participating county offers beneficiaries a choice between a health plan operated by a local entity and one operated by a commercial health maintenance organization. Both types of plans pay for and manage all medically necessary services for their beneficiaries while the department compensates the plans according to a predetermined fixed rate.

Current statistics from one health plan, as well as our own observations of five health plans that administer Medi-Cal managed care, suggest that managed care in general offers benefits that fee-for-service systems do not necessarily provide, especially in the area of preventive care. However, data the health plans submitted to the department are insufficient for us to evaluate the overall quality of health care furnished to beneficiaries in counties with the two-plan model. The data, which include information on services, providers, and beneficiaries, are problematic because the department has not validated them. The department has also faced difficulties in obtaining the data because providers lack incentives for supplying detailed information to the health plans when the providers receive a fixed fee for their services regardless of what services they actually provided. Further, the department inadvertently discourages health plans from supplying some information because it requires them to use two separate forms to report services furnished under two different programs that cover children's medical care. To facilitate its collection of data on medical services, the department recently began to withhold a portion of the health plans' monthly payments until the plans meet reporting goals. The department is also taking other steps to measure the plans' quality of care.

In addition to its difficulties in acquiring necessary data, the department's efforts to monitor health plans have been incomplete and poorly organized. Even though it designed a comprehensive system for overseeing health plans, the department does not supply staff members with specific guidelines to direct their monitoring activities, track the status of documents used for monitoring, or summarize in a formal document the results of its efforts to evaluate plans' compliance with Medi-Cal requirements. These gaps in the department's procedures have contributed to its failures to analyze adequately whether health plans have enough primary care physicians and specialists who can serve beneficiaries, meet its goal for visiting health plan sites regularly, review promptly health plans' proposed corrective actions to address weaknesses the department identified in its audits, and inform its monitoring staff about trends in complaints against the health plans. Finally, the department's audits may be less effective because the department did not coordinate efforts among its staff. Such inefficiencies within the department could eventually delay or even prevent the delivery of quality medical services to those who most need the State's assistance for health care.


To obtain complete, reliable data for measuring the success of the Medi-Cal Managed Care Two-Plan Model, the Department of Health Services should do the following:

In addition, the department should continue to promote quality improvement among the health plans through its various reviews and develop new approaches to address emerging health care issues.

To ensure that it monitors adequately health plans that provide care under Medi-Cal managed care, the department should take these steps:


The Department of Health Services agrees with our audit findings and recommendations and has committed to specific improvements of its monitoring of the health plans.