Report 2014-134 All Recommendation Responses

Report 2014-134: California Department of Health Care Services: Improved Monitoring of Medi-Cal Managed Care Health Plans Is Necessary to Better Ensure Access to Care (Release Date: June 2015)

Recommendation #1 To: Health Care Services, Department of

To ensure that Health Care Services accurately analyzes the adequacy of provider networks when initially certifying a health plan and when new beneficiary populations are added, it should establish by September 2015 a process to verify the accuracy of the provider network data that it uses to determine if a health plan meets adequacy standards for provider networks.

1-Year Agency Response

DHCS has formalized and codified the provider network validation process in a formal procedure. This process was used for the behavioral health treatment transition into Medi-Cal managed care health plans (MCPs). This formal provider network validation process will be utilized each time that DHCS certifies or reviews a MCPs' provider network and will be modified, as appropriate. The procedure was updated to review all signature pages for submissions containing 25 or less. A random sampling of submissions occurs when the submission is 25 or more providers. Attached is the formal provider network validation procedure and sample evidence of record retention.

  • Completion Date: February 2016
  • Response Date: June 2016

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


6-Month Agency Response

DHCS has completed building a new network certification process and tool. This new universal tool and process will initially be used in the transition of the responsibility of behavioral health treatment to managed care health plans no sooner than February 1, 2016. The process for verifying submitted provider data will be completed through obtaining executed plan contract signature pages. When the network submission contains fewer than 30 providers, all signature pages will be requested. When the network submission exceeds 30 providers, a statistically significant random sample will be generated and obtained from the health plan.

  • Estimated Completion Date: Winter 2016
  • Response Date: December 2015

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


60-Day Agency Response

DHCS has instituted a process for certifying Medi-Cal managed care health plan (MCP) networks and ensuring that beneficiaries receive timely access to care. This process will include use of a standardized network certification tool which will be modified to meet the need of the specific transition or implementation. For example, on February 1, 2016, some Medi-Cal beneficiaries are scheduled to begin receiving behavioral health treatment services from MCPs instead of Regional Centers. DHCS is in the process of building a tool which will validate MCP networks prior to the health plans gaining this responsibility. It will measure the number of beneficiaries, types of services needed and frequency, among other indicators. The tool will address the following areas: primary care physician assignment, anticipated utilization rates, the automatic continuity of care process, and validating that health plans have infrastructure in place to provide the services.

  • Estimated Completion Date: February 2016
  • Response Date: August 2015

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


Recommendation #2 To: Health Care Services, Department of

To make certain that it can provide support for its review process related to the adequacy of provider networks, Health Care Services should maintain for three years all documentation that supports its provider network certifications.

6-Month Agency Response

DHCS has instituted a new certification and document storage process. A new "network certification" folder has been added to the DHCS internal drive where documents are archived. All pertinent readiness material, including network certification documents are being saved in this folder. This process will initially be used in the certifying health plan networks for transitioning the responsibility of behavioral health treatment services to managed care no sooner than February 1, 2016.

  • Completion Date: October 2015
  • Response Date: December 2015

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


60-Day Agency Response

DHCS is developing a formal process to store all documents used to certify Medi-Cal managed care health plan networks for at least three years. DHCS will next complete a network certification in the end of 2015. Documents will be stored for at least three years following the certification. This same process will be used for all certifications moving forward.

  • Estimated Completion Date: December 2015
  • Response Date: August 2015

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


Recommendation #3 To: Health Care Services, Department of

To ensure that Managed Health Care reaches accurate conclusions during its quarterly assessments of the adequacy of provider networks, Health Care Services should establish by September 2015 a process to verify the accuracy of the provider network data it receives from health plans and forwards to Managed Health Care. For example, Health Care Services could verify, for a sample of physicians claimed as part of the health plans' provider networks, that health plans have current written agreements with the providers.

1-Year Agency Response

DHCS is on schedule to implement a new MCP provider file submission process in late 2016. Phase one of MCP testing was completed on April 30, 2016. DHCS is conducting monthly webinars with all MCPs and individual MCP calls to discuss policy and technical issues. The new process contains stricter automated validation edits which will foster complete and accurate data.

  • Estimated Completion Date: December 2016
  • Response Date: June 2016

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


6-Month Agency Response

DHCS is on schedule to implement a new health plan provider file submission process in 2016. Testing of the new file will begin in the first half of 2016. Automatic quality checks of the data will be built into this system. The new quality check process will significantly strengthen the process that is in place today.

  • Estimated Completion Date: End of 2016
  • Response Date: December 2015

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


60-Day Agency Response

DHCS agrees with the audit finding. Currently, DHCS has a process for approving provider directories and certifying and monitoring health plan networks, but had self-identified the need for verifying data in the provider file prior to this audit commencing and has already taken steps to improve the data verification process. DHCS has started running all provider data through the Fee-For-Service validation process which checks the providers against national databases and determines if providers are in the network that should not be. A two-step quality check will also be implemented through the DHCS Network Adequacy Monitoring Project that is underway - provider file data will be submitted through a system that conducts a quality check on the data elements and then DHCS will perform a survey to ensure the provider is contracted with the Medi-Cal managed care health plan. This project has a projected implementation date of early 2016.

  • Estimated Completion Date: Winter 2016
  • Response Date: August 2015

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


Recommendation #4 To: Health Care Services, Department of

To improve the accuracy of provider directories, by December 2015 Health Care Services should revise its processes for monitoring health plans' provider directories. Specifically, Health Care Services should review how each health plan updates and verifies the accuracy of the directory. In addition, Health Care Services should identify best practices and require the plans to adopt those practices.

1-Year Agency Response

In May 2016, CMS released new regulations for Medicaid managed care. These regulations include provider directory requirements that appear to exceed the requirements set forth in SB 137. The Department is currently reviewing the regulations to determine its implications. The first set of SB 137 requirements are effective July 1, 2016; MCPs are still in the process of updating policies and procedures. DHCS and DMHC are updating and reviewing their own internal review process to capture the requirements of both the new federal regulation and state law.

  • Estimated Completion Date: July 2017
  • Response Date: June 2016

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


6-Month Agency Response

With the passage of Senate Bill 137, Chapter 649, Statutes of 2015, the DHCS internal workgroup determined that the provisions of SB 137 satisfies the mandates of the CSA audit. SB 137 requires substantial revision of the plan's provider directory monitoring process, in addition to developing uniform provider directory standards to ensure consistency in directories. SB 137 also provides comprehensive requirements for how and when plans should update and verify the accuracy of their directories. During the development and implementation of SB 137 provisions, DHCS will continue to have ongoing discussions and reviews with the plans to enact the policies and procedures as will be set forth by SB 137.

  • Completion Date: December 2015
  • Response Date: December 2015

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

Senate Bill 137, Chapter 649, Statutes of 2015 (SB 137) includes various provisions requiring health plans to implement specific procedures for verifying the accuracy of provider directories. However, as it indicates in its response, Health Care Services plans to continue to have ongoing discussions and reviews with the plans to enact the policies and procedures set forth in SB 137. Further, in our follow-up discussions with Health Care Services, it indicated some planned activities for working with the plans to enact the new requirements. Because the activities are noted as planned and have not yet been completed, we assessed the status of this recommendation as pending.

  • Auditee did not substantiate its claim of full implementation

60-Day Agency Response

DHCS has assembled an internal workgroup to examine and analyze current Medi-Cal managed care health plan (MCP) policies and procedures regarding provider directory updates and verification of listings and proper methodology for randomly sampling directories. DHCS will evaluate MCPs' business practices to determine those functions that yield the most accurate listing results. Once these best practices are identified, DHCS will institute a standardized policy and subsequently monitor compliance with the requirements. Issuance of the policy is scheduled to implement by December 2015.

  • Estimated Completion Date: December 2015
  • Response Date: August 2015

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


Recommendation #5 To: Health Care Services, Department of

To ensure that its review of provider directories is effective in identifying inaccurate information before it approves them for publication, Health Care Services should establish by September 2015 more detailed written policies and procedures for staff to follow that will provide evidence that staff are verifying the accuracy of provider directories. This verification process should include, at a minimum, the following elements:

- Developing a standard process for selecting a random sample, including procedures for selecting a sample size that is sufficient to identify errors in a provider directory and to enable Health Care Services to understand the accuracy of the entire directory. Health Care Services should then ensure that staff follow this process.

- Requiring staff to maintain for at least three years the documentation of their reviews and the verifications of the accuracy of provider directories.

- Retaining for three years Health Care Services' communications with the health plans about any errors found in the directories or about the approvals of the directories.

6-Month Agency Response

DHCS updated its Provider Directory review process and implemented the revised procedures effective September 2015. DHCS developed a standardized universal process to include sample size methodology, as well as a randomization mechanism to determine which providers to contact for verification of their respective PD listing. Staff were trained on the revised process and provided written procedures. DHCS updated the tools and record retention procedures for verification activities and plan communications.

  • Completion Date: September 2015
  • Response Date: December 2015

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


60-Day Agency Response

DHCS has assembled an internal workgroup to examine best practices to validate Medi-Cal managed care health plan (MCP) provider directory listings and develop a methodology for randomly sampling directories. Once identified, DHCS will update review tools, create compliance checklists, establish new policies and procedures, and train staff to ensure policies and procedures are complied with. These new processes will include sample sizes, which appropriately reflect the size of the MCP, and outreach to providers to confirm providers are listed correctly and are a part of the MCP's network. Additionally, DHCS will implement enhanced policies for review documentation and record retention. This activity is scheduled to implement by September 2015.

  • Estimated Completion Date: September 2015
  • Response Date: August 2015

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


Recommendation #6 To: Health Care Services, Department of

If Health Care Services finds significant errors in a health plan's provider directory, it should work with that health plan to identify reasons for the inaccuracies and require the health plan to develop processes to eliminate the inaccuracies.

1-Year Agency Response

In May 2016, CMS released new regulations for Medicaid managed care. These regulations have requirements specific to provider directories that the Department is currently reviewing to determine implications. However, initial reviews show that the requirements exceed those set forth in SB 137. Knox Keene licensed health plans are required to come into compliance with the first set of SB 137 requirements by July 1, 2016. Health plans are currently in the process of updating their policies and procedures to reflect these requirements.

  • Estimated Completion Date: July 2017
  • Response Date: June 2016

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


6-Month Agency Response

DHCS updated its Provider Directory review process and implemented the revised procedures effective September 2015. DHCS developed a standardized universal process to include sample size methodology, as well as a randomization mechanism to determine which providers to contact for verification of their respective PD listing. Staff were trained on the revised process and provided written procedures. DHCS updated the tools and record retention procedures for verification activities and plan communications.

  • Completion Date: September 2015
  • Response Date: December 2015

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

Health Care Services' revised procedures for provider directory review states that if the review results in numerous inconsistencies, staff should inquire about how the health plan follows best business practices for ensuring accurate provider directory information. However, the revised procedures do not require the health plan to develop processes to eliminate the inaccuracies. After we followed up with Health Care Services, it stated that with the enactment of SB 137, Chapter 649, Statutes of 2015 (SB 137), Managed Health Care will be establishing and implementing universal standards and practices for health plans and their provider directories, which will be designed to establish and implement a system of best practices to eliminate provider directory inaccuracies. Health Care Services noted that it will align its policies and procedures for internal functions and for operations pertaining to external entities with Managed Health Care standards and practices.

  • Auditee did not substantiate its claim of full implementation
  • Auditee did not address all aspects of the recommendation

60-Day Agency Response

DHCS has assembled an internal workgroup to examine best practices to validate Medi-Cal managed care health plan (MCP) provider directory listings and develop a methodology for randomly sampling directories. Once identified, DHCS will update review tools, create compliance checklists, establish new policies and procedures, and train staff to ensure policies and procedures are complied with. These new processes will include sample sizes, which appropriately reflect the size of the MCP, and outreach to providers to confirm providers are listed correctly and are a part of the MCP's network. Additionally, DHCS will implement enhanced policies for review documentation and record retention. This activity is scheduled to implement by September 2015.

  • Estimated Completion Date: September 2015
  • Response Date: September 2015

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


Recommendation #7 To: Health Care Services, Department of

To ensure that it can handle adequately the volume of calls from Medi-Cal beneficiaries, Health Care Services should implement an effective plan to upgrade or replace its telephone system and database to make certain that its ombudsman office can handle the volume of calls and maintain complete data to make informed management decisions.

1-Year Agency Response

No update from the 6 month update. However, providing CSA requested documentation.

6-month Update: The new Ombudsman phone system was successfully implemented on September 30, 2015. The new phone system has expanded incoming call capacity with call back features, in addition to a more robust phone tree referral mechanism. In January 2016, the Office of the Ombudsman will release public data related to the implementation of the new phone system. Seven positions are currently filled with the remaining two in the final stages of recruitment.

  • Completion Date: September 2015
  • Response Date: June 2016

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

Although Health Care Services provided documentation to support that it has implemented a new telephone system, it did not provide adequate documentation to demonstrate that the new system can handle the volume of calls and maintain complete data to make informed management decisions.

  • Auditee did not substantiate its claim of full implementation

6-Month Agency Response

The new Ombudsman phone system was successfully implemented on September 30, 2015. The new phone system has expanded incoming call capacity with call back features, in addition to a more robust phone tree referral mechanism. In January 2016, the Office of the Ombudsman will release public data related to the implementation of the new phone system. Seven positions are currently filled with the remaining two in the final stages of recruitment

  • Completion Date: September 2015
  • Response Date: January 2016

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

Although Health Care Services indicates it has successfully implemented its new telephone system, it has not yet provided documentation to substantiate the successful implementation. We followed up with Health Care Services to obtain the public data it refers to in its response, and Health Care Services stated that the release of public data related to the implementation of the new phone system has been postponed and a new release date has not been determined.

  • Auditee did not substantiate its claim of full implementation

60-Day Agency Response

The new Ombudsman phone system is currently in development and expected to be operational in September 2015. DHCS has received approval for 9 Limited Term positions from the legislature beginning July 1, 2015.

  • Estimated Completion Date: September 2015
  • Response Date: August 2015

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


Recommendation #8 To: Health Care Services, Department of

To further ensure that it can handle adequately the volume of calls from Medi-Cal beneficiaries, after upgrading or replacing its systems, if Health Care Services believes that it does not have adequate staffing to address workload, it should justify its need and request additional staff.

1-Year Agency Response

No update from the 6 month update. However, providing CSA requested documentation.

6-month Update: The new Ombudsman phone system was successfully implemented on September 30, 2015. The new phone system has expanded incoming call capacity with call back features, in addition to a more robust phone tree referral mechanism. In January 2016, the Office of the Ombudsman will release public data related to the implementation of the new phone system. Seven positions are currently filled with the remaining two in the final stages of recruitment.

  • Completion Date: September 2015
  • Response Date: June 2016

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

Health Care Services' response does not address whether or not it needs to request additional staff to address workload. During follow-up communication, Health Care Services stated any discussion of additional resources or assessments will be handled in the 2017-18 budget process.

  • Auditee did not address all aspects of the recommendation

6-Month Agency Response

The new Ombudsman phone system was successfully implemented on September 30, 2015. The new phone system has expanded incoming call capacity with call back features, in addition to a more robust phone tree referral mechanism. In January 2016, the Office of the Ombudsman will release public data related to the implementation of the new phone system. Seven positions are currently filled with the remaining two in the final stages of recruitment.

  • Completion Date: September 2015
  • Response Date: December 2015

California State Auditor's Assessment of 6-Month Status: No Action Taken

During follow-up with Health Care Services regarding the positions it refers to in its response, it stated that the nine positions are existing limited term positions and eight positions are filled. Health Care Services stated that it will not fill the ninth position as it expires in March 2016. Health Care Services also stated that at this time a decision has not been made on whether additional positions are necessary. Health Care Services stated that further assessment is required.

  • Auditee did not substantiate its claim of full implementation
  • Auditee did not address all aspects of the recommendation

60-Day Agency Response

The new Ombudsman phone system is currently in development and expected to be operational in September 2015. DHCS has received approval for 9 Limited Term positions from the legislature beginning July 1, 2015.

  • Estimated Completion Date: September 2015
  • Response Date: August 2015

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

Health Care Services did not provide evidence to support its assertion that it received approval for 9 Limited Term positions to address workload related to calls from Medi-Cal beneficiaries.


Recommendation #9 To: Health Care Services, Department of

To make certain that Health Care Services complies with state law requiring it to conduct annual medical audits, it should finish developing and begin adhering to its schedule for auditing all health plans in fiscal year 2015-16.

1-Year Agency Response

DHCS audited 21 of the 22 MCPs during State Fiscal Year 15-16. One MCP will be audited in the beginning of SFY 16-17. Moving forward all MCPs will be audited annually.

  • Estimated Completion Date: On-going audits
  • Response Date: June 2016

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


6-Month Agency Response

All Medi-Cal managed care health plans will be audited during State Fiscal Year 15-16 and annually thereafter.

  • Estimated Completion Date: End of 2016
  • Response Date: December 2015

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


60-Day Agency Response

DHCS has expanded audit resources and all Medi-Cal managed care health plans are scheduled for audit during Fiscal Year 15-16.

  • Estimated Completion Date: July 2016
  • Response Date: August 2015

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

Health Care Services did not provide any documentation to support its response.


Recommendation #10 To: Health Care Services, Department of

To ensure that Health Care Services complies with state law, it should increase its oversight of Managed Health Care to ensure that it completes the quarterly assessments required under the agreements.

1-Year Agency Response

DHCS continues oversight of interagency agreements in the areas of medical surveys and quarterly assessments. The Contract Compliance Unit continues to track the completion of medical surveys and the Managed Care Operations Unit continues to partner with DMHC to send joint network adequacy letters to Medi-Cal managed health plans on a quarterly basis. Both units coordinate with DMHC on a weekly basis.

  • Response Date: June 2016

California State Auditor's Assessment of 1-Year Status: Will Not Implement

Health Care Services appears to be confused about our finding and related recommendation. During the audit, we were aware of Health Care Services' oversight of the interagency agreements. In its response, Health Care Services references two units' focus on oversight of and work associated with its agreements with Managed Health Care. The medical surveys and the related corrective action plans that Health Care Services cites were not related to the quarterly network adequacy reviews that Managed Health Care performs and were not significant to the scope of our audit, which focused on the adequacy of provider networks and accuracy of provider directories. Further, we did review the joint efforts of Health Care Services and Managed Health Care to follow up on the results of the quarterly network adequacy reviews that Managed Health Care performed. However, our finding beginning on page 35 of the report and related recommendation focus on the quarterly reviews that Managed Health Care did not perform as required under one of the two agreements between the two departments. Health Care Services is ultimately responsible for ensuring that its contractor provides the required services covered under both its agreements. Therefore, we stand by our recommendation on page 42 of the report that Health Care Services increase its oversight of Managed Health Care to ensure that it completes the quarterly assessments required under the agreements.


6-Month Agency Response

DHCS continues oversight of interagency agreements in the areas of medical surveys and quarterly assessments. The Contract Compliance Unit continues to track the completion of medical surveys and the Managed Care Operations Unit continues to partner with DMHC to send joint network adequacy letters to Medi-Cal managed health plans on a quarterly basis. Both units coordinate with DMHC on a weekly basis.

  • Estimated Completion Date:
  • Response Date: December 2015

California State Auditor's Assessment of 6-Month Status: Will Not Implement

Health Care Services appears to be confused about our finding and related recommendation. During the audit, we were aware of Health Care Services' oversight of the interagency agreements. In its response, Health Care Services references two units' focus on oversight of and work associated with its agreements with Managed Health Care. The medical surveys and the related corrective action plans that Health Care Services cites were not related to the quarterly network adequacy reviews that Managed Health Care performs and were not significant to the scope of our audit, which focused on the adequacy of provider networks and accuracy of provider directories. Further, we did review the joint efforts of Health Care Services and Managed Health Care to follow up on the results of the quarterly network adequacy reviews that Managed Health Care performed. However, our finding beginning on page 35 of the report and related recommendation focus on the quarterly reviews that Managed Health Care did not perform as required under one of the two agreements between the two departments. Health Care Services is ultimately responsible for ensuring that its contractor provides the required services covered under both its agreements. Therefore, we stand by our recommendation on page 42 of the report that Health Care Services increase its oversight of Managed Health Care to ensure that it completes the quarterly assessments required under the agreements.


60-Day Agency Response

DHCS disagrees with the audit finding. DHCS had little to no discussion with the audit team relative to oversight of interagency agreements between DHCS and DMHC. DHCS has two separate Units focused on oversight of and work associated with the interagency agreements, the: 1) Contract Compliance Unit in the Managed Care Quality and Monitoring Division (MCQMD) ensures that DMHC Medical Surveys are completed and has a robust tracking tool to ensure interagency provisions are complied with, and 2) Managed Care Operations Unit in MCQMD partners with DMHC to send joint network adequacy letters to Medi-Cal managed care health plans on a quarterly basis. This process was established in November 2014

  • Response Date: August 2015

California State Auditor's Assessment of 60-Day Status: Will Not Implement

Health Care Services appears to be confused about our finding and related recommendation. During the audit, we were aware of Health Care Services' oversight of the interagency agreements. In its response, Health Care Services references two units' focus on oversight of and work associated with its agreements with Managed Health Care. The medical surveys and the related corrective action plans that Health Care Services cites were not related to the quarterly network adequacy reviews that Managed Health Care performs, and were not significant to the scope of our audit, which focused on the adequacy of provider networks and accuracy of provider directories. Further, we did review the joint efforts of Health Care Services and Managed Health Care to follow up on the results of the quarterly network adequacy reviews that Managed Health Care performed. However, our finding beginning on page 35 of the report and related recommendation focus on the quarterly reviews that Managed Health Care did not perform as required under one of the two agreements between the two departments. Health Care Services is ultimately responsible for ensuring that its contractor provides the required services covered under both its agreements. Therefore, we stand by our recommendation on page 42 of the report that Health Care Services increase its oversight of Managed Health Care to ensure that it completes the quarterly assessments required under the agreements.


Recommendation #11 To: Managed Health Care, Department of

To make certain that Managed Health Care complies with its contractual obligations, it should continue its plan to perform quarterly reviews of the adequacy of provider networks beginning with the first quarter of 2015.

60-Day Agency Response

In response to the State Auditor's recommendation, the DMHC has taken steps to ensure the quarterly review of Medi-Cal networks in the 28 rural counties. This review is in addition to the quarterly Medi-Cal network reviews for the 30 original counties it has conducted since 2011.

At this time, the DMHC has completed its review of the Medi-Cal networks in all 58 counties for the first quarter of 2015. These network assessments were submitted to the Department of Health Care Services on July 31, 2015. Given the process and staffing improvements, the DMHC is well positioned to continue conducting quarterly reviews of the Medi-Cal networks in all 58 counties on an ongoing basis.

  • Completion Date: July 2015
  • Response Date: September 2015

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


Recommendation #12 To: Managed Health Care, Department of

To make certain that Managed Health Care complies with its contractual obligations, it should monitor workload closely, and it should justify and request additional staff if it determines it does not have adequate staffing to perform quarterly reviews.

60-Day Agency Response

The DMHC has improved its network review tools and technologies to allow for more efficient review of these Medi-Cal networks. The DMHC has also established two new positions in its Office of Licensing, Division of Provider Networks: an Associate Health Program Advisor and a Health Program Specialist. These positions will, among other duties, assist in the quarterly review of the Medi-Cal networks in the 28 rural counties.

  • Completion Date: July 2015
  • Response Date: August 2015

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


Recommendation #13 To: Managed Health Care, Department of

To increase the efficiency of statutorily required reviews by eliminating duplicative work, Managed Health Care should complete by September 2015 its planned assessment of the extent to which it can rely on Health Care Services' annual audits.

6-Month Agency Response

The DMHC has completed its assessment of the extent to which it can rely on DHCS Medi-Cal managed care health plan audit reports in meeting the DMHC's statutory obligation to conduct triennial on-site medical surveys. The DMHC concluded that the work of the DHCS and the DMHC is not so duplicative that the DMHC may meet its obligations by relying on DHCS audit report findings. Notably, DHCS has begun to audit each Medi-Cal managed care health plan annually as of July 2015. The DMHC cannot now determine if the DHCS audit reports are sufficient for it to rely on. The categories of review by each department overlap, but the focus, methods, and conclusions of DMHC surveys and DHCS audits differ. While many of the DHCS health plan audit areas overlap with the Knox-Keene Act, the DHCS audit tools and reports cite DHCS contract provisions which often do not cite the Act or its implementing regulations. To rely on DHCS audit reports, the DMHC would need to "cross-walk" to determine: 1) if a finding was based on a section of the Act or regulations and 2) which provisions of the Act or regulations were violated. Moreover, the DHCS corrective action plan process is different than the DMHC corrective action plan process. The DHCS has provisionally closed its recommendations to health plans regarding contract deficiencies as early as 60 days from the issuance of audit reports. In contrast, if any deficiencies remain uncorrected at the completion of the triennial survey, the DMHC is required to conduct a follow-up review within 18 months of issuance of its triennial report to report on the status of the plan's efforts to correct deficiencies. The DMHC does not find any deficiency corrected until the health plan has fully demonstrated compliance. DMHC's follow-up review includes corrective action plan monitoring, including review of policies and procedures and/or a statistically valid and random selection of files to determine if the deficiencies have been corrected.

  • Completion Date: September 2015
  • Response Date: December 2015

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


60-Day Agency Response

The DMHC expects its assessment to be completed by September 15, 2015. As part of our assessment, DMHC is reviewing the preliminary and final audits reports prepared by DHCS, as well as the corrective action plans developed by the contracted health plans. Also, to ensure consistency, the DMHC is comparing the methodologies for on-site file review employed by the two Departments. Lastly, DMHC is assessing whether DHCS findings of health plan non-compliance will support DMHC enforcement action without independent (DMHC) review.

  • Estimated Completion Date: September 15, 2015
  • Response Date: September 2015

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


Recommendation #14 To: Managed Health Care, Department of

To increase the efficiency of statutorily required reviews by eliminating duplicative work, if Managed Health Care determines that Health Care Services' work is sufficient to meet Managed Health Care's responsibility under the Knox-Keene Act, it should coordinate with Health Care Services to eliminate the duplication of work.

1-Year Agency Response

Since June 2013, DMHC's Division of Plan Surveys, DHCS' Medical Review Branch of its Audits and Investigations Division, and DHCS' Managed Care Quality and Monitoring Division developed a joint audit process that allows both departments to conduct onsite reviews at health plans simultaneously. This eliminated some duplication of work by allowing both departments to be present at each other's investigatory interviews of health plan officers. The divisions have held regular joint audit meetings and developed a joint schedule of DMHC surveys and DHCS audits as part of the joint audit coordination process between the departments. Both departments share preliminary investigative findings on joint audits and the DMHC receives corrective action plans from DHCS pertaining to contract deficiencies.

While DMHC has benefitted from coordination, its statutory responsibilities can never be fully met by DHCS. DMHC is statutorily mandated to conduct onsite surveys of each health plan at least every three years pursuant to Health and Safety Code Section 1380. Additionally, DMHC is directed to coordinate with DHCS on its surveys, but in a manner that does not result in DMHC's failure to conduct surveys. Health and Safety Code Section 1380.3.

Therefore, DMHC is unable to rely entirely on DHCS for its surveys. DMHC's and DHCS' missions reflect their differing statutory responsibilities. DHCS' role focuses on providing health care services, while DMHC's mission is to regulate the provision of health care services to protect consumers. However, DMHC coordinates with DHCS regarding DMHC's regulatory oversight of DHCS' health plan contractors in the ways discussed above.

DMHC will continue to coordinate survey activity with DHCS, use annual DHCS audit findings and corrective action reports to inform DMHC survey activity through the joint audits process, and explore ways to eliminate duplication of work as appropriate through the ongoing joint audit coordination process.

  • Completion Date: June 2016
  • Response Date: June 2016

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

Managed Health has concluded that it is unable to rely entirely on Health Care Services' audits to meet Managed Health's responsibilities under the Knox-Keene Act. During our follow-up, Managed Heath provided documentation demonstrating that it coordinates with Health Care Services when deciding the scope of its work. As a result, we consider this recommendation to be resolved.


6-Month Agency Response

At this time there is no specific area covered in the DHCS annual audits where the DMHC can completely rely on DHCS' audit, and thereby completely eliminate its own assessment. However, the DMHC can rely upon DHCS audit reports to spot issues and identify where more or less intensive review may be required by the DMHC during its triennial surveys, particularly in areas such as utilization management, quality management and grievance and appeal. Accordingly, the DMHC will continue to coordinate its audits with DHCS and share findings. Moreover, the DMHC is committed to continually evaluating the findings of the DHCS annual audits. As it becomes more familiar with these reports, the DMHC believes there will be additional opportunities to rely upon their findings.

  • Estimated Completion Date: June 2016
  • Response Date: December 2015

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


60-Day Agency Response

The DMHC has already identified several areas where duplicative work could potentially be eliminated by relying upon the findings of annual audits performed by DHCS. These potential areas include utilization management, quality management and grievance and appeal.

  • Estimated Completion Date: December 2015
  • Response Date: August 2015

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


All Recommendations in 2014-134

Agency responses received are posted verbatim.


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