California reconsiders oversight of Medi-Cal plans

Kaiser Health News published a longer article about the state of California taking another look at its oversight of plans that administer Medicaid programs (known in California as Medi-Cal). Surprisingly, Medi-Cal covers almost 40% of the children in California and the article reports that even the state auditor says that "Medi-Cal has failed to hold accountable the managed-care health plans that cover almost 12 million of its nearly 14 million enrollees."

The state has started to remedy the situation, although the article also reports that "The state's exact strategy is unclear." Apparently, there are metrics that the state currently evaluates the plans on, although they might not be published or widely known about. Additionally, it seems that the state up until now has not taken significant action against plans that performed poorly. Part of the problem is likely related to the small number of participating plans -- administering Medicaid plans is likely a low-margin business, and many counties only have one plan available (operated by the county itself). Curiously, though, the state's largest commercial Medi-Cal insurer, Health Net, has accounted for $2.1 billion of the $2.9 billion in net profits from Medi-Cal since fiscal year 2014. Kaiser Permanente has lost money on Medi-Cal during that time period despite receiving high marks on the quality metrics, suggesting that the incentives laid out by the state might not align well with its goals.

Changes on this scale will take time to show an effect; it would be nice if the state clearly laid out its plans and metrics and publicly displayed individual plan performance on a regular basis. It might also be possible that Medicaid offers too little money for the services that are needed in order to effect meaningful change.