Medicaid Managed Care: Transparency, Procurement, and Children’s Health

Last month, Children Now released a report on the delivery of preventive health services to children by Medicaid managed care organizations (MCOs) in California.   The report analyzes MCO-specific performance data for 2019 for five different measures: well-child visits in the first 15 months of life; child and adolescent well-child visits; lead screening for children under 2; dental fluoride varnish application; and tobacco use screening for children and youth. (The first two are used in the Core Set of Children’s Health Care Quality Measures collected by CMS). Based on these five measures, Children Now concluded that “overall health plan performance on children’s preventive care services was abysmal.”

That leaves a lot of room for improvement.

Children Now sees “a ripe opportunity to act on these troubling findings” in the state’s Medicaid managed care procurement.  California has begun the process of rebidding its contracts with MCOs for at least 21 and potentially as many as 36 of its 58 counties. As explained by the California Health Care Foundation, the procurement gives the state Medicaid agency the ability to weed out poor performers—such as those MCOs that do not deliver preventive services to enrolled children—and to revise its contracts to incentivize improved performance by MCOs going forward.

This month the state issued a draft RFP seeking public comments with the intent of issuing a final RFP before the end of this year, receiving bids and selecting contractors next year, and implementing the new contracts at the beginning of 2024.  The California Health Care Foundation will be collecting and amplifying the comments of consumer and child advocates as the procurement process unfolds.

It’s clear why all this matters to low-income children (and their advocates) in California.  But why should any of it matter to children (and their advocates) in the 39 other states that contract with MCOs to deliver needed services to Medicaid beneficiaries?

First, the Children Now report is a model for transparency advocacy.  California has a child health dashboard that among other things, stratifies Medicaid beneficiaries under 21 by race, ethnicity and primary language. But unlike Iowa’s child health dashboard,  California’s does not include performance data on an MCO-specific basis.  Child health data aggregated at the state level is useful for context and for identifying statewide trends, but it does not allow identification of high- and low -performing MCOs.

The Children Now report solves for this. It uses 2019 data published by the state to rank individual MCOs from high-performing to low-performing.  In this case, the rankings involve performance for just one type of service—preventive—and are based on only five metrics, so they do not necessarily indicate which MCOs were doing the best (or worst) job for children across all services.  Nonetheless, they show wide variation in performance on delivery of preventive health services, which in and of itself is highly concerning.  The report also builds on pathbreaking work that Children Now did last year, using multiple public records act requests to extract 2018 performance data for each MCO from the state Medicaid agency, identifying high- and low-performers, and posting the data.  Changing the regulatory culture in Medicaid managed care is a long game.  Children Now is blazing a path forward.

Second, this is no ordinary procurement.  California is far and away the largest Medicaid managed care market in the country.  Medi-Cal, as the state’s Medicaid program is known, covers 8.2 million adults and 5.4 million children, more than 13.5 million beneficiaries.  Over 80 percent of those—11.3 million—are enrolled in MCOs. If all 36 counties are open to bid, the state’s procurement could affect as many as 3.4 million of those 11 million enrollees, or less than a third.  But less than a third in California is greater than the total Medicaid enrollment of every state other than Florida, New York, and Texas.  The size of the pie for the nine commercial MCOs with contracts for those counties is over $13 billion.

With this size comes leverage, not just in the California market, but nationally.  Advocates in California want the state Medicaid agency to rewrite its risk contracts to upgrade performance by MCOs on access, quality, and health equity for children and families.  Not only is there a lot of room for improvement in MCO performance on children’s preventive health, there is also a lot of room for improvement in the current risk contracts, as extensive research conducted for the California Health Care Foundation shows.  If the state does take this opportunity to up its game, it will create an opening for other states to do the right thing.  If MCOs in California can be held to high-performance standards, why not MCOs in other states, especially when the MCOs in those states are subsidiaries of the same national companies that are contracting in California? (According to HMA Weekly Roundup, three national insurers that through their subsidiaries hold significant market in the 36 counties potentially up for bid are Centene (48% ), Anthem (21%), and Molina (13%)).

The California procurement is in its early phases.  If the process plays out as scheduled, the new contracts will take effect on January 1, 2024.  That’s a big “If.”  Medicaid managed care procurements, often the largest that state governments make, can be protracted affairs.  It turns out that incumbents don’t like being dislodged, that new bidders don’t like being kept out, and that lawyers like billable hours.  Unsurprisingly, litigation is common, as the recent procurements in the District of Columbia,  Kentucky, Louisiana, North Carolina, Ohio, and Pennsylvania testify.  Nonetheless, procurements are an important—as Children Now would say, “once-in-a-childhood”—opportunity to identify low-performing incumbent MCOs, hold them accountable for their failure to perform, and raise the performance bar for the winning MCOs going forward.  As the California procurement runs its course—however long that course turns out to be–there will be important lessons to be learned for children’s health advocates in other states.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.