California’s Medicaid Managed Care Procurement: A Transparency Event

On August 25, California’s Medicaid agency announced its selections of managed care organizations (MCOs) to serve some 6.4 million beneficiaries in 21 counties beginning in 2024.  The selections, which resulted from the procurement that the agency launched with a Request for Proposal (RFP) in February—a potential game-changer—did not meet with universal applause.  Losing bidders have appealed the results. The state agency is now reviewing those challenges.  In the meantime—which could be quite a long time—there is one undisputed winner: transparency.  The public will be able to learn about the performance of subsidiaries of three national companies that submitted proposals—not just those operating in California, but those operating in other states as well.

In its February RFP, the state Medicaid agency made clear that when it announced its selections in August, all information in the proposals it received would be available to the public upon request.  One purpose of this transparency is to give losing bidders the opportunity to review the proposals of their competitors to decide whether to appeal.  Another is to set an expectation that in a procurement affecting billions of state and federal dollars and millions of program beneficiaries, the norm is transparency—not assertions that information about the performance of MCOs is “proprietary” and therefore not subject to public disclosure.

Five publicly-traded companies have large footprints in Medicaid managed care nationally:  Aetna/CVS Health, Centene, Elevance (formerly Anthem), Molina, and UnitedHealth Group. Through their California subsidiaries, every company but UnitedHealth Group submitted proposals, which are now available on request.  All you have to do is open an account and request the proposal in response to RFP 20-10029 submitted by the name of the California affiliate of the company that you’re interested in. You are likely to get a response within a day. Think of it as joining the Medi-Cal Managed Care PRA Club—with no membership fee.

The February RFP required all companies submitting proposals to provide extensive information relating to their performance in California and all other states in which they operate.  Data buckets of particular note are:

  • Use of pediatric services. Proposers were required to submit utilization reporting rates for pediatric services for measurement years 2017 through 2019 for Medicaid and all other lines of business in all states that in which the proposer operates.  The rates were required to be “stratified by race/ethnicity and age as specified.”  For each measurement year, for plan enrollees under age 21, the rates to be submitted were: (1) primary care provider visits per 1,000; (2) the percentage of children who did not see a primary care provider; (3) the number of visits by enrollees for non-specialty mental health per 1,000 member months; and (4) the number of visits for substance abuse per 1,000 member months.
  • Enforcement actions. Proposers were required to describe “any” enforcement actions taken against the proposer for the previous 5 years “as a result of health plan performance.”  These include corrective action plans, any financial sanctions like fines and liquidated damages, and any nonfinancial sanctions such as loss of auto-assignment allocation.
  • Enrollee grievances. Proposers were required to provide the number of enrollee grievances for the previous three years, “including the nature of the grievance (i.e. access to care, quality of care, timeliness of care, etc.), outcome, whether the outcome resulted in favor of the member, and timeframe for resolution.”
  • Annual quality performance measures. Proposers were required to provide annual quality performance measures reported for Medicaid and all other lines of business for measurement years 2016 through 2018.  This includes any measures reported to the National Committee for Quality Assurance (NCQA).

These four buckets—and there are a number of others—cover A LOT of empirical ground.  By using its purchasing leverage to require detailed proposals and making those proposals publicly available, California’s Medicaid agency has created a one-stop shopping opportunity for those interested in the performance of the subsidiaries of three companies—Centene, Elevance, and Anthem—which as of March of this year operated a total of 71 MCOs in 31 states and the District of Columbia with over 30 million enrollees. (Aetna’s proposal is inexplicably redacted).  There is much in their proposals for those interested in Medicaid MCO performance—beneficiary advocates, health services researchers, the press, other state agencies, and even federal officials at CMS, OIG, GAO, and MACPAC—to analyze. (There’s also information on performance by subsidiaries in the Marketplaces and Medicare Advantage).

To take one example, all companies seeking contracts with the state were required to file, as Appendix S.10.f to their proposals, a list of all enforcement actions taken against each of their Medicaid MCOs in every state in which they did business in each of the last five years prior to submission of their proposals—i.e., March 2017 through March 2022.  The Centene proposal lists enforcement actions against MCOs in 27 states over that five-year period (47 pp).  The Elevance proposal lists enforcement actions against its MCOs in 33 states over that period (30 pp).  And the Molina proposal describes enforcement actions against its MCOs in 14 states and Puerto Rico over that period (23 pp).

For the states in which Centene, Elevance, and Molina all have Medicaid contracts—California, Florida, Kentucky, New York, Texas, and Washington—these data allow for comparison of enforcement activities affecting the companies’ subsidiaries operating in the same state during the same year.  What violations were identified?  Which were subject to financial sanctions?  Which to nonfinancial sanctions?  Because the enforcement philosophies and resources of a state Medicaid agency are not likely to vary from MCO to MCO in the same year, any differences in contract violations identified and sanctions imposed can be a useful indicator of an individual MCO’s performance compared to its competitor(s).

Of course, enforcement actions are just one indicator; utilization data, enrollee grievances, annual quality measures, and financial data are also important to a comprehensive assessment of an MCO’s performance.  These other indicators are also important to evaluating whether the imposition of sanctions improved MCO performance. The proposals for Centene, Elevance, and Molina are here.  To see the enforcement data, double click on the file for the company, then on file “10-Appendix,” then on the file “f.EnforcementActionsReport.” The files for the other data buckets of particular note above are “d.AnnualQualityPerform,” “e.UtilReportingRates,” and “h.MemberGrievances”.

The information submitted by each company in its response to the California RFP has not been independently verified.  And if the appeals of some of the losing bidders are to be believed, information in some of the winning proposals is “false, inaccurate, and misleading.”  Duly noted.  Also noted: these are the magic words under section W.1.c. of the RFP that describe one basis for a finding that a proposal is “non-responsive”—i.e., history—so all companies submitting proposals have an incentive not to submit information that is false, inaccurate, or misleading.

Regardless of how the appeals play out, this procurement is already a transparency event. The information in the proposals submitted by the national companies offers a valuable window into the performance of their subsidiaries in all of the states in which they operate.  Hopefully, other states with upcoming procurements will follow—and even improve upon—California’s transparency template.  Because if the managements of the parent companies know that future procurements in other states will make information about the performance of all their subsidiaries publicly available, they’ll have an additional incentive—reducing reputational risk—to make sure that any low-performing subsidiaries up their games. And that would be a win for enrollees in those MCOs, all without a regulatory finger being lifted.

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