Three years ago, the California Health Care Foundation published a ground-breaking report on Medicaid managed care in the state. Researchers from the University of California at San Francisco presented and analyzed data on the quality of care furnished by each Medicaid managed care organization (MCO) over the 10-year period 2009 – 2018. The researchers found that, over the 10-year period across all MCOs, more than half of the quality measures either did not improve or declined. Four measures declined significantly, 3 of which were related to care of children.
The researchers noted that, if an MCO that performed below a minimum level on a measure, it was required to implement an improvement plan. They found that this requirement was “not effective” in improving MCO performance on these measures over time. (The minimum performance level at the time was the national Medicaid 25th percentile per the National Committee for Quality Assurance). Among their recommendations: “If DHCS is committed to improving quality for Medi-Cal enrollees across all counties, it needs to develop a stronger set of incentives that are relevant for all [MCOs]. One possibility is the use of direct financial rewards for achieving improvement targets and direct financial penalties for consistently scoring below specified targets on quality metrics.”
Fast forward to 2022—this past week, to be exact. The California Medicaid agency announced that it would impose a total of $2.3 million in financial sanctions on 22 of the 25 MCOs it contracted with in 2021 for failing to meet minimum performance measures that year. The sanctions were imposed if an MCO’s performance on certain quality metrics fell below the national Medicaid 50th percentile (up from the 25th, which is the right direction). The quality metrics include those relating to children’s health (immunizations, well-child visits, etc.) and women’s health (breast and cervical cancer screening, postpartum care, etc.). The agency noted that the performance of the 22 MCOs left “significant room for improvement in children’s and women’s preventive services.” That would be an understatement.
The agency sorted the MCOs into three buckets (Green, Orange, and Red “Tiers”) based on their performance on these metrics. The highest performing MCOs—CenCal Health, Kaiser NorCal, and Kaiser SoCal—qualified for the Green Tier and received no fines. The lowest performing MCOs were placed in the Red Tier and sanctions were imposed. These are: Aetna ($25,000); Anthem Blue Cross ($265,000); CHW ($115,000); Health Net ($437,000); Kern Health Systems ($193,000); Molina Health Plan ($117,000); and Partnership Health Plan ($123,000). These seven MCOs accounted for more than half (55 percent) of the total sanctions imposed. Five of these MCOs are subsidiaries of national publicly-traded companies: Aetna; Centene (Health Net, CHW); Elevance (Anthem Blue Cross); and Molina. These companies did quite well in 2021, so lack of parent company resources was likely not a factor in their subsidiaries’ performances.
Compared to the billions of dollars these MCOs received in Medicaid capitation payments from the agency in 2021, these sanctions are barely rounding errors. But the amounts are pretty much beside the point. Symbolism also has its rewards. In this case, the agency appears to be imposing sanctions—and making public the individual MCOs subject to the sanctions—in part to make a statement that performance matters, and that low-performing MCOs will be held accountable.
It remains to be seen whether the agency’s public announcement will drive improvements in individual MCO performance; we’ll have to wait until the results for 2022 and 2023 are available (2024 is when a new risk contract, with additional incentives for improving quality, is scheduled to be implemented under the terms of the procurement now underway). But there’s no reason to think the announcement will hurt, and concern on the part of MCOs about the reputational risk it poses can only help. How will MCO managements explain if next year’s metrics don’t improve?
As for the agency, it recognizes that sanctions are just one tool among many: “…DHCS will leverage monetary sanctions and other enforcement actions, as well as public reporting on this effort, as critical tools for improving quality in Medi-Cal managed care delivery systems.” This is a very different page than the one the agency was on when the CHCF report came out three years ago. This time around, the agency, in addition to imposing sanctions, is requiring each of the low-performing MCOs, by the end of January, to submit a “revised comprehensive quality strategy,” to detail how it “intends to devote adequate resources and staff to quality improvements,” and to work with the agency on “data-driven improvement efforts that will address disparities experienced throughout the state on an ongoing basis.”
All in all, a very promising step forward for transparency and MCO accountability, one which other Medicaid managed care states would do well to emulate.
