Why the State’s Seizure of a Local Health Plan May Have Rescued It

It’s an unusual move, to lock out the people running a local health plan serving about 204,000 people, and to assume state stewardship of that plan.

But that’s what the California Department of Managed Health Care and its director Shelley Rouillard did, just over one year ago in Alameda County in the East Bay.

“We had to take it over in order to save it,” Rouillard said at the time.

The action was pretty dramatic, with four administrators being relieved of their duties and escorted out of the office building one day. The move came amid allegations that the state monitor of the health plan stood to benefit from the seizure when it became the conservator of the plan, too.

Now Rouillard and her department plan to return the Alliance to local control, perhaps at a Superior Court hearing date on Oct. 29. The state will still actively monitor the finances of the health plan but that’s much better than the alternative, Rouillard said.

“It will be six to 12 months of monitoring,” Rouillard said with a small sigh, “but at least I won’t be running it.”

Conditions of Turnover to Local Control

There are three major requirements and a number of smaller markers to be met before the state can relinquish the reins.

“We have developed a corrective action plan that describes the milestones the plan needs to meet,” Rouillard said.

Whether the plan will meet those milestones remains to be seen. The board members and staff apparently want to be silent on whether those goals can be met, as well as just discussing the future outlook for the Alameda Alliance for Health.

Several Alameda Alliance board members were called or emailed for this story and either didn’t return calls or declined to comment. The health plan’s CEO, Scott Coffin, also declined to comment, as did the plan’s medical director, Laurie Nakahira.

Corinne Jan, CEO of Family Bridges, a community-based health and social services organization based in Oakland, was not so reticent to share her thoughts.

“I’m really excited about returning to local control,” Jan said. She said the organizers of Alameda Alliance had done great work for many years, and that the state takeover because of finances interrupted some of the organization’s work.

“This will mean a continuance of the strategic partnerships that we had started before the takeover,” Jan said. “We were working together to meet our community goals of access to quality care. So we are waiting with bated breath.”

According to Rouillard, the three big items on the agenda necessary for return to local control already have been fulfilled. That assumes the biggest agenda item, the new claims processing system launched Sept. 1, proves to work well.

“We were most concerned about that,” Rouillard said. “And also about tangible net equity (now up to 376%), and that’s clearly a target that’s been met. We wanted to make sure the payments backlog was cleared up and they are now, so that’s been met.”

With three big ones down, that leaves the smaller targets that Rouillard hopes can be reached by the end of October. “There are other milestones around provider directories and operational things,” she said.

One of those items, for instance, was answering the phone within 30 seconds, and that may take some work.

Some patients (as well as some members of the media) have had to wait lengthy periods of time, up to 45 minutes or more, to reach a representative on the phone.

Some of the milestones are:

  • Answer the phone within 30 seconds 80% of the time;
  • Get the call abandonment rate under 5%;
  • Hold training sessions with staff;
  • Make sure provider directories are accurate; and
  • Fill several open management positions, including finding a new chief operating officer and chief information officer.

Looking Forward to a Change-Over

All of that is well within reach, Rouillard said.

“It has been primarily the financials we’re concerned about, and paying claims on a timely basis,” Rouillard said.

When the Oct. 29 court date arrives, she added, “I hope to be able to say we’re ready, and they’re ready.”

Rouillard credits the firm hired as the conservator — Berkeley Research Group, based in Emeryville — for resolving the financial difficulties and launching a new claims system.

“They pretty much revamped the whole IT department,” she said. “It is a function of the conservator’s effort that’s going to make this work. They built the system and made it work.”

For Corinne Jan, it will be a relief to have the Alliance back and the drama over.

“It was a pretty dramatic occurrence in the health community,” Jan said. “Everyone was really concerned. After we saw there was nothing we could do, we sat back and watched and waited and hoped for a better organization to emerge, and that’s what we’re waiting to see. And we’re eager to be part of that again.”

Membership at Alameda Alliance has grown substantially in the past year, in part because of Medi-Cal expansion: As of June 30, 2015, Alameda had 246,526 enrollees (compared to about 204,000 in May 2014), according to DMHC officials. About 98% of those enrollees are Medi-Cal members.

Categories: Insight, Insurance