Medi-Cal Redesign Would Give Enrollment Contract to ‘Controversial’ Company

A provision of Gov. Arnold Schwarzenegger's (R) proposed Medi-Cal redesign plan that would give a "controversial private firm some Medi-Cal work now handled by county employers" is "igniting a debate over whether giving the job to a private company is the best way to improve customer service," the Sacramento Bee reports.

The provision, which Schwarzenegger announced earlier this month during his budget proposal, would pay Virginia-based Maximus $1.5 million annually to determine whether children who are enrolled in Healthy Families are eligible for Medi-Cal. The company currently handles Healthy Families enrollment and sends the Medi-Cal applications it receives to the counties. Under the redesign, Maximus would be responsible for about 120,000 Medi-Cal applications annually.

The health department would hire 20 more workers to monitor the Maximus contract at a cost of $6.9 million annually. According to state budget projections, expanding Maximus' contract would save the state $7 million annually by streamlining the application process and reducing state spending for temporary insurance for children with pending applications who are later deemed ineligible for Medi-Cal.

According to the Bee, the proposal is part of an effort to provide a "one-stop center" where low-income residents could go for all necessary government services.

Maximus officials indicated they would need to modify their technology "only slightly to accommodate the new work," the Bee reports.

The proposal, first raised during the California Performance Review, resulted after the state received input from Kathryn Lowell, a Maximus employee who was deputy health secretary under former Gov. Pete Wilson (R).

Stan Rosenstein, deputy director of the Office of Medical Care Services in the Department of Health Services, noted that the proposed shift of Medi-Cal applications is a small part of the redesign plan and said that the contract extension would help the state "test the [CPR's] concept." Rosenstein added, "It will provide us with a lot of information that will be useful in evaluating in the future whether we proceed with the CPR proposal or not."

Steve Tough, president of Maximus' Western region, said the company could oversee "faster" Medi-Cal enrollment, adding, "What we provide is the hopeful perspective. We bring technology and streamline the process."

County officials and advocates said that Medi-Cal, with 165 ways to qualify and "complicated rules," is "just too complicated to give to a private vendor that does not have the same computer programs that county offices use," the Bee reports.

Critics also note that Maximus had problems at the beginning of its Healthy Families contract last year when it mistakenly dropped children from the program and users reported poor customer service.

Although officials at the Managed Risk Medical Insurance Board, which runs Healthy Families, said the initial problems with Maximus' contract have "largely cleared up," other states and municipalities also have complained about Maximus' ability to run programs similar to Healthy Families and Medi-Cal, the Bee reports. For example, the company in December 2004 reported that the U.S. attorney's office in the District of Columbia had opened a fraud investigation into its work with the city's Medicaid program.

Frank Mecca, head of the County Welfare Directors Association, said, "We don't believe the implementation, operational and financial consequences have been fully thought-out. If there's a way to make it work that's better for clients, then we would support it."

Celia Valdez of Los Angeles-based Maternal and Child Health Access said, "Medi-Cal is such a huge and complex program. There's no way you can look at one person and say this person is eligible or not eligible." Valdez added, "It would be very difficult for a company like Maximus to just handle it all of a sudden" (Benson, Sacramento Bee, 1/30).

The Medi-Cal redesign plan, which would move about 800,000 beneficiaries from the fee-for-service system to private managed care plans, would "mak[e] sense," regardless of whether it results in any savings for taxpayers, a Bee editorial states.

While it will take "considerable effort to make this big shift without disrupting care," the state's history of "partnering with the health plans to provide the care and truly manage the needs" of low-income residents "has shown that the effort is worth it," the editorial states. According to the editorial, "It's far easier to track the care, and the quality of the care, of an HMO responsible for all the patient's health needs."

The editorial concludes that even if the transition does not result in the $177 million in annual savings estimated by the Schwarzenegger administration, managed care "is better suited to providing comprehensive care for chronically ill patients than relying on these patients to find the necessary doctors and specialists" (Sacramento Bee, 1/25).

Additional information on the Medi-Cal redesign project is available online.