CMS, State Officials Halt Participation of CalOptima in Dual-Eligible Plan

Federal officials on Friday declared Orange County’s CalOptima insurance company had “multiple, serious violations” in its program for seniors and the disabled.

The insurer denied legally-required prescription coverage, failed to process provider payments in a timely manner and failed to pay for covered emergency services, among other charges, according to a letter released Friday by CMS officials.

The 10-day audit found these problems to be “widespread and systemic.”

“CMS has determined that CalOptima failed to provide its enrollees with services and benefits in accordance to CMS requirements,” the letter said.

In a written statement, CalOptima CEO Michael Schrader said he hopes to address all CMS concerns quickly. “While there is a significant amount of work ahead for CalOptima and our health network partners, rest assured that there is no higher priority than ensuring access and quality of care for our members,” he said.

For state health officials, the CMS findings mean one of California’s eight pilot counties has been eliminated from the Cal MediConnect program, a project slated to begin Apr. 1. CalOptima is the sole insurer in Orange County for the pilot project. California health officials said the insurer could join the dual-eligibles project after it “completes the corrective action” required by CMS.

Orange County has the second-largest population of dual-eligibles in California (after Los Angeles County), with more than 57,000 potential participants in the Cal MediConnect program.

Statewide, Cal MediConnect had hoped to transition up to 456,000 seniors and the disabled who are dually eligible for both Medi-Cal and Medicare into a managed care program. There are a total of one million dual eligibles in California, officials estimate.  

“The [CMS audit] findings were significant, and they raise considerable concern at the Department of Health Care Services,” said a written statement from DHCS officials.

“Given these concerns, Cal MediConnect will not move forward in Orange County until CalOptima has successfully completed the immediate corrective actions prescribed by CMS,” the statement said.

The audit looked at the care received by patients in CalOptima’s OneCare program, which will continue to serve the 16,000 people in that program, but no new enrollees will be allowed in the program.

“Violations resulted in enrollees experiencing delays or denials in receiving covered medical services or prescription drugs, and increased out of pocket costs,” the CMS letter said. “CalOptima’s conduct poses a serious threat to the health and safety of Medicare beneficiaries.”

State health officials also said they will launch their own audit of CalOptima.

“DHCS and the Department of Managed Health Care (DMHC) intend to conduct an audit of the Medi-Cal operations at CalOptima,” DHCS officials said in a written statement. “This Medi-Cal audit is part of a larger effort by DHCS to work closely with CalOptima, CMS, DMHC and all appropriate partners to ensure that members served by the plan receive the quality of care to which they are entitled.”