Judgment Delayed on Potential State Takeover of Alameda Alliance for Health

An Alameda County Superior Court judge yesterday continued until next week a ruling on whether the state will be allowed to take over a local initiative health plan in Alameda County.

Department of Managed Health Care officials on May 6 initiated the takeover of the Alameda Alliance for Health. They said that continuing financial problems of the Alameda Alliance threatened the care of its members.

According to a written statement from DMHC Director Shelley Rouillard, the temporary action had to be taken.

“[This] action will protect Alameda Alliance’s members and ensure they continue to get the care they need,” Rouillard said. “Our goal is to bring the plan into a healthy financial condition as quickly as possible and to transition it back to local control.”

As part of that takeover, state health officials put four members of the staff on administrative leave and reportedly escorted them out the front door.

The Alliance filed its own arguments against the takeover:

“The Board of Governors of the Alliance believe that [DMHC] is railroading their government agency into a loss of local control,” said a court filing by Alliance attorneys. They said the Berkeley Research Group, which made the takeover recommendation, also would be the appointed conservator of the local health plan, and that provided incentive for the recommendation, Alliance attorneys said. 

The Alameda Alliance for Health plan serves more than 200,000 people in Alameda County, most of whom are Medi-Cal beneficiaries.

The financial issues that prompted the intervention, state officials said, included:

  • Failure to maintain minimum tangible net equity;
  • A lack of working capital;
  • A backlog of more than 280,000 claims;
  • A “going concern” opinion from the plan’s most recent independent audit report; and
  • The plan’s failed conversion to a new claims payment system, which the state says cost more than $9 million over the past three years.

A new court date has not yet been set.

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