Health Insurers Owed $271 Million

State officials this week said the Healthy Families program owes $271 million in services already provided by its network of 20 health care insurers and the program needs legislative help to fix the problem.

Healthy Families’ overall shortfall is projected to be $366 million for the year, a deficit caused by expiration of the managed care organization tax in December. Last week, the Senate budget subcommittee on Health and Human Services delayed a vote on the MCO tax.

“The Legislature failed to extend the MCO tax, therefore MRMIB did not have sufficient cash to pay for the Healthy Families program invoices,” said Tony Lee, deputy director for administration at the Managed Risk Medical Insurance Board, which oversees the Healthy Families program. Lee spoke Wednesday at the monthly MRMIB board meeting.

“MRMIB has contacted all of our Healthy Families program plans as well as our administrative vendors to let them know that payments would be delayed while MRMIB works with the [Brown] Administration to seek remedy,” Lee said.

Movement likely will come in the next few weeks, as the Legislature and the governor hammer out details of the budget. Managed care organizations have said they would support an MCO tax if the money funds Medi-Cal programs. The Brown Administration has been pushing for MCO revenue to go into the general fund, which funds Medi-Cal as well as other state programs.

Roughly 860,000 Healthy Families children are being transitioned to Medi-Cal managed care plans. Since the four-phase transition started in January, 614,224 children have made the switch to Medi-Cal managed care. Healthy Families enrollment is currently 154,069 children, according to MRMIB officials. Many families disenrolled or were dropped from the program for non-payment, MRMIB officials said.

Board member Richard Figueroa said one of the most pressing issues now for MRMIB is to oversee as smooth a transition as possible.

“We’re trying to make sure children transition appropriately,” Figueroa said. “And we’re doing whatever oversight we can to ensure quality of care and access to care under the new program.”

MRMIB executive director Janette Casillas said the agency is working hard to come up with a quick resolution of the payment problem.

“We have been working with the [Brown] Administration and the Legislature in resolving MRMIB’s budget shortfall,” Casillas said. “We are very appreciative of our Healthy Families plan partners and vendors for their patience as we collectively work toward a solution.”

Elizabeth Abbott, director of administrative advocacy for Health Access, a not-for-profit legislative research and advocacy group, raised another Healthy Families issue at the MRMIB meeting this week. She said the state needs to communicate a specific provision about coverage more clearly to Healthy Families beneficiaries: Some patients can remain in their current provider network even if that provider does not accept Medi-Cal patients, Abbott said.

“If your child is undergoing a serious course of treatment, you can delay, because of the continuity of care issue, up to 12 months, and for a newborn, up to 36 months,” Abbott said. “We think it’s a really critical notice to give to families.”

That information could be included in the 60-day notices sent out by the Department of Health Care Services, Abbott said.

“If you don’t tell consumers about this provision, they are very unlikely to exercise this provision,” Abbott said. “It’s really important.”

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