California Law May Show Limits of How Far Managed Care Can Go

Children in Medi-Cal with hard-to-treat conditions like spina bifida, cystic fibrosis, and sickle cell anemia would not have to move to managed care plans under a bill that passed both houses of the California legislature last week. Its fate now rests with Governor Jerry Brown, who must decide whether to sign it.

At issue is the California Children’s Services program, which services an estimated 180,000 clients under age 21. The program has been the subject of heated debate as family members and advocates have protested folding the $2 billion program into Medi-Cal in the wake of a state auditor’s report that found widespread problems for consumers enrolled in other parts of Medicaid managed care, such as narrow provider networks and unanswered calls to the state ombudsman.

CCS functions as a traditional fee-for-service plan, while Medi-Cal is increasingly moving to managed care, which pays a capitated fee for each client it serves.

The bill’s success, amid outcry in other states as families of the disabled cry foul over plans to shift society’s most vulnerable into unknown healthcare circumstances, may show that the quest for savings under Medicaid managed care has its limits. Are some patients simply too challenging, or do huge systems like Medi-Cal need to allow more time to do it correctly?

Documented problems with finding doctors and getting appointments helped parents and advocates in California make their case. If managed care wasn’t working well for relatively healthy patients, they argued, why let Medi-Cal try to take on the most vulnerable clients, whose lives depend on highly skilled specialists? In many cases, parents have spent years locating appropriate caregivers; they would fight before ceding control to decision-makers, within managed care companies who might be unfamiliar with their child’s needs.

If Governor Brown signs the bill, the first 31,000 clients scheduled to go into managed care would be able to delay that transfer until 2017. Advocates say this will allow more time to work on a better program for the affected children and their families.

"The time frame is just too short to ensure that the managed care networks have enough pediatric specialists, and the financing is too complicated to sort out quickly," Alex Johnson, executive director of the Children's Defense Fund-California told Kaiser Health News. "Let's keep children where they are now. If we slow down and work together, we can get a program that works best for children and families."

Battles like the one in California, over trying to bring managed care principles to the most difficult cases, are going on around the country, with similar concerns being raised. In Nebraska, a mother with nursing credentials who had been paid to care for her autistic, disabled son lost a court battle to continue the arrangement under managed care.

Proposed rules pending before CMS would seek to create better ground rules for circumstances in which states use managed care for Medicaid patients who need what is called “LTSS,” or “long-term services and supports.” While the number of patients who need these services is comparatively small, the dollar amounts can be large because of the seriousness of the illnesses or conditions involved. CMS also seeks to give clearer paths for appealing decisions to deny or discontinue care.

Among the clarifications in the rules is the right of patients to have care at home, outside of institutions.