Over the past decade, the California Department of Health Care Services (DHCS) has dramatically increased the reach of the Medi-Cal managed care program through the successful expansion of Medicaid under the Affordable Care Act, the integration of the Children's Health Insurance Program into Medi-Cal, and a significant expansion of managed care to seniors and persons with disabilities and to rural areas of the state. With 10.8 million enrollees and expenditures of $49 billion, the Medi-Cal managed care program is larger than the entire budget of all but two other states. To ensure that Californians are getting the best value possible from this critically important program, it is imperative that oversight and monitoring of Medi-Cal managed care by DHCS is effective and efficient. With this goal in mind, the California Health Care Foundation (CHCF) engaged Bailit Health to research and make recommendations for how DHCS could strengthen its purchasing strategy and oversight of Medi-Cal managed care plans (MCPs). In approaching this work, Bailit Health drew from its value-based purchasing perspective, consultations with CHCF, knowledge of other states' Medicaid managed care contracts, prior experience as state Medicaid managed care staff, consulting experience with many Medicaid agencies, and knowledge of other state and private purchasers' use of tools with contracted MCPs. Value-based purchasing is an ongoing process that begins with defining a procurement approach and vision, and then continually monitoring, measuring, and modifying the approach to improve quality and outcomes, including using financial and nonfinancial incentives and penalties. At its core, the value-based purchasing model encourages purchasers to move beyond a compliance-based oversight model to one in which they have a collaborative partnership with MCPs to help improve performance and advance the purchaser's vision. Bailit Health employed a multipronged research approach, including identifying potential types of health care purchasing tools and strategies, reviewing managed health plan contracts of select public purchasers, and interviewing public purchasers and stakeholders in California as well as senior Medicaid managed care staff in select other states. The authors conducted research in the fall of 2018, prior to Governor Newsom's administration taking office. This research work was informed by examining health plan contracts and other available material from Medi-Cal, Covered California, and the California Public Employees' Retirement System (CalPERS) as well as interviewing staff responsible for oversight of these purchasers' MCP contracts. Similarly, the authors reviewed Medicaid MCP contracts in Florida, Massachusetts, Tennessee, Texas, and Washington. To supplement the authors' knowledge, interviews were also conducted with Medicaid staff from those states and Oregon.
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