To ensure that Californians are getting the best value possible from Medi-Cal, it is imperative that oversight and monitoring of Medi-Cal managed care by the California Department of Health Care Services (DHCS) is effective and efficient. This paper recommends how DHCS can strengthen its purchasing strategy and oversight of Medi-Cal managed care plans (MCPs) to move toward a value-based purchasing model.

Recommendations are based on best practices from other large California health care purchasers and other Medicaid managed care programs across the country. Priority recommendations include:

• Articulate a strategic vision for managed care and translate to policy requirements within the MCP contract.
• Strengthen oversight of MCPs that delegate risk to another entity.
• Enhance the current focus on quality measurement and reporting.
• Use a combination of financial and nonfinancial incentives to improve performance.
• Establish regular meetings between DHCS and MCP leadership.