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Putting Quality to Work: Rewarding Plan Performance in Medi-Cal Managed Care

Bailit Health Purchasing, LLC

Examining California’s efforts to improve Medi-Cal managed care, this report highlights the development and implementation of a new performance-based incentive for health plan contractors in 14 counties.

Across the country, states are exploring various ways to improve the quality of Medicaid managed care programs — and California is no exception. In 2003, with the state’s fiscal crisis ruling out financial incentives, the California Department of Health Services (DHS) proposed joining a handful of other states in providing performance-based incentives to health plan contractors.

This system applies a set of performance indicators to the process of assigning a health plan to beneficiaries who do not choose one for themselves — essentially rewarding higher-performing Medi-Cal contractors by assigning them more enrollees. Its emphasis on performance aims to improve care for all Medi-Cal beneficiaries.

With support from the California HealthCare Foundation, and in collaboration with stakeholders, DHS launched the new performance incentive in 2005. It uses five quality measures and two measures of safety net participation to determine auto-assignment distribution in 14 counties.

This report provides an overview of the incentive system. It also examines prior auto-assignment methods, the range of ideas proposed for measuring performance, the results, and the impact it’s having on health plans.

The analysis concludes that a projected 2.7 million enrollees in 14 counties should benefit from all health plans striving to improve their performance. Additionally, the report finds that it is possible to implement performance-based auto-assignment without overtaxing administrative resources, and that under the right conditions, stakeholders are supportive of these efforts.

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