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who may have received services directly through Medi-Cal in the past.

As structured, the CCS carve-out makes neither program (CCS nor Medi-Cal) fully accountable for the care of the full child.  This leads to confusion in state expenditures.  Per the Medi-Cal estimate, Medi-Cal will spend approximately $7.2 billion in managed care payments for all children, and an additional $654 million a year for CCS care for children enrolled in managed care. This means that the CCS carve-out is equal to approximately 9 percent of the total cost of the total premium payments for all enrollees in Medi-Cal managed care.  This is even more pronounced for infants where the carve-out will pay out $30 million a year and $220 million a year for disabled children.    As other states do not have a CCS carve-out, this also makes comparison of Medi-Cal rates to the rates of other Medicaid programs difficult as it reflects an apples to oranges comparison.  In other words, unadjusted for CCS, Medi-Cal managed care rates are higher than a straight state to state comparison would demonstrate.   

The CCS program faces many challenges in serving the growing population of eligible children:

Insufficient reimbursement limits access and strains providers.  While CCS physician services receive 39 percent higher rates than the rest of Medi-Cal, CCS providers remain challenged to operate under these rates.  The program has experienced delays in its ability to discharge children home due to the inability to obtain services for these children. The providers who deliver the most care in the CCS program, physicians and hospitals, report having financial difficulty and an increasingly difficult time recruiting the needed specialty care providers.  Hospital data shows the children’s hospitals encounter significant losses, especially because hospitals must pay physician groups to meet “call” requirements, a cost that Medi-Cal does not allow.  Because of CCS’s broad coverage, these providers have a far greater percentage of state-sponsored patients than most providers.  This makes it very difficult for these providers to compensate by shifting the cost of care to private health insurance.  

Reimbursement rules create incentives for inpatient care.  Reliance on the Medi-Cal fee-for-service system brings with it the system’s bias toward paying for care on an inpatient basis rather than providing care in an outpatient setting (See Section 1-C for more information on that topic).  

Fragmented coverage creates care coordination challenges.  Medi-Cal managed care and Healthy Families carves out only the CCS services for the child’s condition, while all other medical services – including some related to their CCS-eligible condition, are covered by the health plan.  This leads to complex coordination issues and limits the ability of medical homes and specialty care centers to be created for the child.  This is particularly problematic in cases where CCS finds that part of an overall treatment plan is CCS qualified and other parts are not.  For example, CCS will pay for some of the days a neonate is hospitalized but not other days during the same stay.  Children in state/county-only CCS do not have these care coordination issues as they do not qualify for services delivered out of the CCS system.  

Health Management Associates/Harbage ConsultingPage 20

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