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this population with the intent that this process be completed before further expansion.  The Department continues its process to improve the managed care rate setting process.


Integrating Managed Care with Hospital Financing.  Currently, the state reimburses managed care plans for the non-federal share of payments to designated public hospitals.   For fee-for-service enrollees, designated public hospitals (per the hospital waiver agreement) are paying the non-federal share of care through the certified public expenditure process.  Moving more Medi-Cal enrollees from fee-for-service to managed care will shift the source of the non-federal funds to the state general fund.  The new hospital cost to the state general fund will significantly offset the state’s savings from managed care.  Some of these new general fund costs might be reduced by a voluntary intergovernmental transfer (IGT) from the counties, but the state cannot require them to contribute.


Chronic Care Management.  Many states have been very effective in improving their Medicaid programs by increasing the management of chronic care.  California has four pilots under way to create management programs, as well as the long-running Medical Case Management (MCM) program.  An evolution of these programs and measurement of the effectiveness of the MCM program could serve as a basis for reform in Medi-Cal.  The program could look at the following elements:


Targeting patients according to predictors of continued high utilization of services.


Individualized hospital pre-discharge planning and counseling by multi-disciplinary teams in order to avoid readmissions.


Higher-intensity interventions that wind down to a level of patient self-management.


Face-to-face meetings among multi-disciplinary teams using care managers and guidelines and a targeted patient treatment plan.


Lessons Learned from the Coverage Initiatives.  The state’s current Section 1115 waiver has created 10 coverage initiatives, many of which are implementing programs to provide care management and medical homes for high cost indigent care populations.  While the program has not yet been formally evaluated, preliminary results indicate that these programs are effective in providing more coordinated care and may reduce the cost of care for this indigent population.  The state could explore cost-effective ways to expand these programs to Medi-Cal beneficiaries to generate quality improvements and cost savings.  

For example, the public hospitals participating in these initiatives are the primary source of care for a significant number of Medi-Cal beneficiaries.   (In many cases, the care management benefits provided under the coverage initiative are not provided to people enrolled in Medi-Cal.)  From the initial review, it is clear that:

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