MOORLACH UPDATE — CalOptima State Audit — February 6, 2014

A little sooner than expected, the Medical Review Branch of the Department of Healthcare Services (DHCS) informed CalOptima yesterday that they would be by on Monday to conduct a two-week onsite Medical Review Audit, from February 10-21. CalOptima CEO Michael Schrader informed the Board of Supervisors yesterday afternoon that “The audit team will include 8-10 auditors from DHCS and the Department of Managed Healthcare (DMHC). The audit will include our delegated health networks. The audit period will be from 7-1-13 to 12-31-13. The audit team is requiring that CalOptima provide a comprehensive data set, from which a sample of cases will be pulled, by the close of business tomorrow. The auditors will require that some health networks have representatives onsite at CalOptima for the audit. The auditors will review grievances; care coordination; utilization management; appeals; and fraud, waste, and abuse.”

On Tuesday, CEO Schrader stated that MediCal policies, procedures and oversight are quite different and less stringent from that of Medicare and Medicaid and that the state audits should go much better than the one just completed by the federal Centers for Medicare & Medicaid Services. This was in response to one of my inquiries during the Board meeting. Let’s hope that he is correct, that the recent findings can be resolved and corrected, and that CalOptima can go about the business of assisting those in our County that cannot otherwise afford or access health care services.

State Auditors Descend on CalOptima


California’s Department of Health Care Services will begin its own special review Monday of potential problems at CalOptima, Orange County’s health plan for low-income, disabled and elderly residents.

The review comes on the heels of a severely critical federal audit report last month that cited a potentially “serious threat to the health and safety” of participants in CalOptima’s 16,000-member OneCare program for low income, elderly residents. Federal officials ordered CalOptima to halt new enrollments in OneCare and immediately fix the worst problems.

The CalOptima board of directors, which has yet to discuss the audit by the federal Centers for Medicare & Medicaid Services, holds its regular monthly meeting today, but the audit isn’t on the agenda, meaning board members can’t talk about it. It’s unknown when the 11-member board of directors plans to start dealing with the problem.

When the federal audit report was released Jan. 24, state officials announced they would also conduct a full audit of the way CalOptima handles Medi-Cal, the California program for federal Medicaid health program for those with low incomes. That audit is scheduled to begin later this year.

But Wednesday, health officials in Sacramento notified CalOptima they would begin a “focused review” next week of programs identified in the federal audit.

That review, which is expected to take about a week, will be handled by auditors and medical reviewers but the results won’t be publicly available until they are analyzed in the following weeks.

“If there are corrective actions, the plan will be notified and a corrective action plan will be implemented,” said Department of Health Care Services public information officer Carol Sloan in an email.

In the meantime, two county supervisors Wednesday questioned why they were denied access to an internal CalOptima board of directors report that said the agency’s two in-house lawyers wrongly accused former CalOptima executives of misconduct.

The lawyers leveled the unfounded charges because they thought they were about to be fired, according to the 2011 report by the Costa Mesa-based Theodora Oringher law firm, which was obtained by Voice of OC.

Supervisor John Moorlach, adding to comments he made during Tuesday’s supervisors’ meeting, said in 2012 he had one of his aides contact CalOptima to get the Theodora Oringher report but, he said, the aide was told by CalOptima General Counsel Gary Crockett that Moorlach couldn’t have it. Only CalOptima board members could see it, the aide was told.

Last year, said Moorlach, he publicly asked during a supervisors meeting for the Theodora Oringher report but was told later by Mark Refowitz, head of the county’s department of Health Care Services and chairman of the board of CalOptima, “negative. You can’t have it.”

Similarly, Supervisor Todd Spitzer said Wednesday he asked Refowitz this week for the Theodora Oringher report but Refowitz told him access was restricted only to those who were on the CalOptima board of directors at the time the report was delivered in late 2011.

Not true, said Ed Kacic, who was chairman of the CalOptima board of directors at the time the Theodora Oringher reports were delivered. Kacic said when new members, including Refowitz, came on the CalOptima board in early 2012, he asked Todd Theodora if he could give them the report.

At the time, the CalOptima board was implementing the report’s recommendations, including hiring an outside general counsel, and contracting with a firm to do an assessment of CalOptima. CalOptima managers also were upgrading the status of the compliance officer.

Kacic said he thought it was important for all new board members to know why the steps were taking place.

In a cover note to new board members and former Supervisor Bill Campbell, who was the new alternate, Kacic wrote “…the CalOptima Board retained Theodora Oringher to conduct an inquiry into various matters. For you information and reference, and per Theodora Ohringer’s instructions I have included a copy of the final report for your information…”

Kacic said he sent it to Refowitz twice because Refowitz told him he deleted the first copy without reading it.

Refowitz declined to be interviewed about the Theodora Oringher report.

Supervisor Janet Nguyen went to county counsel Nick Chrisos in late 2011 when she wanted to distribute a portion of the same report to at least some other supervisors.

Theodora told Kacic that he, Chrisos and District Attorney Tony Rackauckas held a conference call and decided it was proper for Nguyen to distribute it to other supervisors. The CalOptima board, which also is a county agency under the Board of Supervisors, still could maintain the confidentiality of the report, Kacic said Theodora told him.

Nguyen took control of CalOptima following a controversial December 2011 vote by herself, Supervisors Pat Bates and Bill Campbell that put Nguyen in a position to remake the CalOptima board of directors, heightening representation for the health industry and county agencies on the board.

Supervisors Moorlach and Shawn Nelson both voted against the proposal and were vocally opposed to changing CalOptima’s governing ordinance.

Internal upheaval within CalOptima, fueled according to the Theodora report by the toxic relationship between top managers and the agency’s lawyers, was later heightened following Nguyen’s efforts to appoint new board members.

In the wake of the upheaval, nearly two dozen top and key executives left for jobs in private industry or other government agencies.

Supervisors signaled Tuesday they would move to blunt Nguyen’s influence over the health plan that serves about 470,000 county residents, most of them children.

The management vacancies and lack of leadership at CalOptima following Nguyen’s takeover contributed to administrative lapses and played a role in the outcome of the federal audit, CalOptima CEO Michael Schrader told the Board of Supervisors.

“That turmoil definitely had an impact in terms of operational focus,” Schrader said.

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