State fines largest Medi-Cal managed care plan $55 million for serious violations

March 08, 2022

On Friday, the California Department of Managed Health Care (DMHC) and the California Department of Health Care Services (DHCS) levied $55 million in fines against L.A. Care, the state’s largest Medi-Cal managed care plan. This consists of a $35 million penalty from the DMHC and $20 million sanction from the DHCS.

The two departments conducted coordinated investigations into the plan’s violations and worked together on the respective department actions. The departments’ investigations found several serious violations by the plan, including L.A. Care’s handling of enrollee grievances, the processing of requests for authorization, and inadequate oversight and supervision of its contracted entities regarding timely access.

L.A. Care disclosed to DHCS and DMHC in 2021 a systemic failure to issue resolution letters to members who filed a grievance with the plan. A health plan is required to acknowledge receipt of a non-urgent grievance within five days, resolve the grievance within 30 days, and send a written resolution to the member. L.A. Care reported to the DMHC that it had failed to timely respond to more than 67,000 grievances for several lines of business, including Medi-Cal. L.A. Care reported to DHCS 41,500 instances in which L.A. Care failed to timely issue a resolution letter for a grievance or appeal from January 2019 through October 2021.

Additionally, L.A. care had a significant backlog in processing requests for authorizations of health care services for members. The plan reported a backlog of 9,125 authorization requests to the DMHC and 8,517 to the DHCS for a three-month period in 2021. Upon further inquiry, L.A. Care further disclosed to the DHCS an identified 92,854 instances in which prior authorization requests were not processed timely from January 1, 2019, through October 13, 2021.

L.A. Care’s systemic failure to timely process prior authorizations for health care services delayed members’ access to necessary health care services and had a detrimental impact on its members. Examples of patient harm caused by authorization delays include a cancer patient’s health deteriorating, a plan member suffering extreme, untreated/chronic pain for over two weeks, and another cancer patient given a prognosis of six to nine months to live who disenrolled from L.A. Care because of treatment delays. These examples of documented harm to the plan’s members demonstrate L.A. Care’s failure to provide time-sensitive health care services in a timely manner.

This is just the latest example of the critical need to streamline or eliminate low-value prior-authorization requirements to minimize delays or disruptions in care delivery.

The California Medical Association is sponsoring a legislative effort in California (SB 250, Pan) to ensure patients can receive timely access to needed health care services. The bill will reform prior authorization processes and reduce administrative burdens in physician practices so physicians can spend less time on paperwork and plan bureaucracy,  and more time providing  patient care.

In addition to the prior authorization delays, the DMHC/DHCS investigations found that L.A. Care failed to maintain sufficient organizational and administrative capacity to provide services to members. L.A. Care also failed to accurately and fully disclose the full extent of its case processing backlog and past violations.


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