CalOPTIMA (Orange, CA)

CalOPTIMA is a county-based Health Insuring Organization in Orange County California. Through CalOPTIMA, the county as enrolled 300,000 Medicaid recipients in managed care. PHPG has worked for CalOPTIMA since 1994 and is currently assisting the agency in evaluating alternative reimbursement arrangements for hospital services. PHPG consultants were involved in the development of the design components and participation requirements for the program's unique "Physician-Hospital Consortia", and assisted in the agency's initial contracting activities.

PHPG assisted in the performance of operational compliance audits of all contracted plans, to identify areas of deficiency and to make recommendations for program improvement.

Specific activities have included:

• Assisting the County Oversight Board in a public process designed to build consensus for the program

• Assisted in the design of a managed care delivery system model, including design of financing models

• Participating in the development of the RFP for health plans and evaluation of proposals

• Conducting operational compliance audits of contracted health plans

PHPG conducted an in-depth financial analysis of program utilization, unit cost and per member per month expenditures by aid category and service type. We also analyzed administrative costs and profitability among the county’s Physician-Hospital Consortia managed care contractors. At the conclusion of our study, we outlined options for modifying benefits and restructuring risk arrangements between the county and its contractors to achieve the necessary savings. The options ranged from incremental steps, such as streamlining medical case management and reducing specialist physician payment rates, to structural changes such as elimination of hospital capitation in favor of direct contracting with selected hospitals.