Board of Governors Meeting #238

BOARD OF GOVERNORS MEETING #238

September 4, 2014 ● 2:00 PM L.A. Care Health Plan 1055 W. 7th Street, Los Angeles, CA 90017

1 Mission, Vision & Values

Our Mission To provide access to quality health care for Los Angeles County’s vulnerable and low income communities and residents and to support the safety net required to achieve that purpose.

Our Vision A healthy community in which all have access to the health care they need.

Our Values We are committed to the promotion of accessible, high quality health care that:

* Is accountable and responsive to the communities we serve and focuses on making a difference; * Fosters and honors strong relationships with our health care providers and the safety net; * Is driven by continuous improvement and innovation and aims for excellence and integrity; * Reflects a commitment to cultural diversity and the knowledge necessary to serve our members with respect and competence; * Empowers our members, by providing health care choices and education and by encouraging their input as partners in improving their health; * Demonstrates L.A. Care’s leadership by active engagement in community, statewide and national collaborations and initiatives aimed at improving the lives of vulnerable low income individuals and families; and * Puts people first, recognizing the centrality of our members and the staff who serve them.

AGENDA BOARD OF GOVERNORS MEETING No. 238 Thursday, September 4, 2014, 2:00 P.M. L.A. Care Health Plan, 10th Floor, 1055 W. 7th Street, Los Angeles, CA 90017

Teleconference Call In Information Teleconference Site Call in number: (855) 846-1604 or (213) 438-5445 Honorable Gloria Molina Participant Access code: 67163639 County of Los Angeles Board of Supervisors 500 W. Temple Street #856 Los Angeles, CA 90012

I. Welcome Thomas Horowitz, D.O. Chair

II. Approve today’s meeting agenda Chair

III. Public Comment Chair

IV. Approve July 10, 2014 meeting minutes Chair

V. Approve Consent Agenda Items Chair 1. Kenny-Edelman Contract to support Department of Health Services (BOG 100) 2. Quarterly Investment Report (FIN 100) 3. Office Ally Contract Amendment (FIN 101) 4. Healthx Contract Amendment (FIN 102) 5. Interpreting Services International (ISI) Contract (FIN 103) 6. Salesforce Contract and Implementation Vendor Contract Amendment (FIN 104) 7. Maricich Healthcare Communications Contract (FIN 105) 8. Disaster Recovery/Business Continuity Services Contract (FIN 106) 9. 2014 Compliance Program, 2014 Code of Conduct, 2014 Compliance Auditing and Monitoring Plan (COM 100) 10. 2015 Board and Committee Meeting Schedule (GOV 100) 11. RCAC Members (ECA 100) 12. CHCAC Member (CHC 100)

VI. ADJOURN TO CLOSED SESSION (Est. time: 60 mins.) Chair

A. CONTRACT RATES Pursuant to Welfare and Institutions Code Section 14087.38(m) · Plan Partner Rates · Provider Rates · DHCS Rates

B. REPORT INVOLVING TRADE SECRET Pursuant to Welfare and Institutions Code Section 14087.38(n) Including Discussion Concerning New Product Lines Estimated date of public disclosure: September 2016

C. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Section 54956.8 of the Ralph M. Brown Act Property: 1055 West 7th Street, Los Angeles Agency Negotiator: Howard A. Kahn Negotiating Parties: Jamison Properties, 1055 West Seventh, LLC Under Negotiation: Price and Terms of Payment

3 8/29/2014 8:57 AM Board of Governors Meeting Agenda September 4, 2014

D. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Property: 1200 West 7th Street, Los Angeles Agency Negotiator: Howard A. Kahn Negotiating Parties: Jason L. Warner, Managing Director of Jones Lang LaSalle; Charter Holdings, Inc.; RML Leasing Corp., Wells Fargo Bank Under Negotiation: Price and Terms of Payment

E. PUBLIC EMPLOYMENT Pursuant to Section 54957 Ralph M. Brown Act Title: Chief Executive Officer

VII. RECONVENE IN OPEN SESSION Chair

VIII. Chairperson’s Report Chair

IX. Chief Executive Officer Report Howard A. Kahn · Operations Report Chief Executive Officer

· 3rd Quarter Organizational Performance Report

X. Chief Medical Officer Report Gertrude S. Carter, MD Chief Medical Officer XI. Approve Motions for Consideration Chair 1. Ansafone Contract Amendment (BOG 101) 2. Dickerson Employee Benefit Insurance Services Contract Amendment (BOG 102) 3. Contracts Amendment: Vendors for Temporary Labor (BOG 103) 4. FY 2013-14 Community Health Investment Fund (CHIF) Ad-Hoc Grants A. Achievable Foundation (BOG 104) B. Antelope Valley Community Clinic (BOG 105) C. Corporation for Supportive Housing (BOG 106) D. Multipurpose Senior Services Program (BOG 107)

XII. Committee Reports

A. Executive Committee Thomas Horowitz, D.O., Chair

1. Government Affairs Update Cherie Fields Director, Government Affairs

B. Finance & Budget Committee Michael Rembis, Chair

1. Approve Financial Report (BOG 108) Tim Reilly Chief Financial Officer

2. Approve Operating & Capital Budget Fiscal Year 2014-2015 Tim Reilly (FIN 107)

3. 3rd Quarter Pre-Qualified Vendors Report Jonathan Freedman, Chief of Strategy, Regulatory, and External Affairs

C. Compliance & Quality Committee G. Michael Roybal, MD, MPH 1. Approve Revisions to Member Services Policy No. 003 Chair (Member Assignment and Selection Process) (COM 101)

D. Governance Committee Alexander K. Li, MD 1. Approve Nomination of Hector De La Torre to L.A. Care Chair Board of Governors (GOV 101) 8/29/2014 8:57 AM 4 Board of Governors Meeting Agenda September 4, 2014

E. Audit Committee Meeting G. Michael Roybal, MD, MPH Chair

XIII. Advisory Committee Reports

AA. Children’s Health Consultant Advisory Committee Thomas S. Klitzner, MD, PhD

XIV. Adjournment

The next meeting is scheduled for Thursday, October 2, 2014.

The order of items appearing on the agenda may change during the meeting. Teleconference arrangements may change prior to the meeting. Those planning to participate by telephone should confirm with L.A. Care Board Services prior to the meeting.

Please keep your comments to three minutes or less.

THE PUBLIC MAY ADDRESS THE BOARD OF GOVERNORS ON ALL MATTERS LISTED ON THE AGENDA BY FILLING OUT A “REQUEST TO ADDRESS” FORM AND SUBMITTING THE FORM TO L.A. CARE STAFF PRESENT AT THE MEETING BEFORE THE AGENDA ITEM IS ANNOUNCED. YOUR NAME WILL BE CALLED WHEN THE ITEM YOU ARE ADDRESSING IS DISCUSSED. THE PUBLIC MAY ALSO ADDRESS THE BOARD ON L.A. CARE MATTERS DURING PUBLIC COMMENT. AN AUDIO RECORDING OF THE MEETING IS MADE TO ASSIST IN WRITING THE MINUTES AND IS RETAINED ONLY FOR 30 DAYS.

NOTE: THE BOARD OF GOVERNORS CURRENTLY MEETS ON THE FIRST THURSDAY OF MOST MONTHS AT 2:00 P.M. POSTED AGENDA and PRINTED MEETING MATERIALS ARE AVAILABLE FOR INSPECTION AT Board Services, 1055 W. 7th Street – 10th Floor, Los Angeles, California 90017.

Any documents distributed to a majority of the Board Members regarding any agenda item for an open session after the agenda has been posted will be available for public inspection at Board Services, L.A. Care Health Plan, 1055 W. 7th Street, 10th Floor, Los Angeles, CA 90017, during regular business hours, 8:00 a.m. to 5:00 p.m., Monday – Friday.

Meetings are accessible to people with disabilities. Individuals who may require any accommodations (alternative formats – i.e., large print, audio, translation of meeting materials, interpretation, etc.) to participate in this meeting and wish to request an alternative format for the agenda, meeting notice, and meeting packet may contact L.A. Care’s Board Services Department at (213) 694-1250. Notification at least one week before the meeting will enable us to make reasonable arrangements to ensure accessibility to the meetings and to the related materials.

8/29/2014 8:57 AM 5 Board of Governors General Meeting # 237 Meeting Minutes – July 10, 2014 L.A. Care Health Plan Conference Room 1018-1019 1055 W. Seventh Street, Los Angeles, CA 90017

Members Management/Staff Thomas Horowitz, DO, Chairperson Ozzie Lopez, MPA Howard A. Kahn, Chief Executive Officer Mark Gamble, Vice Chairperson Supervisor Gloria Molina* Trudi Carter, MD, Chief Medical Officer Michael A. Rembis, FACHE, Treasurer * Hilda Perez Jonathan Freedman, Chief of Strategy, Regulatory & External Affairs Louise McCarthy, Secretary * G. Michael Roybal, MD, MPH Augustavia J. Haydel, Esq., General Counsel Thomas S. Klitzner, MD, PhD * Sheryl Spiller Tim Reilly, Chief Financial Officer Jann Hamilton Lee Walter A. Zelman, PhD Tom Schwaninger, Chief Information Officer Alexander K. Li, MD *absent; ** via telephone John Wallace, Chief Operating Officer

AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN CALL TO ORDER Thomas Horowitz, DO, Chairperson, called the meeting to order at 2:08 p.m.

Thomas Horowitz, DO, Chair Horowitz announced that the public may address the Board on the matters listed on the agenda before or during the Board’s consideration of the item, and on any other matters during the public comment section.

Chair Horowitz and the Board recognized Barbara Cook for her service to L.A. Care. Howard A. Kahn, Chief Executive Officer, congratulated Ms. Cook on her retirement and expressed appreciation on behalf of L.A. Care for Ms. Cook’s work during her nine years with L.A. Care. As Chief of Human and Community Resources, Ms. Cook oversaw a period of significant growth for L.A. Care’s staff and managed the restructure of the Community Outreach and Engagement, greatly improving the involvement of L.A. Care’s members.

Ms. Cook thanked the Board and staff members. She noted that working at L.A. Care has been a pleasure and it is an organization where the mission is of primary importance.

Member Perez thanked Ms. Cook for her service to members and the consumer advisory groups, and wished her well in her retirement.

Mr. Kahn introduced new staff members Francisco Oaxaca, Communications Director, and Bob Turner, Chief of Human Resources.

APPROVAL OF Chair Horowitz noted that the Services Agreement Committee meeting scheduled for today Approved unanimously. MEETING AGENDA was cancelled. 9 AYES (Gamble, Hamilton

6 DRAFT AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN Lee, Horowitz, Li, Lopez, Thomas Horowitz, DO The meeting Agenda was approved as submitted. Perez, Roybal, Spiller, and Zelman).

PUBLIC COMMENT Public Comment: Elizabeth Cooper, Member, RCAC 2, offered sincere good wishes to Barbara Cook on her retirement. She expressed her concern to the consumer representative and advocate members, Hilda Perez and Ozzie Lopez, that a promise had been made to her prior to the Board meeting she would be updated but she has not been informed as promised.

She noted that there is a serious water shortage in California and she asked that the Board of Governors consider ways that L.A. Care can encourage members to conserve water as it is a public health concern. She recommended that L.A. Care be aware of the issue and communicate with members about how to conserve water. She thanked Mr. Kahn for adding diversity among the staff.

On behalf of Jonathan Cooper, she thanked the staff for their good wishes during his recent illness. Also on his behalf she encouraged more diversity in staff at L.A. Care.

Dr. Zelman expressed appreciation for Ms. Cooper’s statements on water conservation and encouraged everyone to do all that is possible to conserve water.

Mr. Kahn noted that in furnishing the headquarters offices, L.A. Care received recognition for water conservation systems and use of recycled materials.

ACCEPTANCE OF The minutes of the June 5, 2014 meeting were approved as submitted. Ap proved unanimously. MINUTES OF 9 AYES MEETING

Thomas Horowitz, DO

APPROVAL OF Public comment: Elizabeth Cooper commented that she is concerned that Community CONSENT AGENDA Outreach and Engagement (COE) staff is being moved to offices in the Garland Building. The members served by L.A. Care are important and she does not want members relegated to Thomas Horowitz, DO a lower status. She would like to see the COE staff stay in the headquarters building. She is concerned that responsibilities for COE will now be handled by the Senior Director Member and MediCal Operations. She encouraged more diversity in staff recruitment. A motion was approved by her Regional Community Advisory Committee 2 on the Coordinated Care Initiative (CCI), and was presented at the Executive Community Advisory Committee Board of Governors Meeting July 10, 2014 DRAFT 7 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN meeting. She would like the Board of Governors to consider the motion brought by RCAC 2. Mr. Kahn responded that the COE staff will be moving in order to improve services to L.A. Care members, as COE will be closer to the Member Services staff to coordinate member assistance and programs.

Chair Horowitz presented eight motions on the Consent Agenda. The Consent Agenda was 1. TenTek Temporary Staffing (FIN 100) approved unanimously as 2. DTL Temporary Staffing (FIN 101) presented. 9 AYES 3. Cognizant Technology Solutions U.S. Corporation Contract Amendment (FIN 102) 4. RCAC Membership (ECA 100)

Four items were added to the Consent Agenda from Section XI, Motions for Consideration: 5. Healthy Kids 0-5 Extension to 2015 (BOG 101) 6. Sierra Pacific Constructors contract extension (BOG 102) 7. Authorization for Restacking Project at the headquarters building (BOG 103) 8. Authorization to open account with Mutual of Omaha Bank (BOG 104)

ADJOURN TO Augustavia Haydel, Esq., General Counsel, announced the following items to be discussed in closed session, and she reported CLOSED SESSION that an announcement on the closed session is expected when the meeting reconvenes in open session. The Board adjourned to a closed session at 2:34 p.m. Thomas Horowitz, DO A. CONTRACT RATES Pursuant to Welfare and Institutions Code Section 14087.38(m) • Plan Partner Rates (not needed) • Provider Rates • DHCS Rates

B. REPORT INVOLVING TRADE SECRET Pursuant to Welfare and Institutions Code Section 14087.38(n) Discussion concerning New Product Lines Estimated date of public disclosure: June 2016

C. CONFERENCE WITH LEGAL COUNSEL –EXISTING LITIGATION Pursuant to Section 54956.9 (d) (1) of Ralph M. Brown Act Name of case: Lancaster Hospital Corp (dba Palmdale Regional Medical Center; formerly known as Lancaster Community Hospital) v. Toby Douglas, Director of DHCS, L.A. Care Health Plan, Care 1st, L.A. County CHP et al., Case No.: MC024766

Board of Governors Meeting July 10, 2014 DRAFT 8 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN D. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION Pursuant to Section 54956.9 (b) of the Ralph M. Brown Act One (1) potential case

(Member Lopez left the meeting.)

E. CONFERENCE WITH LABOR NEGOTIATOR Pursuant to Section 54957 of the Ralph M. Brown Act Agency Negotiator: Howard A. Kahn; Unrepresented Employee: All L.A. Care Employees

F. PUBLIC EMPLOYMENT Pursuant to Section 54957 Ralph M. Brown Act Title: Chief Executive Officer

RECONVENE IN The Board reconvened in open session at 4:08 p.m. OPEN SESSION

Thomas Horowitz, DO

CHAIRPERSON’S No meetings in August REPORT

Thomas Horowitz, DO

CHIEF EXECUTIVE Mr. Kahn reported that: OFFICER’S REPORT · L.A. Care received a Blue Shield of California Foundation Grant for $175,000 for the Advancing Primary Care and Behavioral Health Integration through Community Howard A. Kahn Collaboration program. The program aims to create Healthy Neighborhoods in Los Angeles County through integration of safety net medical, mental health, and substance use disorder care within defined neighborhoods. L.A. Care partnered with Los Angeles County Departments of Health Services and Mental Health, and with the Community Clinic Association of Los Angeles County on this grant. It is L.A. Care’s practice not to compete with community organizations for grant funds, but to step forward to lead worthy programs when no other organization is able to do so. · Coordinated Care Initiative/Cal MediConnect (CMC) enrolled about 6,600 additional members in July 2014. This represents the crosswalk population; members who are eligible for CMC and were enrolled with L.A. Care for their Medi-Cal benefit and and fee- for-service for Medicare. Board of Governors Meeting July 10, 2014 DRAFT 9 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN · As of July 1, 2014, L.A. Care is participating in the Managed Long Term Supports and Services (MLTSS) program, which includes long term care, In Home Supportive Services, and other services. The Multipurpose Senior Services Program (MSSP) benefit will begin on October 1, 2014. · Los Angeles County Medical Association and other organizations filed a lawsuit which requests a preliminary injunction to stop enrollment and implementation of the CMC program. The reasons outlined in the lawsuit are that the state is implementing the program too quickly to provide adequate access to services, and there is no clear way for members to opt out.

Mr. Kahn recognized Ellen Turner and congratulated her on her retirement.

L.A. Care/DHS Medi-Cal John Wallace, Chief Operating Officer, reported: Operational Realignment · Included in the Board materials is information about an operational realignment between L.A. Care and Los Angeles County Department of Health Services (DHS). · On July 1 L.A. Care assumed responsibility for outpatient and emergency services for members assigned to DHS providers that are delivered outside of the DHS system. · This means that L.A. Care will provide medical management and will pay the claims for L.A. Care/DHS patients that receive services in a non DHS hospital or emergency room. Member Li, on behalf of DHS, expressed appreciation for the collaboration with L.A. Care staff on the new contract arrangement reported by Mr. Wallace. Dr. Li further noted that the realignment will improve services to L.A. Care members.

CHIEF MEDICAL Gertrude S. Carter, MD, Chief Medical Officer, reported: OFFICER’S REPORT · National Committee on Quality Assurance (NCQA) audit preliminary report is positive; L.A. Care scored 100% on standards. Gertrude S. Carter, MD · L.A. Care has an overall score of 77.43%, which qualifies L.A. Care for the Accredited level

NCQA status. A final report is expected by July 23. The score is based on the HEDIS 2012 results. · NCQA standard score was deemed to be 100% for the L.A Care Covered exchange product, because there is not yet a history of HEDIS scores for this product line. · California Department of Health Care Services (DHCS) conducted an audit at L.A. Care on June 25. A detailed report on the audit will be provided to the Compliance and Quality Committee. The audit results may require corrective action plans. Some areas of concern are:

Board of Governors Meeting July 10, 2014 DRAFT 10 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN o Clinical decision making process and timelines for grievances o Authorization process provides opportunities for improvement o L.A. Care’s oversight of Plan Partners Quality processes. o Mr. Kahn noted that DHCS closely examined L.A. Care’s oversight of Plan Partners, and there was a clear message that oversight of delegated services needs improvement.

Member Zelman asked if L.A. Care’s Medicare STAR rating will be affected by the audit. Mr. Kahn indicated that comment on the STAR rating would be premature prior to release of the official audit results. Dr. Carter anticipates that results will be available by the end of September.

Dr. Carter introduced L.A. Care’s new Director of Medical Management, Derek Lanier, MD, who joined L.A. Care from Meridian Health Care in Chicago.

MOTIONS FOR CONSIDERATION

Craig Stephens/Beecher Tim Reilly, Chief Financial Officer, introduced a motion to authorize a contract with Beecher Carlson Holdings, Inc. Carlson, to engage Craig Stephens for work on the implementation of the Pharmacy Benefit Contract Management (PBM) contract that may be officially awarded soon. Mr. Stephens has experience working with L.A. Care’s current PBM contractor. Approved unanimously. 8 AYES (Gamble, Motion BOG 100.0714 Hamilton Lee, Horowitz, To authorize staff to execute a contract with Craig Stephens/Beecher Carlson Li, Perez, Roybal, Spiller, Holdings, Inc. to provide pharmacy management expertise and consulting services, Zelman) for a total amount not to exceed $450,000, from July 1, 2014 to June 30, 2015.

Healthy Kids 0-5 Motion BOG 101.0714 extension to 2015 To ratify execution of the Healthy Kids 0-5 multi-year contract amendment effective July 1, 2012 through June 30, 2015.

Sierra Pacific Motion BOG 102.0714

Constructors contract To authorize staff to use the funds approved in Motion FIN A.0133 to construct a Motions BOG 101, BOG extension member reception space in the Garland building (instead of the HQ building) subject 102, BOG 103, and BOG 104 to obtaining adequate building front signage to direct members appropriately, and to were approved extend Sierra Pacific Constructors contract to June 30, 2015, in an amount not to unanimously earlier in this exceed the budgeted $275,200. meeting on the Consent

Board of Governors Meeting July 10, 2014 DRAFT 11 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN Authorization for Motion BOG 103.0714 Agenda. Restacking Project of HQ 1) To delegate authority to the CEO to approve vendors for the HQ building restack 9 AYES Building project construction, repair work and furniture purchase and reconfiguration; 2) To delegate to the CEO discretionary authority for a cumulative 10% expense contingency calculated on the not-to-exceed total of $272,500.

Authorization to open an Motion BOG 104.0714 account with Mutual of To designate Tim Reilly, Chief Financial Officer; Patricia Mowlavi, Senior Director, Omaha Bank Accounting & Financial Services; and Irene Chang (Lem), Controller, with banking signatory authority applicable to premium processing.

Amendment to Cognizant Tom Schwaninger, Chief Information Officer, summarized a motion to amend a contract with contract for Trizetto Cognizant Technology Services to support information technology staff to address: Clinical CareAdvance® · Continued support of the implementation of the Clinical Care Advance module; and, related services · Development of a web-based portal for providers to manage authorizations.

This motion is brought to the Board directly rather than through the Finance & Budget Committee due to the timing of the contract.

Member Li asked why the contract is with a third party and not directly with Cognizant. Mr. Schwaninger reported that staff sought to engage the vendor with the most effective, comprehensive and lowest cost solution for the scope of work under this contract.

Motion BOG 105.0714 To authorize staff to amend a contract with Cognizant adding $212,168 (total contract Approved unanimously. not to exceed $1,840,090) for Clinical Care Advance related implementation, support 8 AYES and development, through January 31, 2015.

STANDING COMMITTEE REPORTS FINANCE & BUDGET Chairperson Horowitz, reported on behalf of Michael Rembis, Committee Chairperson, that the COMMITTEE Committee met on June 16, 2014. (Minutes of the meeting can be obtained by contacting Board Services.)

In addition to the motions approved earlier on the consent Agenda, the Committee approved a contract with Inovalon Inc. which does not require Board approval.

Motions approved under Motion FIN 100.0714 Board of Governors Meeting July 10, 2014 DRAFT 12 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN the Consent Agenda To authorize expenditures with TenTek Staffing Firm for an additional $538,560 (total expenditures not to exceed $678,880) for professional temporary labor services in L.A. Care’s Information Technology department through December 31, 2014. FIN 100, FIN 101 and FIN Motion FIN 101.0714 102 were approved To authorize staff to add $170,000 to approved expenditures with DLT Staffing unanimously earlier in this services for professional temporary labor in the Claims Department, for a total amount meeting on the Consent not to exceed $541,757. Agenda. Motion FIN 102.0714 9 AYES To authorize staff to amend a contract with Cognizant to provide Oracle performance testing services in preparation of the migration of L.A. Care’s Oracle system from version 10g to 11g, in the amount of $80,000, through October 31, 2014.

Financial Report Mr. Reilly indicated that the Finance & Budget Committee usually reviews the financial reports prior to the Board meeting. However, due to timing of the Board and Committee meetings this month, the statements will be presented at the Finance & Budget Committee meeting on July 16, 2014. Mr. Reilly provided highlights of the May, 2014 financial results: · Revenue surplus of $12 million for the month; $49 million for fiscal year, with a positive margin of less than 1%. · Financial performance continued along the lines of past months with positive overall performance results.

Mr. Kahn indicated that the scope of the financial reports has changed dramatically, with about $4 billion in revenues expected for the current fiscal year.

2014-2015 Budget Update Mr. Reilly reported that the Finance & Budget Committee will review the draft budget for the second time at its July meeting. It is expected that a 2014-15 Budget approved by the Finance & Budget Committee will be presented to the Board of Governors in September.

Cornerstone Contract Mr. Wallace summarized a motion to amend a contract with Cornerstone Data Strategies. Amendment The amendment is for services related to the Core System project implementation. Additional funds are requested for:

1. Update the original scope of work to include L.A. Care Covered, a program which was not known at the time of the original scope of work.

2. Changes in the time frame of the project due to changes in the federal requirements for implementation of ICD-10 update.

Board of Governors Meeting July 10, 2014 DRAFT 13 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN Motion FIN 103.0714 Approved unanimously. To authorize staff to amend a contract with Cornerstone Data Strategies, Inc., for an 8 AYES additional amount of $2,800,000 (total contract amount not to exceed $9,329,795) for consulting and staffing services through January 31, 2015.

EXECUTIVE The Executive Committee met on July 16, 2014. (Minutes of the meeting can be obtained by COMMITTEE contacting Board Services.)

Thomas Horowitz, DO

Government Affairs Cherie Fields, Director, Government Affairs, reported: Update · Attended a meeting and conference with Howard Kahn, conducted by America’s Community Affiliated Plans (ACAP), L.A. Care’s national trade association in Washington Cherie Fields D.C. · Also attended ten Congressional office meetings with legislators while in Washington D.C., to provide updates on Cal Medi-Connect implementation and Medicaid expansion. · The Centers for Medicare and Medicaid Services (CMS) sent letters to states to request that they address the system gaps and enrollment backlog that delay processing applications and beginning coverage for Medicaid program beneficiaries. · Difficult to determine actual extent of the backlog for beneficiaries in L.A. County. · Los Angeles County Department of Public Social Services (DPSS) is working closely with advocacy organizations to deliver services to eligible beneficiaries in Los Angeles County. · Because of the application backlog the usual process for redetermination of eligibility have been suspended in California.

Member Spiller reported that DPSS has about 237,000 applications in various stages of processing. Because of problems with the application process, about 52% of cases could be denied using the current process. DPSS is carefully reviewing each case using eligibility information for other public assistance programs to be sure benefits are not terminated improperly. She noted that other counties in California have similar problems, but because there is a large eligible population in Los Angeles County, the application problems involve many more beneficiaries than in other counties.

Mr. Kahn noted that the problems increase “churning” (when members are dropped from coverage and then re-enrolled within a short period of time) among program beneficiaries, which can pose serious health and financial consequences for the children and families affected. ACAP is sponsoring legislation to provide continuous eligibility for these members. Board of Governors Meeting July 10, 2014 DRAFT 14 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN Retirement Plan Augustavia Haydel, General Counsel, summarized a motion to change L.A. Care’s retirement program that had been previously reviewed by the Executive Committee. As discussed with the Board, changes will be made in the retirement programs offered to L.A. Care employees based on changes in the applicable laws. Prior to the January 1, 2013 effective date of PEPRA (a new law governing public employee retirement options), all L.A. Care employees participated in the “Legacy” defined contribution plan. In order to comply with PEPRA, L.A. Care required all new employees hired after January, 2013 to enter a PEPRA 2@62 retirement plan. Based upon recent clarifications to PEPRA, L.A Care has reviewed its options and determined to offer Social Security plus a modified defined contribution plan as the only retirement option for future employees hired after October, 2015. Employees that participate in the PEPRA 2@62 plan will be transitioned to the Legacy defined contribution plan. All employees hired prior to October, 2015 will have the option to remain in the Legacy defined contribution plan or to enter the Social Security plan. As discussed by Altman and Cronin (L.A. Care’s actuaries) at the June 2014 board meeting, L.A. Care’s costs will increase by 1.5% for those employees participating in the PEPRA 2@62 plan as they transition to either the Legacy or the Social Security plans. In addition, there are other costs totaling approximately $900,000.00 to close out the PEPRA retirement plan.

Motion EXE 100.0714 Approved unanimously. To approve the following to implement the retirement program redesign: 8 AYES 1. Freeze and terminate the PEPRA 2@62 Defined Benefit Plan effective December 31, 2014, fully vesting all participants in their benefits under that plan.

2. Amend the existing qualified defined contribution "401(a)" Basic Plan to: a. Permit employees hired after 2012 to participate in that plan effective January 1, 2015; b. Eliminate the election for employees hired before 2013 to participate in the PEPRA 2@62 Defined Benefit Plan effective as of the amendment date; and c. Effective October 1, 2015, provide for a new modified defined contribution benefit coordinated with Social Security for those current employees who elect to participate in that system and all new employees hired after the Social Security referendum. 3. Adopt the attached resolution (PERS-SOC-40D) to: a. Request authorization from CalPERS, the State's Social Security administrator, to conduct a divided-vote referendum (Division) under section 218(d)(6) of the

Board of Governors Meeting July 10, 2014 DRAFT 15 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN Social Security Act for the defined contribution retirement system; b. Establish October 1, 2015 as the effective date of Social Security coverage; c. State that no optional exclusions from Social Security are to be requested; d. Name Robert Turner, the Chief of Human Resources, as the Local Division Officer (representative designated by L.A. Care to conduct the referendum); and e. Specify that the defined contribution retirement system will be modified to coordinate contributions under that retirement system with Social Security. 4. Establish a new qualified supplemental defined contribution plan, effective January 1, 2015, to provide additional contributions to certain leadership employees hired after 2012. The amount of L.A. Care contributions (if any) shall be determined by the Executive Committee on advice of the Chief Executive Officer and the presentation of cost and budget impacts on L.A. Care as appropriate. 5. Establish a new nonqualified supplemental defined contribution plan, effective January 1, 2015, to provide additional contributions to certain leadership employees hired after 2012. The amount of L.A. Care contributions (if any) shall be determined by the Executive Committee on advice of the Chief Executive Officer and the presentation of cost and budget impacts on L.A. Care as appropriate. 6. Delegate and instruct the Chief Executive Officer to take all necessary or appropriate actions to implement the above resolutions, including but not limited to filing of such forms with the Internal Revenue Service related to the above- mentioned actions as may be necessary or appropriate, and taking any and all actions necessary or appropriate to conduct the divided-vote Social Security referendum and implement Social Security coverage for affected employees.

Robert E. Tranquada, Roland Palencia, Community Benefits Director, introduced a motion to award grants to improve M.D. Safety Net population health outcomes through the Tranquada Safety Net Infrastructure Initiative. Of Infrastructure V the 50 entities invited to apply, nine responded, and seven are recommended for funding. All HEDIS Initiative Awards seven are expected to improve their HEDIS scores, improving services for 10,500 L.A. Care members. The funds requested include support for a program evaluator.

Motion EXE 101.0714 Approved unanimously. To approve seven Robert E. Tranquada, M.D. Safety Net Infrastructure V – HEDIS 8 AYES Initiative Awards and consultant support not to exceed $1,350,000 as outlined in the enclosed memo and Attachment A. Board of Governors Meeting July 10, 2014 DRAFT 16 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN

PUBLIC ADVISORY COMMITTEE REPORTS EXECUTIVE Motion ECA 100.0714 COMMUNITY Motion ECA 100 was To approve the following candidate(s) to the Regional Community Advisory ADVISORY approved earlier on the Committees (RCAC) as reviewed by the Executive Community Advisory Committee COMMITTEE (ECAC) Consent Agenda. (ECAC) during the June 11, 2014 ECAC meeting.

Ozzie Lopez/ RCAC # Type of Hilda Perez Name Member Antelope Valley Partners for Health RCAC 1 Advocate County of Los Angeles Department of Public RCAC 1 Advocate Health Area Health Office SPA 1 County of Los Angeles Department of Public RCAC 2 Advocate Health Area Health Office SPA 2 USC Hartford Center of Excellence RCAC 6 Advocate Parents with Exceptional Kids Inc. RCAC 7 Advocate Fiesta Educativa Inc. RCAC 10 Advocate

Member Perez reported that the Executive Community Advisory Committee met on June 11 and July 9, 2014. · ECAC approved a motion to revise the ECAC/RCAC Operating Rules to include specific reports on ancillary meetings like training and information meetings. Revised Operating Rules will be drafted and reviewed by ECAC, Governance Committee and Board of Governors. · As a member of the ad hoc CEO Search committee, Ms. Perez I asked ECAC and RCAC members to provide a list of desired CEO characteristics. As soon as all the RCACs have had the opportunity to discuss this, I will present the list to the ad hoc CEO Search Committee. · Mary Franz, HITEC LA Senior Executive Director, and Ali Modaressi, HITEC LA Director of Electronic Health Records, presented information to ECAC on the Blue Button application on the L.A. Care website member portal. A list of the five pilot clinics was presented. · Mike Shook, Director, Quality Improvement, updated ECAC on the Interdisciplinary Committee that will be reviewing member issues brought to ECAC from RCAC members.

Board of Governors Meeting July 10, 2014 DRAFT 17 AGENDA ITEM/PRESENTER MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN An Interdisciplinary Committee member will regularly attend ECAC meetings to provide updates. · Mr. Shook gave the status of member issues that were forwarded to the Interdisciplinary Committee last month. ECAC members seem pleased to have a process to submit information and get resolution on member issues. · Staff is reviewing RCAC member participation data and will report to ECAC and RCACs as part of the process to reassess RCAC member term limits. After RCAC members discuss it, the information will be presented to the Governance Committee. ECAC passed a motion asking that the Governance Committee meeting be scheduled after the September ECAC meeting so the information from the RCAC discussions can be presented to ECAC. · Auleria Eakins, Manager, Community Outreach & Engagement Department acknowledged Carlos Aguirre, RCAC 2 Chair and members of RCAC 2 for actively seeking proclamations from their local Legislative Offices to commend Barbara Cook’s invaluable service to L.A. Care, ECAC and RCACs. · Carlos Aguirre, RCAC 2 Chair and Ana de Jesus Rodriguez, RCAC 2 Vice Chair presented Ms. Cook with proclamations from Assembly Member Raul Bocanegra, the City of San Fernando, and Congressman Tony Cardenas from the U.S. House of Congress, 29th Congressional District, and thanked Ms. Cook on behalf of RCAC 2 members for her continued support of the RCACs and ECAC.

Report from Closed Ms. Haydel reported that the Board of Governors approved a motion in closed session to Session delegate authority to Howard A. Kahn, CEO and Tim Reilly, CFO (or their respective delegates) to take any appropriate and necessary actions, including authorizing funds, to enter into a settlement agreement relating to Lancaster Hospital Corporation dba Palmdale Regional Medical Center, fka Lancaster Community Hospital v Local Initiative Health Authority for Los Angeles County, dba L.A. Care Health Plan et al., (Case No. MCO24166), and report back to L.A. Care’s Services Agreement Committee.

ADJOURNMENT The meeting was adjourned at 4:50 p.m.

Respectfully submitted by: Linda Merkens, Manager APPROVED BY: ______Malou Balones, Committee Liaison Louise McCarthy, Secretary Hilda Stuart, Committee Liaison ` Date Signed ______

Board of Governors Meeting July 10, 2014 DRAFT 18

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 100.0914

Committee: Chairperson: Thomas Horowitz, DO

Issue: Contract with Michael S. Kenny & Company and Daniel J. Edelman, Inc. (Edelman) to support the Los Angeles County Department of Health Services (DHS).

Background: L.A. Care requests approval to contract with Michael S. Kenny & Company for $225,000 and with Daniel J. Edelman, Inc. for $75,000 from September 8, 2014 through March 31, 2015, to provide DHS additional project management and communications development support. These vendors were initially engaged by L.A. Care in September 2013, through a competitive bid process, to assist DHS with the transition of Low Income Health Program (LIHP) members to Medi- Cal managed care. Upon DHS’ request, L.A. Care proposes to enter into new contracts with these vendors to provide DHS Managed Care Services additional assistance related to post-transition enhancement projects.

DHS is seeking additional services for projects including but not limited to, operational metrics analysis and dashboard development, managed care functional and skills readiness implementation, workflow process development and training, and design and production of member outreach marketing material. DHS requests that L.A. Care engage the respective project management and communication consultant services and co-manage their service performance. To date, both vendors have provided professional services to support DHS operational efforts in preparation for Medi-Cal Expansion.

Michael S. Kenny & Company - $225,000 Michael S. Kenny & Company has been instrumental in coordinating inter-organizational operational process workflows between L.A. Care and DHS for Medi-Cal Expansion to ensure a seamless transition of Healthy Way LA members to Medi-Cal managed care, as well as operational realignment workflows and DHS policy development. L.A. Care requests to add $225,000 for managed care project consultant services from Michael S. Kenny& Company through March 31, 2015. The current 12-month expense history with Michael S. Kenny is $298,755.

Daniel J. Edelman - $75,000 Daniel J. Edelman, Inc., developed communication and outreach material to members, providers and clinics related to Medi-Cal Expansion. L.A. Care requests to add $75,000 to fund communication- related services to be provided by Daniel J. Edelman, Inc. through March 31, 2015, for design and production of member outreach collateral materials for the Medi-Cal line of business. The current 12- month expense history with Daniel J. Edelman is $99,500.

Budget Impact: The expenditure for both Michael S. Kenny & Company and Daniel J. Edelman for the total amount of $300,000 will have no budget impact on L.A. Care. The arrangements are stipulated in an agreement between L.A. Care and DHS through the LAC/DHS Transition Safety Net Agreement.

19 Board of Governors MOTION SUMMARY

Motion: To authorize L.A. Care to enter into contracts with Michael S. Kenny & Company adding $225,000 (total contract not to exceed $523,755) and with Daniel J. Edelman, Inc. adding $75,000 (total contract not to exceed $174,500) from September 8, 2014 through March 31, 2015, for professional consulting services to support the Los Angeles County Department of Health Services.

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. FIN 100.0914

Committee: Finance & Budget Chairperson: Michael Rembis

Issue: Acceptance of the Investment Report for the quarter ended June 30, 2014.

Background:

Budget Impact:

Motion: To accept the Investment Report for the quarter ended June 30, 2014, as submitted.

DATE: July 16, 2014 TO: Finance & Budget Committee FROM: Timothy Reilly, Chief Financial Officer

SUBJECT: Quarterly Investment Report – June 2014

As of June 2014, L.A. Care's combined portfolio total is $276 million. Interest income and realized gains totaled approximately $280,000 for the quarter and $780,000 fiscal year to date.

Most of the investments are in the short-term portfolio. The Investments are compliant with the annual investment policy & CA Insurance Code. The portfolio holdings include primarily U.S. Treasuries (35%), U.S. Agency Securities (31%), and Corporate Bonds (28%). Due to possible future of interest rate increases, 29% of the invested portfolio is currently in floating rate securities. The average portfolio credit quality is AA.

The short-term portfolio had approximately $193 million invested and returned an annualized 0.11% for the quarter. The comparative money market index used as a benchmark had a return of 0.00%. The extended term portfolio had approximately $83 million invested and returned an annualized 0.16% for the quarter. The comparative 1-year Treasury note used as a benchmark had a return of 0.05%.

22 July 9, 2014

Ms. Patricia Mowlavi Director of Finance and Accounting L.A. Care Health Plan 1055 West 7th Street, 10th Floor Los Angeles, CA 90017

Re: L.A. Care Health Plan Quarterly Investment Report April 1 through June 30, 2014

OVERVIEW

The California Government Code requires the L.A. Care Treasurer to submit a quarterly report detailing its investment activity for the period. This investment report covers the three month period from April 1 through June 30, 2014.

PORTFOLIO SUMMARY

As of June 30, 2014 the market values of the portfolios as managed by Payden & Rygel are as follows:

Portfolios Payden & Rygel

Cash Portfolio #2365 $193,084,006.25

Low Duration Portfolio #2367 $ 83,381,409.35

Total $276,465,415.60

COMPLIANCE WITH THE ANNUAL INVESTMENT POLICY

Based upon an independent compliance review performed by Sperry Capital Inc. of the monthly investment reports prepared by Payden & Rygel, L.A. Care is in compliance with L.A. Care’s investment guidelines pursuant to the California Government Code and the California Insurance Code.

The Payden & Rygel investment reports include a monthly transaction summary along with the current market values of the investments as of each month end. The Payden & Rygel investment reports for L.A. Care are available upon request.

July 9, 2014 Page 2 of 4

California Government Code Compliance Verification Detail as of June 30, 2014

California Insurance Code Compliance Verification Detail as of June 30, 2014

Maximum Permitted Maturity Actual Maximum Maturity

#2365 #2367 #2365 #2367 Enhanced Cash Low Duration Enhanced Cash Low Duration Compliance

US Treasuries 5 Years 5 Years 2.2 Years 2.2 Years Yes

US Agencies 5 Years 5 Years 2.8 Years 2.8 Years Yes

State of CA 5 Years 5 Years 1.4 Years 1.9 Years Yes

Negotiable CDs 270 Days 270 Days 49 Days 49 Days Yes

Corporates (MTNs) 5 Years 5 Years 2.9 Years 2.9 Years Yes

MM & Mutual Funds NA NA 1 Day 1 Day Yes

Mortgage/Asset-Backed 5 Years 5 Years 3.5 Years 3.5 Years Yes

July 9, 2014 Page 3 of 4 Compliance Verification Combined #2365 and #2367 Portfolios as of June 30, 2014 Insur. Code Govt. Code Sections Section 1170-1182 53601 1191-1202

US Treasuries Yes (1)(2)(3) Yes (4)(5) US Federal Agencies Yes (1)(2)(3) Yes (4)(5) State of California Yes (1)(2)(3) Yes (4)(5) Negotiable CDs Yes (1)(2)(3) Yes (4)(6) Corporate Notes Yes (1)(2)(3) Yes (4)(6) Money Market Funds Yes (1)(2)(3) Yes (4)(6) Mortgage/Asset Backed Yes (1)(2)(3) Yes (4)(6)

(1) Approved security (2) Meets minimum rating (3) Meets diversification maximums (4) NAIC High Grade Obligations (5) Authorized by Insurance Code Sections 1174 and 1194.5 (6) Authorized by Insurance Code Section 1196.1

MARKET COMMENTARY

If the bond market’s strong first-quarter performance was surprising, the continuation of the rally through the second quarter proved even more so. Coming into 2014, the consensus expectation was that bond yields were too low and could only go in one direction – up – at a time in which the U.S. Federal Reserve was tapering its quantitative easing policy.

However, the consensus expectation was way off the mark. Bond prices in fact rallied through the first six months of the year (as yields fell) confounding the negative expectations that continue to hang over the market even now. The yield on the 10-year Treasury Note closed the quarter ending March 31 at 2.73%, and then down 2.53% on June 30 based on a wide range of factors which came together to fuel the bond market's strong second quarter showing. Economic data continued to point to an environment of slow, but steady growth – positive enough to support the performance of corporate and high yield bonds, but not so fast as to raise concerns that the Fed will begin raising short-term interest rates sooner than the middle of next year.

Along that same time, inflation was also well-behaved; positive enough to dampen concerns about potential deflation, but still low enough that the Fed can maintain its gradual pace of tightening

July 9, 2014 Page 4 of 4 policy. This steady, not-too-hot, not-too-cold environment was ideal for the bond market by providing investors with high visibility regarding Fed policy expectations.

Supply-and-demand factors also played a part in the rally. The declining budget deficit led to a reduced supply of new Treasury securities, meaning that the Fed was able to reduce its bond- purchasing program without disrupting the balance of supply and demand.

Instability in the geopolitical realm, namely, the Russia-Ukraine conflict and civil war in the Middle East further boosted Treasuries by encouraging a “flight to quality.” Falling U.S. Treasury yields, in turn, provided the spark for continued gains throughout the bond market and supported strong performance for rate-sensitive areas such as municipal bonds, and high-grade corporates. At the same time, the economic conditions and investors’ hearty appetite for risk fueled strong performance for credit-sensitive segments of the market, such as high yield bonds.

The U.S. economy contracted in the first quarter by the most since the depths of the last recession as consumer spending cooled. Gross Domestic Product (GDP) fell at a 2.9 percent annualized rate, more than forecast and the worst reading since the same three months in 2009, after a previously reported 1 percent drop, the Commerce Department reported in June. It marked the biggest downward revision from the department’s second GDP estimate since records began in 1976. The revision reflected a cold winter and a slowdown in health care spending. Consumers returned to stores and car dealerships, companies placed more orders for equipment and manufacturing picked up as temperatures warmed, indicating the early-year setback was temporary. Combined with more job gains, such data underscores the views of Federal Reserve Bank’s policy makers that the economy is improving and in less need of monetary stimulus.

COMPLIANCE WITH THE ANNUAL INVESTMENT POLICY

Based on Sperry Capital’s review of Payden & Rygel’s month-end reports, L.A. Care’s portfolios were in compliance with its Annual Investment Guidelines and the California Government Code Insurance Code section.

Sincerely,

James W. Martling Principal

26 L.A. Care Health Plan

2nd Quarter 2014

PAYDEN.COM LOS ANGELES | BOSTON | LONDON | PARIS

27 Payden & Rygel

July 2014

Six months into the year and two questions occupy everyone’s mind: First, are interest rates going to rise? And second, will inflation be a problem?

In the last week of June, information related to both of these questions emerged. The core PCE (Personal Consumption Expenditure price index) for the month of May showed an increase of 1.5% compared to a year ago. Even though it was below the US Federal Reserve Bank’s (Fed) 2% target, the immediate concern was: “Is inflation back?” Also this week, the government announced a first quarter GDP revision of negative 2.9%, the worst non-recession number since WWII.

What does this mean to investors and your investment manager looking to preserve clients’ capital but also to satisfy longer term objectives of growth?

As you know, we have been on the side that economic growth would be moderate, unemployment still a challenge and higher short-term interest rates would be at least a year away. We continue to stand by this outlook, and it appears that the Fed Chair remains very concerned about the employment situation. In particular, the lack of wage growth and the number of underemployed Americans concerns policymakers.

Another point of interest is the significant increase in global demand for bonds compared to the amount of investable securities. We believe that this calls for further emphasis on liquidity and being very aware of future global structural changes. Against this background, we continue to believe that a diversified income approach can help cushion the shock from higher interest rates. This approach includes both fixed-income bonds and income-oriented equities with growth potential.

Our very best wishes for the summer to you and your family.

Joan A. Payden

President & CEO

28 L.A. Care Health Plan – Combined

Portfolio Review – 2nd Quarter 2014

Investment Objectives: Short Maturity Fixed Income

Combined Portfolio Market Value $ 276,465,416 Average Credit Quality AA Average Duration 0.7 years

Average Yield to Maturity 0.29%

Sector Allocation Maturity Distribution

Combined Portfolio

Market Value Percent Percent Dollars Cash $5,375,369 1.9% <90 day Money Market 59,390,741 21.5% 53.5% $147,837,512 90 days to 1 year Treasury 96,303,633 34.8% 15.8% 43,635,922 1 - 2 years Agency 26,620,911 9.6% 24.8% 68,701,424 2 - 5 years Credit 76,083,175 27.5% 5.9% 16,290,558 ABS/MBS 10,112,611 3.7% 100.0% $276,465,416 Municipal 2,578,976 0.9% $276,465,416 100.00%

Portfolio Returns – All Periods Annualized

Periods Ended 6/30/14 Trailing Trailing 2nd Qtr 1 year 3 years Short-term* 0.11% 0.33% 0.28% Money Market Index 0.00% 0.01% 0.02%

Extended-term** 0.16% 0.62% 0.56% 1-year Treasury Note 0.05% 0.15% 0.17%

Combined 0.12% 0.42% 0.37%

*Combined (Restricted/Unrestricted - The restricted portfolio was merged into the current unrestricted portfolio in Oct. 2009) ** Merrill Lynch 1-3 Yr Treasury Index from inception to 3/31/2010; Merrill Lynch 1-Yr Treasury Index thereafter.

29 Payden&Rygel z 333 S. Grand Avenue z Los Angeles, California 90071 z (213) 625-1900 z www.payden.com 30 Payden&Rygel z 333 S. Grand Avenue z Los Angeles, California 90071 z (213) 625-1900 z www.payden.com L.A. Care Health Plan – Short-Term

Portfolio Review – 2nd Quarter 2014

Investment Objectives: Short Maturity Fixed Income

Short-term Portfolio Market Value $ 193,084,006 Average Credit Quality AA Average Duration 0.5 years

Average Yield to Maturity 0.26%

Sector Allocation Maturity Distribution

Short-term Portfolio Short-term Portfolio

Market Value Percent Percent Dollars Cash 3,477,059 1.8% <90 day 61.5% 118,714,088 Money Markets 58,990,358 30.5% Treasury 58,161,577 30.1% 90 days to 1 year 14.8% 28,547,195 Agency 18,009,098 9.3% 1 - 2 years 21.3% 41,076,820 Credit 47,455,491 24.6% 2 - 5 years 2.4% 4,745,903 ABS/MBS 5,513,885 2.9% 100.0% $193,084,006 Municipal 1,476,538 0.8% Total Portfolio $193,084,006 100.0%

Portfolio Returns – Periods Over One Year Annualized

Periods Ended 6/30/14 Trailing Trailing 2nd Qtr 1 year 3 years

Short-term* 0.11% 0.33% 0.28%

Money Market Index 0.00% 0.01% 0.02%

* Combined (Restricted/Unrestricted - The restricted portfolio was merged into the current unrestricted portfolio in Oct. 2009)

31 Payden&Rygel z 333 S. Grand Avenue z Los Angeles, California 90071 z (213) 625-1900 z www.payden.com L.A. Care Health Plan – Short-Term Enhanced Cash Strategy Overview – 2nd Quarter 2014 The Fed reassured market participants that they have no current plans to raise rates and have tied this decision to economic data going forward. As a result, short-term US Treasury yields remain close to zero. The term structure of interest rates flattened during the quarter, as 2-year Treasury yields rose 4 basis points (bps) and 10-year Treasury yields fell 19 bps. Credit sectors outperformed equivalent duration Treasuries on strong demand and limited supply. The US Treasury market remains stable, backed by strong demand for risk-free assets and low global government bond yields. A divergence in global central bank policies is unfolding, with the Federal Reserve and Bank of England turning slightly hawkish and the ECB and Bank of Japan dovish. Credit markets continue to be supported by strong balance sheets and improving economic fundamentals.

Portfolio Impact

Economic Domestic economic growth continues at a Allowed portfolio duration Neutral: The longer duration moderate pace. The Fed would continue Environment to age, by reducing exposure benefitted the portfolio, but longer to reduce asset purchases and would keep to the 3-year part of the yield yield curve exposure detracted short-term rates low until there is a curve. However, the from performance. noticeable improvement in economic portfolio’s duration is still conditions, or inflation targets are met. longer than that of the index.

Credit The fundamental outlook for issuers Swapped securities with tight Positive: Investment-grade remains strong and front-end technical valuations into securities with corporate debt outperformed US factors are positive. Tight yield spreads greater total return potential. Treasuries and government-related and increased bank litigation would Maintained floating-rate debt, as investors continued to reduce the relative value of the coupon exposure while search for yield. financial sector. selectively increasing 3-year maturity fixed-rate bonds.

Structured Asset-backed securities and CMOs Maintained exposure to high- Positive: The mix of asset- provide quality yield. New issue quality asset-backed and backed and mortgage-backed Securities rental property and GSE risk sharing mortgage-backed securities. securities with their yield deals would do well given strong advantage provided positive total demand and higher yields. returns.

US Treasury Yield Curve (0-5 Years) Yield by Sector (3-Month Effective Maturity)

0.4 2.0 6/30/2014 0.34 3/31/2014 0.29 1.5 0.3 0.23 1.0 Yield (%) 0.2 0.18 Yield (%)

0.5 0.1

0.02 0.0 012345 0.0 US LIBOR CP A1/P1 Corp FRN ABS AAA- Maturity (years) Treasury Ind(A) rated

Source: Bloomberg Source: Merrill Lynch, BBA, Payden & Rygel as of 6/30/14

32 Payden&Rygel z 333 S. Grand Avenue z Los Angeles, California 90071 z (213) 625-1900 z www.payden.com L.A. Care Health Plan – Extended-Term

Portfolio Review – 2nd Quarter 2014

Investment Objectives: Short Maturity Fixed Income

Extended-Term Portfolio Market Value $83,381,410 Average Credit Quality AA Average Duration 1.0 years

Average Yield to Maturity 0.37%

Sector Allocation Maturity Distribution

Extended-term Portfolio Extended-term Portfolio

Market Value Percent Cash $1,898,310 2.3% Percent Dollars Money Market 400,382 0.5% <90 day 34.9% $29,123,424 Treasury 38,142,056 45.8% 90 days to 1 year 18.1% 15,088,727 Agency 8,611,813 10.3% Credit 28,627,684 34.3% 1 - 2 years 33.1% 27,624,604 ABS/MBS 4,598,727 5.5% 2 - 5 years 13.9% 11,544,655 Municipal 1,102,438 1.3% 100.0% $83,381,410 Total Portfolio 83,381,410 100.0%

Portfolio Returns – Periods Over One Year Annualized

Periods Ended 6/30/14 Trailing Trailing 2nd Qtr 1 year 3 years

Extended-term* 0.16% 0.62% 0.56%

1-year Treasury Note 0.05% 0.15% 0.17%

* Merrill Lynch 1-3 Yr Tsy Index from inception to 3/31/2010; Merrill Lynch 1-Yr Tsy Index thereafter.

33 Payden&Rygel z 333 S. Grand Avenue z Los Angeles, California 90071 z (213) 625-1900 z www.payden.com L.A. Care Health Plan – Extended-Term Low Duration Strategy Overview – 2nd Quarter 2014

The Fed reassured market participants that they have no current plans to raise rates and have tied this decision to economic data going forward. As a result, short-term US Treasury yields remain close to zero. The term structure of interest rates flattened during the quarter, as 2-year Treasury yields rose 4 basis points (bps) and 10-year Treasury yields fell 19 bps. Credit sectors outperformed equivalent duration Treasuries on strong demand and limited supply.

The US Treasury market remains stable, backed by strong demand for risk-free assets and low global government bond yields. A divergence in global central bank policies is unfolding, with the Federal Reserve and Bank of England turning slightly hawkish and the ECB and Bank of Japan dovish. Credit markets continue to be supported by strong balance sheets and improving economic fundamentals.

Payden & Rygel View Payden & Rygel Action Portfolio Impact Economic Domestic economic growth continues Maintained the modest position in Positive: The portfolio benefitted from the longer maturity Environment at a moderate pace. The Fed would longer-maturity corporate bonds to continue to reduce asset purchases and benefit from higher yields and the exposure. keep short-term rates low until there is roll return from the yield curve’s a noticeable improvement in economic positive slope. Overall portfolio conditions, or inflation targets are met. duration remains slightly underweight. Credit The fundamental outlook for issuers Reduced banking positions with Positive: Investment-grade remains strong and front-end technical tight valuations. Maintained corporate debt outperformed factors are positive. Tight yield floating-rate coupon exposure Treasuries and government- spreads and increased bank litigation while selectively increasing 3-year related debt as investors would reduce the relative value of the maturity fixed-rate bonds. continued to search for yield. financial sector.

Structured Asset-backed securities and CMOs Maintained exposure to high- Positive: The mix of asset- Securities provide high quality yield. New issue quality asset-backed and mortgage- backed and mortgage-backed rental property and GSE risk sharing backed securities. securities with their yield deals would do well given strong advantage provided positive total demand and higher yields. returns.

US Treasury Yield Curve (0-5 Years) 2nd Quarter Sector Total Return

2.41 2.5 2.0 6/30/2014 1-3 Year Maturity 3/31/2014 2.0 1.5

1.5 1.0 1.20

Yield (%) 1.0 Total Return (%) 0.5 0.66 0.55 0.5 0.27 0.25 0.30 0.0 012345 0.0 Maturity (years) Tsy Agcy MBS ABS Corp High EM Yield

Source: Bloomberg Source: Merrill Lynch, Payden & Rygel, and JP Morgan as of 6/30/14

34 Payden&Rygel z 333 S. Grand Avenue z Los Angeles, California 90071 z (213) 625-1900 z www.payden.com THE WORLD ECONOMY

From Madagascar to Germany, perhaps the greatest economic story of the last 40 years could be told in the same way: falling prices. In 1980, 90% of the countries in the world had annual inflation rates in excess of 5%. Today, only 36% of the countries in the world have annual inflation of over 5% (see chart below). Global Inflation Trends Lower

100%

90%

80% % of Countries* with Inflation Over 5% Year-Over-Year 70%

60%

50%

40%

30%

20% % of Countries* with Inflation Under 5% Year-Over-Year 10%

0% 1980 1990 2000 2010 2014 Source: IMF

*Number of countries varies by year. Percentages include only those countries for which data exists.

In addition to monetary policy changes, we think that the tremendous forces of globalization, automation, and improved productivity have conspired to drive prices consistently lower in recent history. Since the financial crisis though, inflation in the developed world has been exceptionally low (see table below).

Core Inflation: US UK Euro Area Japan China # of consecutive months below 2% 25 11 75 192 31 Time Frame: 2012-2014 2013-2014 2008-2014 1998-2014 2012-2014

All major central banks currently preside over economies with annual price inflation below their stated target (typically 2%), even as lackluster growth and slow economic recoveries persist. Indeed, in the second quarter, the European Central Bank responded to the threat of deflation by moving their deposit rate to -10 basis points, historically unprecedented for a major global central bank. For bond investors, we don’t necessarily recommend penciling in low inflation in perpetuity, but the structural disinflationary trends we have witnessed look like they touch more than one country, more than one index, and may be here to stay for some time. If inflation stays low, expect lower bond yields.

35 THE WORLD’S PULSE THROUGH WEB SEARCH TRENDS Is it possible to peer into the minds of investors and the general public? No, but using “Google Trends” we can take a peek into search trends over the last year. The charts below track search volume based on key search terms. Together and separately they tell a story of market worries over the past quarter.

Q2 2014 Search Terms

100 "4 western Iraqi towns fall to advancing ISIS militants" - CNN “ISIS”* 80 Iraq faces the threat of 60 full scale Civil War as ISIS militants, 40 denounced even by Al 20 Qaeda, advance towards Baghdad 0 06/13 08/13 10/13 11/13 01/14 03/14 05/14 06/14 *Islamic State of Iraq and al-Sham

100 "World Cup Kicks Off in Brazil" - TIME “WORLD CUP” 80 Millions of soccer fans 60 around the World will focus on Brazil as the 40 $11.3 billion event 20 gets underway.

0 06/13 08/13 10/13 11/13 01/14 03/14 05/14 06/14

The European Central Bank's 100 Negative Deposit Rate “NEGATIVE RATES" 80 - WSJ Fighting deflation, the 60 Draghi Takes ECB Deposit Rate ECB cut interest rates Search Interest over Time over Interest Search Negative in Historic Move to -10 basis points for 40 - Bloomberg the first time. 20

0 06/13 08/13 10/13 11/13 01/14 03/14 05/14 06/14

100 Modi Meets Pakistan’s Sharif on First Day as India’s Leader - Bloomberg “MODI” 80 New Indian PM ushers 60 in hopes of a new era India bulls charge 40 ahead on reform hopes 20 - FT

0 06/13 08/13 10/13 11/13 01/14 03/14 05/14 06/14 Source: Google Trends

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. FIN 101.0914 Committee: Finance & Budget Chairperson: Michael Rembis

Issue: Request to amend an existing contract with Office Ally for electronic data interchange.

Background: L.A. Care has been using Office Ally since 2011. Given the large volume of claims, Office Ally continues to be L.A. Care’s largest electronic data interchange (EDI) claims clearinghouse and the exclusive clearinghouse for a majority of providers who submit electronic claims.

In November 2013, L.A. Care issued an EDI request for proposal and selected a new vendor. However, the agreement with the selected vendor and L.A. Care is on hold given that adding the new selected vendor at this point would duplicate unnecessary resources and efforts on claims processes since the implementation of QNXT for the Medi-Cal line of business has not been implemented. Extending the current contract with Office Ally would save time on the coordination and submission of claims through their current contract term.

Until an executed contract between both parties is in place, L.A. Care would like to continue to use Office Ally. Office Ally’s rates ($0.25 per claim) are standard for our volumes and compare very favorably with the cost for internal scanning and optical character recognition of paper claims ($0.38 per claim).

L.A. Care is requesting to amend the contract with Office Ally for an amount of $276,000 through April 30, 2015. The vendors’ current 12-month history is $402,000. The requested amount of $276,000 will bring the total contract amount to $678,000.

Office Ally has provided critical support that has enabled staff to be dedicated to other ongoing Claims projects. The amendment will support the critical and time sensitive effort to ensure that claims are submitted for the services rendered to members and that they meet L.A. Care’s requirements.

Budget Impact: The amount requested will come from unspent balances in the Claims department budget for FY2013-2014. Sufficient funds are being requested in the Claims department FY2014-2015 budget.

Motion: To authorize staff to amend a contract with Office Ally for an amount of $276,000 (total contract not to exceed $678, 000) for electronic data interchange services through April 30, 2015.

Board of Governors MOTION SUMMARY Date: September 4, 2014 Motion No. FIN 102.0914 Committee: Finance and Budget Chairperson: Michael Rembis

Issue: To amend the existing contract with Healthx to support the member portal solution platform for L.A. Care Covered.

Background: L.A. Care conducted an extensive request for proposal (RFP) process in July 2013. Healthx, with many years of experience in healthcare, was selected as best meeting the evaluation criteria specific to the member portal platforms to enhance member user experience and integrate the online HRA (Health Risk Assessment) using mobile devices and desktops.

Staff is requesting approval to extend the existing contract with Healthx to maintain support for the Member Portal Solution Platform for an amount of $316,480 through August 31, 2016. This amendment will streamline and enhance the capturing and housing of the HRA data, which was previously handled by another vendor, while continuing to maintain the member portal, desktops and mobile browser support (for both Android and Apple devices).

The scope of this contract has been identified as follows: 1. Consulting and implementation: data mapping and analysis, integration with QNXT, customization, and training for L.A. Care Staff. 2. Member portals in both English and Spanish. 3. Mobile applications for Android and Apple devices. 4. Web based provider search and online directory. 5. One-time tool license fee (negotiated 10 % discount) including annual support and maintenance for two years at $141,240 per year, for a total of $282,480.

Added Scope: 6. Healthx will be required to capture and house health risk assessment (HRA) data from member’s via desktops and/or mobile devices (both Android and Apple devices). 7. Update and maintain member portal, desktops and mobile browser support (for both Android and Apple devices). 8. One time implementation fee and acceptance testing for revised HRA desktop and mobile interfaces at $10,000, with annual support & maintenance for two years at $1,000 per month for a total of $24,000 for a total of $34,000.

Total Project Cost: The 12 month history for Healthx is currently $242,740. The additional amount requested of $316,480 will bring the total contract amount to $559,220.

Budget Impact: The amount requested is accounted for in the Information Technology department budget for FY2013-14 and sufficient funds have been projected in the budget for FY2014-2015.

Motion: To authorize staff to amend a contract with Healthx adding $316,480 (total contract not to exceed $559,220) for support of L.A. Care Covered Member Portal Solution Platform through August 31, 2016.

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. FIN 103.0914

Committee: Finance and Budget Chairperson: Michael Rembis

Issue: Contract with Interpreting Services International (ISI) to provide translation and face-to-face interpreting services.

Background: The Cultural & Linguistic Services Unit is requesting approval of a vendor contract with ISI for $438,000 from November 1, 2014 to October 31, 2015 to provide translation and face-to- face interpreting services. State and federal regulations require translation of member materials in ten threshold languages and the availability of interpreting services at medical appointments and public meetings. L.A. Care has contracted with ISI since November 2011 and, through this new contract, ISI will continue to translate documents such as the MCLA Evidence of Coverage and Regional Community Advisory Committee (RCAC) meeting minutes and agendas. ISI will serve as our primary vendor for interpreting services at RCAC and Executive Community Advisory Committee meetings and as our backup vendor for medical appointments.

A request for proposal process was completed in May 2014. Of the 15 vendors that submitted a proposal, two were qualified to provide conference interpreting, four were qualified to provide interpreting at medical appointments, and six were qualified for translation. In addition to ISI, L.A. Care chose four other vendors from the RFP process for language services as detailed below. This will assure sufficient capacity and timely provision of services. Other vendor contracts will not require Finance and Budget Committee approval due to their contract amounts not meeting the required threshold.

ISI and Magnus were qualified to provide conference interpreting. Magnus charged $125 an hour, and ISI charged $100 an hour. We chose ISI because of the cost and their experience.

ISI, Magnus, PALS for Health, Pacific Interpreters were qualified to provide interpreting at medical appointments. We chose Magnus as primary and ISI as the backup for these services. Magnus charged $55 an hour and ISI charged $65 an hour. The range for this bid was $55 to $75.

Six vendors applied for translation services. We chose three vendors (refer to the chart below) and we chose ISI as one of our translation vendors. ISI’s per-word rate for Spanish translation was $0.17. Bids ranged from $0.27 to $0.13. L.A. Care was able to negotiate the translation minimum charge rate down from ISI’s current average of $79.17 to $67.11, resulting in a cost savings of 15% over current pricing.

ISI was selected as the sole vendor for conference interpreting, the back-up vendor for medical appointment interpreting, and one of three translation vendors. ISI was chosen due to their history of providing quality and timely services, knowledge of L.A. Care processes, and low pricing.

The next request for proposal will be conducted in May 2017.

39 Board of Governors MOTION SUMMARY

Vendor Amount ISI (translation and meeting interpreting) $438,000 Avantpage (translation) $232,000 Magnus (medical interpreting) $230,000 Medialocate (translation) $95,000 Lifesigns (American Sign Language interpreting) $80,000

Total $1,075,000

Budget Impact: The Cultural and Linguistics Department will be asking for a budget of $1.2 million for Translation and Interpretation in the FY14-15 budget.

Motion: To approve staff to execute a contract with Interpreting Services International to provide translation and face-to-face interpreting services in the amount of $438,000 from November 1, 2014 to October 31, 2015.

Board of Governors MOTION SUMMARY Date: September 4, 2014 Motion No. FIN 104.0914 Committee: Finance & Budget Chairperson: Michael Rembis

Issue: Contract with Salesforce and contract amendment with a vendor to be selected for Salesforce implementation activities.

Background: The Member Outreach, Retention and Engagement (MORE) department sought a centralized customer relationship management (CRM) solution more comprehensive and robust than the databases currently used to track member communication preferences, campaigns, and touch points. The CRM will consolidate many separate databases and tracking tools, streamline communications, enhance L.A. Care’s complete view of the member through the engagement lifecycle, and contribute to increased member satisfaction.

In April 2014, MORE solicited proposals from thirteen vendors. Salesforce was selected because it offered the most flexible, comprehensive, scalable solution and the lowest pricing. Salesforce is headquartered in San Francisco. Staff requests $121,500 for 20 Salesforce Service Cloud- Enterprise Edition product licenses, upgrades and support through July 14, 2017.

Salesforce implementation requires a third party vendor. Information Technology (IT) department staff will competitively choose a vendor who is recognized as top tier vendor among certified Salesforce implementation partners, has the knowledge and expertise in the health care industry, and is familiar with the QNXT core system to allow for a smooth integration process.

Staff is requesting approval of a contract amendment not to exceed $200,000 through December 31, 2014, with a yet to be determined vendor as a third party implementer.

Budget Impact: Total amount requested of $321,500. $240,500 not budgeted in FY 2013-2014, but existing unspent balances are sufficient in IT budget $40,500 will be fully budgeted in FY 2014-2015 IT Department budget $40,500 will be fully budgeted in FY 2015-2016 IT Department budget

Motion: To approve a contract for $121,500 with Salesforce for Service Cloud- Enterprise Edition licenses and support through July 14, 2017 and a contract amendment with an existing IT vendor adding $200,000 for Salesforce implementation through December 31, 2014.

Board of Governors MOTION SUMMARY Date: September 4, 2014 Motion No. FIN 105.0914

Committee: Finance and Budget Chairperson: Michael Rembis

Issue: Contract with Maricich Healthcare Communications for marketing, advertising and media placement for L.A. Care Covered and development of L.A. Care’s Medicare Advantage Dual Eligible Special Needs Plan (D-SNP) Center for Medicare and Medicaid Services (CMS) required member materials.

Background: L.A. Care is combining marketing functions for two separate product lines into one contract amendment with Maricich.

Staff requests: 1. To amend the contract with Maricich Healthcare Communications from August 1, 2014 to July 31, 2015 for an amount not to exceed $4,000,000, for marketing, advertising and media placement for the 2015 open and special enrollment cycle for L.A. Care Covered, and, 2. To create a scope of work in an amount not to exceed $600,000 for the development of member materials required by Center for Medicare and Medicaid Services (CMS) for L.A. Care’s Medicare Advantage Dual Eligible Special Needs Plan (D-SNP).

In July 2013, Maricich Communications was among nineteen agencies that responded to a request for quotes to provide creative direction, branding, comprehensive community marketing campaigns, media planning, and placement for the L.A. Care Covered and D-SNP product and model documents and member materials in multiple languages. Maricich’s 12 month history is in the amount of $4, 983,250 through December 31, 2014. The next bidding process will be conducted during 2015 and prior to 2016 product year.

L.A. Care Covered Staff is requesting authorization to begin the development and planning for the marketing, advertising and media plan for the Covered California 2015 open enrollment cycle (November 15, 2014 – February 15, 2015). Staff is pleased with the work that Maricich has provided and recommends that we continue to work with them on the 2015 program. A scope of work will be prepared by the Sales and Marketing Department with the support of the Commercial Product Operations Department for review and approval by Howard A. Kahn, Chief Executive Officer and John Wallace, Chief Operating Officer.

Maricich Media (Pass Through) Expenses for L.A. Care Covered $2,000,000 Radio $ 350,000 Out-of-Home (transit shelters, bus interiors, food trucks) $ 10,000 Newsprint (Antelope Valley Only) $ 150,000 POS Displays $ 275,000 Direct Mail/Door Hangers $ 200,000 Search Engine Marketing $ 250,000 Digital (display, video, mobile, radio) $ 150,000 Social Media $ 15,000 E-mail marketing (pilot program) $3,400,000 Total

D-SNP CMS requires health plans to prepare member materials for the Open Enrollment Period that begins in November 2014. The development process of member materials is complex and requires that internal staff and Maricich Communications conduct expedited review, formatting and translation of model documents as soon as they are released by CMS. Critical path benchmarks will be incorporated in the scope of work and the vendor will be provided guidance associated with the continued status of D-SNP plans by DHCS and CMS.

D-SNP related services and deliverables include: · member model document development, · expedited production charges resulting from late delivery of final product information from CMS, · marketing and communication materials, · collateral materials (product education and general information) for contracted provider offices, and · translation services.

Maricich 12 Month Total Expenses $ 453,250 2013-14 contract $1,200,000 Schedule A-2 for CMC signed 9-25-13 $2,500,000 Schedule A-3 for LACC Phase II signed 1-17-14 $ 830,000 Schedule A-4 for CMC signed 3-1-14 $4,983,250 Total

Budget Impact: Sufficient funds are budgeted for FY 2013-14 in the Marketing Department, and are being proposed in the FY2014-15 Advertising Budget for the requested amount of $6,600,000.

Motion: To authorize staff to amend a contract with Maricich Healthcare Communications in a total amount not to exceed $4,600,000 for the period of August 1, 2014 through July 31, 2015. · $4,000,000 for L.A. Care Covered marketing, advertising and media; · $600,000 for L.A. Care’s Medicare Advantage Dual Eligible Special Needs Plan (“D-SNP”) member materials.

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. FIN 106.0914

Committee: Finance & Budget Chairperson: Michael Rembis

Issue: Contract for business continuity and disaster recovery services.

Background: Regulatory compliance requires that L.A. Care have a business continuity plan (BCP) and disaster recovery plan (DRP) in the event of a disruption to the business (e.g. power outage or other disaster). In order for such plans to be effective, the following services are provided by SunGard.

· Data and system recovery services, including a hot site data center, remote office space, voice communications, network services and support 7 days a week, 24-hours a day; · Systems recovery support 7 days per week, 24-hours a day; · Annual test services and support staff; · Dedicated space for L.A. Care staff to work in the event of the loss of use of the main building (up to 100 staff); · Increased network bandwidth at a reduced rate.

SunGard’s current contract expires October 31, 2014. Staff is requesting approval for a contract with a vendor to be determined. A request for proposal is in process and it is expected to be completed in September 2014. This may either result in a contract with a new vendor or enable a renewed contract with SunGard.

Budget Impact: Funding is available the Information Technology Department’s budget for FY2013-14 and will be allocated in the FY2014-15 budget.

Motion: To approve delegation of expenditure authority to Howard A. Kahn, CEO, to execute a contract as follows: 1) Not to exceed $500,000 for a vendor yet to be determined for disaster recovery and business continuity services for two years through October 31, 2016, contingent upon final approval by the Chairperson and Treasurer of L.A. Care’s Board of Governors of the contract with the selected vendor, and, 2) In the event that the existing vendor is selected through an RFP process, to extend the existing contract for two years

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No.: COM 100.0914

Committee: Compliance & Quality Chairperson: G. Michael Roybal, MD, MPH

Issue: Approval of L.A. Care’s 2014 Compliance Plan, 2014 Code of Conduct and 2014 Compliance Auditing and Monitoring Plan

Background:

2014 Compliance Program Since the launch of the L.A. Care D-SNP plan, we have maintained two separate written Compliance Program documents; one for the D-SNP and one for all other L.A. Care programs. The Centers for Medicare and Medicaid Services (CMS) does not require a separate D-SNP Compliance Program as long as the organization’s overall Compliance Program includes all the components required by CMS. Therefore, this revision combines the two Compliance Programs into a single L.A. Care Compliance Program which reflects all elements recommended by the Office of the Inspector General (OIG) for a comprehensive Compliance Program which is the industry standard for an effective compliance program. In addition to some formatting changes, we have updated some processes to more closely reflect current practice. We have updated and clarified language regarding L.A. Care’s Program Integrity Plan which is incorporated into this document and describes more clearly L.A. Care’s obligations to identify and report potential fraud, waste, and abuse issues to the appropriate regulatory agencies. The Program also includes the specifics related to L.A. Care’s Privacy and Information Security responsibilities and the means to meet those responsibilities. This document has been reviewed by Legal Affairs and recommended changes have been incorporated into the document. 2014 Code of Conduct A Code of Conduct should reflect an organization’s guiding principles as to how it conducts its business affairs and should provide the standards of conduct that foster the behaviors that exemplify those guiding principles. The 2013 Code of Conduct included many procedural steps that would have been more appropriately addressed in a policy and procedure. Those steps have been removed from the Code. While the basic principles have not changed, the document has been re-organized into an easier-to-read format. This new document also confirms for the reader that the Code of Conduct applies to permanent and temporary L.A. Care employees at all levels, Board of Governors members, and all others with whom L.A. Care does business including Contractors, Consultants and Vendors. This document has been reviewed by Legal Affairs and recommended changes have been incorporated into the document. 2014 Compliance Auditing and Monitoring Plan One of the seven elements of an effective compliance program, as defined by the OIG, is a comprehensive auditing and monitoring program that identifies areas of risk and corrects any identified deficiencies. The Plan presented today captures the oversight of those areas where these deficiencies are most likely to occur. Budget Impact: None

Motion: To approve the L.A. Care’s 2014 Compliance Plan, 2014 Code of Conduct and 2014 Compliance Auditing and Monitoring Plan, as submitted.

Compliance Program

Medicare Advantage HMO Special Needs Plan Cal-Medi Connect Compliance Plan

2014

I. Compliance Program Overview

L.A. Care Health Plan (“L.A. Care”) is committed to establishing and maintaining its business operations in compliance with ethical standards, contractual obligations, and all-applicable statutes, regulations and rules, including those pertaining to the State of California requirements and the Medicare program. L.A. Care’s compliance commitment extends to its own internal business operations, as well as its oversight and monitoring responsibilities relating to its business partners.

L.A. Care has tailored its Compliance Program to fit the unique environment of the organization. Moreover, the Compliance Program is dynamic; L.A. Care regularly reviews and enhances the Compliance Program to meet evolving compliance needs (i.e., business or legal areas of risk) as well as changes in state and federal laws and regulations. The Compliance Program applies to Board members, L.A. Care employees, and Contractors including contracted Knox-Keene licensed health plans, participating providers, and suppliers.

As part of our commitment, L.A. Care has formalized its compliance activities by developing a comprehensive Compliance Program that incorporates the fundamental elements identified by the government and L.A. Care as necessary to prevent and detect violations of ethical standards, contractual obligations and applicable law and the involvement of L.A. Care’s governing body and executive staff. The program incorporates existing compliance elements and functions and expands upon them to improve the quality of L.A. Care’s compliance efforts.

II. Compliance Program Elements

L.A. Care has incorporated the fundamental elements into its Compliance Program. Section VI of this document provides a description of these requirements which are as follows: • Written standards of conduct and other policies which promote the organization’s commitment to compliance. • The designation of a Compliance Officer or other individual who is given the responsibility of implementing and monitoring the compliance process. • Monitoring and auditing systems and techniques to monitor the effectiveness of the compliance program. • Conducting education and training programs. • An internal reporting system for receiving complaints. • Mechanisms for enforcing the compliance program and disciplining employees. • The implementation of appropriate measures to prevent future offenses.

III. Authority and Responsibility

L.A. Care’s Compliance Program ensures compliance with federal rules and regulations, L.A. Care’s payer contracts and other standards as required by applicable regulatory agencies. This includes but is not limited to the following requirements as applicable to each Participating Physician Group (“PPG”) and Contractor affiliated with L.A. Care:

47 • Rules and Regulations promulgated by and for the Department of Managed Health Care. • Rules and Regulations promulgated by and for the Centers for Medicare & Medicaid Services. • All applicable federal rules and regulations that apply to the provision of health services. • Terms and conditions as set forth in L.A Care’s contracts with California and federal agencies, private foundations and other payer organizations for the provision of health care services. • The State and Federal Governments’ right to access premises to assure compliance with the Contract(s) and for any other reasonable purpose, with or without notice to L.A. Care.

IV. Scope of the Compliance Program

1. Internal Monitoring

The Compliance Program is intended to ensure the organization and its contracted network are in compliance with all applicable laws, regulations and contractual requirements including those involving reimbursements for services provided to all lines of business. The program incorporates periodic monitoring and auditing mechanisms, such as employee interviews, random chart reviews and prospective billing audits into its oversight.

2. Education and Training

The continuing training and education of its employees on their legal and ethical obligations under applicable laws, regulations and policies (including, but not limited to, federal health program requirements) is a critical element of L.A. Care Health Plan’s compliance program. L.A. Care is committed to taking all necessary steps to communicating effectively its standards, policies and procedures to all affected personnel. Additionally, L.A. Care regularly reviews and updates its training programs, as well as identifies additional areas of training as needed based on new developments.

The Compliance Program reinforces the ongoing commitment of each business unit to the overall purposes of the organization’s Code of Conduct standards. Through the Compliance Program, L.A. Care staff, vendors, key stakeholders, and others who do business with and on behalf of L.A. Care are identified as a component of the Code of Conduct standards that are held responsible to the objectives of Code of Conduct.

3. Internal Reporting Mechanisms.

L.A. Care has established a fraud, waste, and abuse detection Special Investigations Unit (SIU) to comply with Federal and State requirements. The purpose of the SIU is to organize and implement anti-fraud strategies to identify and reduce costs caused by fraudulent activities, and to protect members and providers in the delivery of health care services through timely detection, investigation and referral of suspected fraud.

The Compliance Officer recommends corrective action procedures and preventive strategies for adoption and implementation by Management and the Board as appropriate. The Management is 48 responsible for cooperating in investigations of reported non-compliance, commits appropriate resources to conduct of investigations and to corrective action and prevention measures. The Board oversees compliance efforts by receiving and assessing reports of findings and progress of internal investigations, and of corrective action and prevention measures; assures that it benefits from the recommendations of the Compliance Officer and from the advice of counsel when corrective action may require report of the non-compliance to the outside parties including the government.

V. Goals and Objectives

L.A. Care’s Compliance Program is designed to facilitate the provision of quality health care services to all its members. The goal of L.A. Care’s Compliance Program is to ensure that all L.A. Care Health Plan members receive appropriate and quality health care services through a provider network in compliance with all applicable stateCalifornia and federal rules and regulations as well as L.A. Care contractual requirements.

L. A. Care’s Compliance Program incorporates the following objectives:

• Provides oversight of delegated responsibilities to the Participating Physician groups (PPGs) and other sub-contracted entities. • Implements corrective action plans with PPGs and sub-contracted entities to address deficiencies in provision of health care services. • Conducts Auditing and Internal Monitoring activities of L.A. Care business units and subcontractors to assess compliance with L.A. Care’s performance standards (i.e., specialty health plans and PPGsarticipating Physician Groups) • Identifiesy and investigate potential fraud, waste, and abuse activities. Takes appropriate action(s) to report or resolve suspicious activities.resolve all fraud and abuse activities. • Provides education and other available resources to assist PPGs and sub-contracted entities in becoming compliant with Privacy & Information Security requirements. • Educates staff and enforce adherence to L.A. Care’s Code of Conduct standards and mission. • Provides new legislation updates to PPGs and sub-contracted entities that specifies required actions to ensure contractual compliance. Makes available additional information about compliance activities and requirements to PPGs on an ongoing basis.

VI. L.A. Care’s Incorporation of OIG Fundamental Elements

A. Written Standards

L.A. Care’s Health Plan’s policies and procedures, and Code of Conduct are statements of ethical and compliance principles that guide daily operations. The written standards establish the expectation that management, employees and sub-contracted entities act in accordance with all laws, regulations and organization’s policies.

1. L.A. Care’s Code of Conduct

49 L.A. Care’s Code of Conduct is intended to provide general ethical conduct standards to follow and to assist the organization in meeting its compliance goals. The Code is intended to complement, but not replace existing policies and procedures. If there is no existing policy on a particular subject matter, this Code shall become the applicable policy. Any questions regarding the Code should be directed to the Compliance Officer.

The Code of Conduct standards, as well as all statutes, regulations, contractual obligations and L.A. Care policies and procedures must be supported by all employees, contractors, the Board of Governors, the Public Advisory Committees, and anyone else engaged in our work environment or acting on behalf of the organization. No one, regardless of position, will be allowed to compromise adherence to the Code, statutes, regulations, contractual obligations, professional and ethical standards, policies or procedures.

2. Regular Reaffirmation

L.A. Care requires that endorsement of the Code of Conduct and applicable Policies and Procedures from this Compliance Plan be confirmed, during each calendar year, in the following manner:

• The Code of Conduct shall be reviewed with employees, Board members and Contractors on a regular basis. Managers shall record any deviations from compliance discovered during the discussions and report those deviations to the Compliance Officer. The Code of Conduct shall be reviewed with all employees on a regular basis during annual training sessions. Employees shall be advised of any changes from the prior year. The meeting sign-in sheets shall provide the record of affirmation. Compliance training, which includes the Code of Conduct, is disseminated via a Learning Management System which tracks deployment and completion of all assigned training. This system will track the acknowledgment and agreement with the Code of Conduct on an annual basis. • The Compliance Officer shall include the Compliance Program (other than the Code of Conduct) and applicable Policies and Procedures in a regular dissemination to board members, employees and contractors if there have been significant revisions and/or amendments to the Compliance Plan and/or Policies and Procedures. Otherwise, the Compliance Officer may determine alternative schedules for redistribution of the Compliance Plan (other than the Code of Conduct) and Policies and Procedures. • Each board member shall sign an Affirmation Statement and forward it to the Compliance Officer. • The end result of this process is that the Compliance Officer shall receive the final Employee Affirmation Sign-In sheets together with all Board member and Contractor Affirmation Statements. The Compliance Officer will review all completion records and Affirmation Statements to ensure that all Employees, Board members and Contractors have completed the assigned training and have affirmed their understanding and agreement with the Code of Conduct. • In the event that an Employee, Board member or Contractor does not complete the assigned training or does not affirm their compliance with the Code of Conduct, the Compliance Officer will bring the issue to the Internal Compliance Committee for further action.

50 3. Review and Implementation of Performance Standards

L.A. Care regularly reviews its business operations against new standards imposed by applicable contractual, legal, regulatory requirements, and policies and procedures to identify potential risk areas. In addition, L.A. Care also reviews its operations by examining information collected from monitoring and auditing activities (including both external reviews of L.A. Care’s operations and L.A. Care’s review of health network, and participating provider, and supplier operations)., These reviews assist L.A. Care in identifyingbased upon which reviews it identifies additional risk areas. L.A. Care regularly reviews these sources of standards to ensure that L.A. Care, its Board members, Employees and Contractors operate under and comply with any changes to the the changing standards.

L.A. Care communicates and implements standards through Policies and Procedures, as well as specific plans, programs, and manuals. Figure one (1) below shows how standards are reviewed and implemented at L.A. Care:

Establishment and/or revision of policies and New or changed procedures Federal and/or State laws, rules, regulations, policies Establishment and/or revision of plans, programs and manuals Communication, Information from Review and training and/or monitoring interpretation education of new activities of new standards standards Establishment and/or revision of performance monitoring tools New or changed contractual requirements

Establishment and/or amendment of Contracts

Fig. 1

4. Compliance with Policies and Procedures

L.A. Care regularly and systematically updates its Policies and Procedures to stay current with contractual, legal, and regulatory requirements. L.A. Care’s Policy & Procedure Review Committee (“PPRC”) and Quality Oversight Committee are comprised of L.A. Care staff and meets regularly to review and approve proposed changes and additions to L.A. Care’s Policies and Procedures. The Policies and Procedures assure that Board members, Employees, and Contractors perform their responsibilities in compliance with their positions, contractual obligations, and applicable law. Board members, Employees, and Contractors are responsible

51 for ensuring that they comply with the Policies and Procedures relevant to their appointment, job descriptions, and/or contractual obligations. These Policies and Procedures are set forth in L.A. Care’s Policies and Procedures and Procedures Manual (i.e., the Policy & Procedure database on L.A. Care’s intranet) are available in the Policy and Procedure database on L.A. Care’s intranet.

In addition to Policies and Procedures, L.A. Care has several programs that address its contractual, legal, and regulatory obligations, including the following:

5. Utilization Management Program (UM Program)

The purpose of the L.A. Care UM Program is to define and describe L.A. Care’s multidisciplinary and comprehensive approach and process to manage resource allocation through systematic monitoring of medical necessity and quality and maximize the cost effectiveness of the care and services delivered to L.A. Care members. It encompasses management and evaluation of health care across the continuum including, pre-service review and authorization and concurrent and retrospective review of institutional care.

6. Quality Improvement Program (QI Program)

The purpose of the L.A. Care QI Program is to establish methods for objectively and systematically evaluating and improving the quality of care furnished to L.A. Care members and the service provided by L.A. Care and itsthe PPGsHealth Networks.

7. Program Integrity PlanAnti-Fraud Program

The purpose of L.A. Care’s Program Integrity Plan Anti-Fraud program is to organize and implement an antifraud strategy to identity and reduce costs caused by fraudulent activities and protect L.A. Care members in the delivery of health care services. The Anti-Fraud programProgram Integrity Plan is designed to establish methods to identify investigate and refer incidents of suspected fraud, waste and/or abuse in L.A. Care’s Medicare or Cal Medi-Connect program(s). programs.

L.A. Care Employees and Contractors are also responsible for being familiar with and following all L.A. Care plans and programs applicable to their job functions and contractual obligations.

8. Familiarity with Identified Standards

Board members, Employees and Contractors are familiar with the standards related to issues that are generally considered potential risk areas for managed care organizations. These areas include but are not limited to:

Marketing • Use of improper marketing materials and personnel. • Selective marketing and enrollment practices. • Specialized training of employees participating in marketing activities.

Under-Utilization, Access, and Quality of Care • Failure to ensure that covered services are available and accessible to members. 52 • Inappropriate withholding or delay of covered services. • Improper interference with health care professionals’ advice to members including advice regarding member’s health status, medical care and treatment options and risks and benefits of treatment or non-treatment. • Failure to verify that practitioners and providers are appropriately licensed and/or certified to furnish covered services to members.

Data Collection and Submission • Failure to comply with contractual and regulatory requirements relating to accurate, timely, complete, and truthful data in submissions including, but not limited to, encounter data, and claims and financial information. • Knowing submission of false information or data to any regulatory agency. • Failure to comply with disclosure requirements including financial interests and conflicts of interest disclosures.

Emergency Services • Improper prior authorization requirements for emergency services • Failure to make payment for emergency services based on contractual standards. For example, the prudent layperson and Medical Screening Exam standards. • Failure to ensure that enrollees with emergency conditions will be evaluated immediately and emergency services are available and accessible within the plan’s service area.

Anti-Kickback Statute and other inducements • Knowing and willful offer, payment, solicitation or receipt of remuneration to induce the referral of business reimbursable under the Medi-Cal or Medicare programs. • Inappropriate incentives or remuneration to enrollees to induce them to use a particular practitioner, provider, or supplier. • “Swapping” arrangements whereby practitioners, providers, or suppliers are offered reduced rates in capitates arrangements to participate in other product lines that do not have the payment or utilization constraints (i.e. low capitation rates traded for access to fee-for-service business)

Federal False Claims Act • L.A. Care’s liability for violating the False Claims Act. • Qui Tam (Whistleblower”) procedures, rights and awards. • No retaliation policy against an employee for reporting misconduct in good faith..

Confidentiality • Improper disclosure of confidential member and employee information including disclosure of names of persons receiving public social services, medical diagnosis, and services in violation of contractual and statutory requirements. • Improper disclosure of protected peer review and quality improvement information

Excluded Providers • Entering into contractual or employment relationships with persons or entities that are suspended, excluded or otherwise not eligible to participate in Federal and/or State health care programs.

53 • Submitting claims or otherwise seeking reimbursement for items or services furnished, ordered, prescribed, or supplied by an excluded person or entity. • Failure to take appropriate corrective action upon subsequently learning of a person’s or entities excluded status.

Member Dis-enrollment • Improper action to request or encourage an individual to disenroll from L.A. Care or any health plan contracted with L.A. Care.

Member Grievance and Appeal Procedures • Failure to ensure that members are properly notified of their grievance and appeal rights. • Failure to provide adequate member grievance and appeal procedures.

B. Designation of a Compliance Officer

L.A. Care has directly employed a Compliance Officer to serve as the focal point for compliance activities and who reports directly to senior management and to the Board of Governors. The L.A. Care Compliance Officer is also the Part D Compliance Officer. The Compliance Officer is charged with the responsibility for developing, operating and monitoring the Compliance Program which includes, but is not limed to the developing, operating, and monitoring the fraud, waste, and abuse program. This also includes establishing an auditing and monitoring plan, overseeing compliance audit functions, continuously reviewing organizational risk areas to identify necessary auditing and monitoring activities; assisting management with formulation of corrective action plans and overseeing and/or verifying implementation of corrective action. The Compliance Officer has the authority to report directly to the Board of Governors and the Chief Eexecutive Officer (“CEO”), as necessary..

The Compliance Officer shall ensure that:

• The Code of Conduct and Policies and Procedures applicable to Board members, Employees, and Contractors are developed, implemented, and distributed to all Board members, Employees, and Contractors. • The Compliance Program, including policies and procedures and other performance standards documents are revised and updated based on changes in L.A. Care’s needs, regulatory requirements, and applicable law and are distributed to all affected Board members, Employees, and Contractors regularly or more often as is appropriate. • Certifications confirming receipt, review, and understanding of the Code of Conduct are obtained. • Developing and monitoring the implementation and compliance with Parts C and D related policies and procedures through the creation and implementation of a work plan as discussed in Section 50.2.6.

54 • An appropriate education and training program that focuses on the elements of the Compliance Program is developed, coordinated, implemented, and provided to appropriate Board members, Employees, and Contractors. • Reporting, at least on a quarterly basis, or more frequently as necessary, to the Compliance & Quality Committee of the Board of Governors, and the CEO on the status of the Compliance Program. This includes, but is not limited to, implementation, the identification and resolution of potential or actual instances of noncompliance, and L.A. Care’s oversight and audit activities. • Effective lines of communication are instituted and communication mechanisms such as telephone hotline calls are monitored, investigated, and treated confidentially (unless circumstances dictate the contrary). • Ensuring that first tier entities, downstream entities, and related entities, particularly those involved in sales and marketing activities, are aware of and follow the requirements for Medicare Part D sales and marketing activities • Inquiries and investigations with respect to any reported or suspected violation or questionable conduct are timely initiated and completed and/or are timely referred to the appropriate member of the Internal Compliance Committee. • Responding to reports of potential instances of Parts C and D fraud, waste or abuse, including the coordination of internal investigations and the development of appropriate corrective or disciplinary actions, if necessary. • Coordinating and periodically reviewing the Participation Status Review process with the Director of Human Resources and other designated employees to ascertain that the process is conducted in accordance with L.A. Care Policies and Procedures. Additionally, tL.A. Care he Director of Human Resources will assist to will ensure that the DHHS OIG and GSA exclusion lists and the State exclusion list “have been checked with respect to all employees, temporary employees, consultants, interns, officers, directors and managers as well as first tier entities, downstream entities, and related entities are not included on such lists. This exclusion monitoring will be done upon hire, appointment or engagement and will done monthly thereafter. • Each of the requirements of the Compliance Program has been substantially accomplished.

1. L.A. Care’s Compliance and Quality Committee

L.A. Care has established a Compliance & Quality Committee of the Board of Governors to advise and assist with the implementation and oversight of the Parts C and D Compliance Program. The Committee is comprised of six Board members, none of whom is an employee of L.A. Care Health Plan. Committee members are independent of management and free of any relationship that, in the opinion of the Board, could interfere in the exercise of independent judgment as a committee member. The Committee shall meet at least on a quarterly basis or more frequently, as necessary. The Committee shall make recommendations to the Board periodically, in consultation with the CEO and the Compliance Officer, on those findings and matters within the scope of their responsibility. The Committee shall maintain minutes of all its meetings to document its activities and recommendations.

The Compliance & Quality Committee:

• Oversees L.A. Care’s compliance efforts.

• Consults with advisors as necessary. • Develop strategies to promote compliance and the detection of any potential violations. • Assists in the creation of effective corrective action plans and ensure that they are implemented and monitored. • Analyzes L.A. Care’s contractual, legal, and regulatory requirements and risk areas and coordinates with the Compliance Officer to ensure the adequacy of the Compliance Program. • Receives periodic reports from the Compliance Officer concerning the Compliance Program. • Suggests whatever actions are appropriate and necessary to ensure that L.A. Care conducts its activities in compliance with the applicable law and regulations and sound business ethics. • Support the Parts C & D Compliance Officer's needs for sufficient staff and resources to carry out his or her duties. • Ensures that legal counsel is consulted as appropriate and that all applicable privileges are preserved, including the attorney-client privilege and/or work product doctrine.

2. L.A. Care Management

Directors and Managers must be available to discuss with each employee under their direct supervision and every contractor with whom they are the primary liaison:

• The content and procedures in the Compliance Program. • The legal requirements applicable to Employees’ and Contractors’ job functions or contractual obligations, as applicable. • That adherence to the Compliance Program is a condition of employment. • That L.A. Care shall take appropriate disciplinary action, including termination of employment or a Contractor’s agreement with L.A. Care, for violation of the principles and requirements set forth in the Compliance Program and applicable law and regulations.

C3. Oversight and monitoring of delegated responsibilities and internal operations

L.A. Care’s Compliance Program includes ongoing efforts to monitor, assess, audit and evaluate compliance with the company’s policies and procedures. L.A. Care notes that in accordance with the OIG Guidance, the nature of its reviews, as well as the extent and frequency of its compliance monitoring, assessing and auditing varies according to a variety of factors, including new regulatory requirements, changes in business practices and other considerations.

4D. Conducting effective training and education

The continuing training and education of its employees on their legal and ethical obligations under applicable laws, regulations and policies (including those under federal healthcare program requirements) is a critical element of L.A. Care’s Compliance Program. L.A. Care is committed to taking all necessary steps to effectively communicate its standards, policies and procedures to all affected personnel. Additionally, L.A. Care will regularly revise and update its training program, as well as identify additional areas of training as needed based on new development including but not limited to the following:

• Code of Conduct tTraining • Anti-Kickback statute • State and federal False Claims Acts • Common fraud sSchemes in pPharmaceutical pPrograms • Medicare Advantage tTraining • Medicare Part D training • Operational training (general and specific)

L.A. Care’ training programs will be updated based on findings from internal audits and risk assessments and audits performed by regulatory agencies.

1. Continuing Education and Training

All employees shall receive a copy of L.A. Care’s Code of Conduct and training on an annual basis. Additionally, under the direction of a new employee’s manager, all new employees receive policies and procedures pertinent to that individual’s job responsibilities upon commencement of their employment.

All employee training and instruction shall include:

• A description of the compliance program, including a review of compliance policies and procedures, the code of conduct, and the organization's commitment to business ethics and compliance with all statutory, regulatory, and Medicare program requirements. • Overview of system or process to ask compliance questions, request compliance clarification or report potential non-compliance. Training should emphasize confidentiality, anonymity, and non-retaliation for compliance related questions, or reports of potential non-compliance. • Review of the disciplinary guidelines for non-compliant or fraudulent behavior which results in mandatory retraining and may result in disciplinary action, including possible termination when such behavior is serious or repeated or when knowledge of a possible violation is not reported. • Attendance and participation in formal training programs as a condition of continued employment.

57 • Review of policies related to contracting with the government, such as the laws addressing fraud and abuse or gifts and gratuities for Government employees. • Review of potential conflicts of interest and the Sponsor's disclosure/attestation system. • Overview of HIPAA, the CMS Data Use Agreement, and the importance of maintaining the confidentiality of Protected Personal Health Information (PHI).. • Overview of the monitoring and auditing work plan of the organization.

Employees may receive such additional compliance training as is reasonable and necessary based on changes in job descriptions/duties, promotions, and/or the scope of their job functions.

Board members shall receive a copy of the Code of Conduct as part of orientation. Board members shall receive compliance training as part of their orientation and on a regular basis thereafter.

Contractors shall receive a copy of the Code of Conduct including an overview of the Federal False Claims Act pertinent to their engagement from L.A. Care if directly engaged by L.A. Care. Contractors shall be encouraged to disseminate copies of the Code of Conduct to their employees, agents, and subcontractors furnishing items or services to L.A. Care and /or its members. L.A. Care may also develop compliance training and education presentations and/or roundtables for specified Contractors.

2. Documentation

The following sets forth the documentation requirements related to the training and education program:

• Training program materials shall include schedules, topic outlines, and sign-in sheets. If training is deployed via the L.A. Care Learning Management System, these requirements can be met utilizing the electronic tracking systems available through this System. • All Bboard members, Eemployees, and Ccontractors shall certify, in writing, or electronically, that they have attended the required training or completed a study guide and comprehensive review.

3. Coordination of Training

The Compliance Officer shall coordinate compliance education and training programs. The Compliance Officer or appropriately trained and experienced consultants, staff, or employees shall conduct compliance education and training presentations, programs, and seminars.

5E. Developing effective lines of communication

L.A. Care’s Compliance Department is committed to fostering dialogue between management and employees through multiple channels. Our goal is that employees should know where to turn when they are seeking answers to questions or reporting potential instances of fraud, waste, and abuse, or other potential violations of law, regulations or company policies. Employees also should feel free to make these inquiries or reports without fear of retaliation or retribution. To facilitate these goals, L.A. Care expects its supervisors to maintain an open door policyenvironment which does not tolerate retaliation by any employee against another employee for good faith reports of potential violations of law, regulations or company policies. L. A Care L.A. Care has established a Compliance Helpline which is available 24 hours a day, 7 days a week through which potential violations of law, regulations and policies may be reported. The Compliance Helpline phone number is 1-800-400-4889. L.A. Care’s Compliance Officer is responsible for communicating the compliance findings to senior management and the Board of Governors.

6F. Responding promptly to detected offenses, developing corrective action, and reporting to government agencies

L.A. Care’s Compliance Program includes clear disciplinary policies that set out the consequence of violating the law, regulations, or company policies. Enforcement of L.A. Care’s performance standards are conducted through the following disciplinary guidelines are enforced via the following means:. • There are wWell-publicized disciplinary standards available to all parties; program. • There is cConsistent application of disciplinary standards; and action. • Standard process and documentation for actions taken.There is a well documented standardized process that is followed when taking disciplinary action • Standard disciplinary actions.

Although each situation is considered on a case-by-case basis, L.A. Care consistently undertakes appropriate disciplinary action to address inappropriate conduct and to deter future violations. L.A. Care policies & procedures, and the Code of Conduct state that employees in violation of policies and procedures may be disciplined up to and including termination of employment. When appropriate, the progressive discipline procedure consists of: • Verbal counseling and education; • First written warning with enhanced education and oversight. • Final written warning, which may include suspension. • Discharge/termination.

Disciplinary action may also be taken for: • Authorizing or participating in a violation. • Failing to report a violation or suspected violation. • Refusing to cooperate with the investigation of a suspected violation.

59 • Retaliating against an individual who reported, in good faith, a suspected violation. • Failing to complete required training.

1. Confidentiality and Non-Retaliation

L.A. Care takes all reports of violations, suspected violations, questionable conduct or practices seriously.

Verbal communications to the Compliance Helpline, written reports to the Regulatory Aaffairs and Compliance department and reports to Management staff shall be treated confidentially to the extent permitted by applicable law and circumstances. The caller and/or reporter need not provide his or her name. Communications via the Compliance Helpline or in writing shall be treated as privileged to the extent permitted by applicable law.

L.A. Care’s policy prohibits any retaliatory action against a Board member, Employee, or Contractor for making any verbal or written communication in good faith. Discipline shall not be increased because a Board member, Employee, or Contractor reported his or her own violation or misconduct. Prompt and complete disclosure may be considered a mitigating factor in determining a Board member’s, Employee’s, or Contractor’s discipline or other sanction.

Although Bboard members, Eemployees and Ccontractors are encouraged to report their own wrongdoing, Bboard members, Eemployees and Ccontractors may not use any verbal or written report in an effort to insulate themselves from the consequences of their own violations or misconduct. Board members, Eemployees, and Ccontractors shall not prevent, or attempt to prevent, a Bboard member, Eemployee, or Ccontractor from communicating via the Compliance Helpline or any other mechanism. If a Bboard member, Eemployee, or Ccontractor attempts such action, he or she is subject to disciplinary action up to and including, dismissal, or termination.

L.A. Care also takes violations of this reporting policy (e.g. retaliation) seriously and the Compliance Officer will review disciplinary and/or other corrective action for violations, as appropriate, with the Compliance and & Quality Committee.

7G. Appropriate measures to prevent future offenses

Based on the findings from the ongoing Monitoring and Auditing activities as fore- mentioned, The Compliance Officer makes recommendations to the Board of Governors and L.A. Care’s Senior Management to include, but not limited to, the establishing of policies, procedures and standards, reviewing corrective action plans, imposing additional conditions of participation and imposing appropriate sanctions for any organization that is directly or indirectly contracted with L.A. Care.

VII.H. L.A. Care’s Compliance Program Activities

1. Internal Monitoring and Auditing

To ensure that all L.A. Care Health Plan members receive high quality and medically appropriate healthcare services, in addition to internal monitoring and auditing, L.A. Care staff performss an annual audit of contracted risk bearing or sub-delegated organizations which evaluates the contracted/delegated entity’s performance and compliance with all contractual and regulatory requirements. The Compliance Officer along with L.A. Care staff areis responsible for ensuring the implementation of the program and all associated policies and procedures, performance standards and activities. This includes the periodic auditing and monitoring activities of L.A. Care business units and subcontractors (i.e. Plan Partners and Participating Physician Groups).

L.A. Care shall regularly conduct internal audits and monitor its operations in order to identify and correct any potential occurrences of noncompliance or barriers to compliance. The Compliance Officer will also audit and monitor the operation of the Compliance Program to determine compliance with laws, regulations, contractual requirements and other obligations. Compliance audit priorities will be determined annually. L.A. Care will assess current enforcement trends, operational and clinical risks identified during the annual risk assessment, guidance from regulatory authorities, potential compliance issues of which it is aware and the annual OIG Work Plan when assigning audit priorities.

The Compliance Officer will develop an audit work plan under (with the guidance of the Compliance and Quality Committee,) that describes in detail the scope, schedule and proposed methodology of internal audits. The work plan is derived from the risk assessment process which quantifies associated risk with failure to comply with all applicable compliance standards.

Audit reports and/or findings will be prepared, with the assistance of legal counsel as necessary. Results of an audit will be provided to the appropriate members of senior management and to the Compliance and Quality Committee to ensure that management is aware of the results and can take necessary steps to correct any concerns to prevent reoccurrence of the activity. Audit reports shall specifically identify (i) the reason for the audit, (ii) any suspected non-compliance, (iii) areas where corrective action is needed or self-disclosure is appropriate and (iv) in which cases, if any, subsequent audits or studies would be advisable to ensure that the recommended corrective actions have been implemented and are successfuleffective.

Additionally, the Compliance Officer will work with the L.A. Care’s information systems department to monitor areas where there is potential for fraud, waste, and abuse. If necessary, the Compliance Officer may also consider and recommend monitoring systems produced by outside vendors for possible incorporation into the system. The Compliance Officer, as appropriate, will keep records of all random internal audits conducted of any business unit of claims ,and theany results of these audits, and any corrective actions that are identified and implemented as a result of these audits.

2. Oversight of Delegated Activities

L.A. Care delegates certain functions and/or processes to contractors who are required to meet all contractual, legal, and regulatory requirements and comply with L.A. Care Policies and Procedures and other guidelines applicable to the delegated functions.

L.A. Care maintains oversight over all contractors, including but not limited to, the following delegated activities:

• Utilization Management:. • Facility Site Reviews and medical record audits. • First level review of Medicare program member and provider grievances. • Review of Provider Dispute resolution cases: • Practitioner and provider credentialing and re-credentialing;. • PProvider network contracting:. • Claims payment:. • Cultural & Linguistic services:. • Pharmaceutical services/benefits: and . • Care management/coordinator of care

3. Oversight of Non-Delegated Activities

L.A. Care also maintains oversight of the following activities that are not delegated to contractors and remain the responsibility of L.A. Care:

• The Quality Improvement Program. • First level review of the Medicare program Member and provider grievancesMember Grievances. • Development of credentialing standards in specified circumstances. • Development of utilization standards. • Development of quality improvement standards. • Pharmacy and drug utilization review. • Compliance and Anti-fraud programProgram Integrity Plans a. 4. Annual Oversight Audits

Annual on-site visit of delegated PPGs and sub-sub-contracted entities are conducted to ensure that delegated responsibilities and services are in compliance with program requirements. Any deficiencies identified during the annual audit process will result in corrective action plans. The corrective action plan developed by a PPG or sub-contracted entity will identify the deficiency, outline how the deficiency will be corrected and set a time frame for implementing the corrective actions. b. 5. Review of Plan Partner and PPG and Specialty Health Plan Reports/Logs

On a regular basis (monthly or quarterly), basis, sub-contracted entities and PPGs and Specialty Health Plans are required to submit tracking/activity reports to L.A. Care. The reports/logs are analyzed to identify opportunities for improvement, and to establish trends and/ or patterns. Any variances and/ or identified deficiencies will be communicated to the sub-contracted entity or PPG or Specialty Health Plan as applicable. Additional information will be requested to explain the identified variances or deficiencies. The reports/logs submitted by sub-contracted entities and PPGs and Specialty Health Plans address activities in utilization management, member services, pharmacy, information systems, provider network services, financial solvency and claims reimbursement.

I2. L.A. Care’s Program Integrity Plan

L.A. Care Health Plan (“L.A. Care”) recognizes the importance of preventing, detecting and investigating fraud, waste, and abuse. abuse and waste. L.A. Care is committed to protecting and preserving the integrity and availability of health care resources for our Members, stakeholders, and business partners by maintaining a comprehensive program integrity plan.

These responsibilities are delegated to the Special Investigations Unit (SIU), whose mission is to maintain adherence to the Program Integrity Plan to ensure the integrity of publicly funded programs.

The goals for L.A. Care’s Program Integrity Plan include: 1. Goals of the Program Integrity Plan • Effective implementation of written policies and procedures. • Provision of de appropriate training to improve the knowledge and effectiveness of the Special Investigations Unit personnel. • Ensure an effective Fraud Awareness Program for all employees. • Maintain Privacy and Information Security Compliance. • Track and report investigation activities and outcomes. • Cooperate with local, state, federal, administrative and law enforcement agencies. • Support L.A. Care’s Code of Conduct.

2. The Program Integrity Plan consists of: 1.a. Reporting Structure 2.b.Reporting Fraud, Abuse & WasteWaste, and Abuse 3.c. Methods of Detection 4.d.Investigation Procedures 5.e. Written Policies and & Procedures 6.f. Fraud, Waste, and Abuse & Abuse Training 7.g.Ethics 8.h.False Claims Act

63 i. Privacy and Information Security 9.j. Record retention requirements 10. Record Retention

L.A. Care’s Anti-Fraud & Abuse Special Investigation Unit (“SIU”) unit was created to help deter fraudulent activities in L.A Care’s network. Fraud is defined as an intentional deception or misrepresentation that the provider, member, employee or entity makes knowing that the misrepresentation could result in some authorized benefit to provider, member, employee, entity or some other party. The goal of this unit is to deter, detect and follow-up on suspected fraudulent activities with the objective of protecting member, providers, employees and other stakeholders in the delivery of health services. Anti-fraud activities will be coordinated between L.A. Care and its PPGs, hospitals, ancillary providers, and contractors.

L.A. Care’s Board Members, Eemployees, and Ccontractors are encouraged to discuss compliance issues directly with their Supervisors, or the Compliance Officer. However, in the event any person wishing to remain anonymous may use L.A. Care’s confidential reporting systems described below. L.A. Care has established a separate and distinct confidential Compliance Helpline. The purpose of the Helpline is to ensure that there is an effective line of communication between L.A. Care and its Bboard members, Eemployees, Ccontractors and/or Mmembers as well as a process for investigation and resolution of reported matters. This reporting system is described below: The SIU is under the direction of L.A. Care’s Compliance Officer and Privacy & Information Security Officer, who hasve the authority to carry out the provisions of the Program Integrity Plan. For this purpose, while the Compliance Officer has a direct reporting relationship to the Chief, Strategy and Regulatory Affairs, the Compliance Officer and Privacy & Information has a dotted line to the CEO and to the Board of Governors.Security Officer report to the Chief Executive Officer and the Chief of Staff of L.A. Care: Contact information for the Compliance Officer

Steven Krivit Veronica Richardson Denise Corley, Compliance Officer Privacy & Information Security Officer Telephone: (213) 694-1250 ext.4292 Telephone: (213) 694-1250 ext.4193 Facsimile: (213) 629-6925 Facsimile: (213) 629-6925 Email: [email protected] Email: [email protected]

J. Internal Compliance Committee

L.A. Care’s Internal Compliance Committee (ICC), which the SIU is a sub-committee, meets at least ten times per year. The SIU is a subcommittee of the ICC. The purpose of the Compliance CommitteeICC is to review the Compliance Plan, review the Program Integrity Plan, review iInternal aAudit findings, review external audit reports, review

64 external regulatory reports, address compliance issues and review Fraud and Abuseprogram integrity reports.

K. Responsible Individuals for Investigating and Reporting Possible Acts of Fraud, Abuse and Waste

The SIU is staffed with employees committed to preventing, detecting and investigating fraud, waste and abuse. The professional experiences among the SIU members vary and are diverse, including claims, provider network, medical management, pharmacy, and legal affairs.

L.A. Care’s Compliance Officer and Privacy & Information Security Officer are is accountable for the development, oversight and implementation of the PProgram Integrity Plan. The Compliance Officer and Privacy & Information Security Officer are is responsible for providing the overall strategic direction for the unit and leading the team of investigators. The Compliance Officer and Privacy & Information Security Officer assists in identifying new fraud schemes and directs activities of all investigators.

SIU members are responsible for investigating assigned cases in order to detect fraudulent, abusive or wasteful activities/practices and recover funds paid on fraudulent claims. SIU members participate on investigative teams, perform tasks assigned in order to contribute to the overall case development and effectively collaborate with law enforcement resources.

L. Reporting Fraud, Waste, and Abuse Reporting Fraud, Waste, and Abuse

In order to maintain the effectiveness of the Program Integrity Plan, a comprehensive approach will be utilized for the reporting of all fraud, waste, and abuse, abuse and waste allegations.

1. Referrals to SIUReferrals to SIU

Allegations may beare referred to the SIU by company personnel, L.A. Care beneficiaries, health care providers, vendors, subcontractors and other external entities by any of the following methods.

Methods: • L.A. Care ComplianceFraud Helpline is available for confidential and/or anonymous reporting of allegations of fraud, abuse and waste.

• Beneficiaries and providers are encouraged to call the Compliance Helpline at 1- 800-400-4889; however, they may also use the Member Services Call Center to report fraud.

65 • Reports to Supervisors, the Compliance Officer, or any member of the Management team.

Referral Requirements • Name of Person Reporting Fraud – caller may remain anonymous(Optional) • Name, Address, License or Insurance ID of Subject , if known (if known) • Nature of Complaint • Date of Incident(s) • Supporting Documentation , if available(Optional)

1. Regulatory Agency Reporting

The SIU will report to Regulatory State and Federal agencies, law enforcement agencies, and appropriate professional boards (i.e., medical, pharmacy, and nursing) as required by law and contract on possible fraudulent activities as identified through the SIUUnit’s investigations.

The referral shall include but be not limited to the reported allegation and all supporting documentation that has been gathered during the investigation. This documentation may include such information as claims and encounter data, pharmacy utilization reports, and summaries of interviews conducted. In compliance with the reporting requirements from the Centers for Medicare and Medicaid Services (CMS), all potential fraud, waste, and abuse cases shall be referred to the CMS program integrity contractor, NBI MEDIC within thirty days of identification of the potential issue.report and referral shall include: • Allegation • Statutes or regulations violated • Results of the investigation • Regulations violated for the time period in question • Estimated overpayment identified • Summary of interviews conducted • Encounter data submitted by the provider for the time period in question • All supporting documentation obtained as the result of the investigation.

The SIU will submit investigational activities, summaries and reports as required by Regulatory agencies.

The report shall include: • Internal monitoring and auditing activities • Review of fraud and abuse activities • Corrective Action Plans • Outcomes

The SIU will also submit the Program Integrity Plan with notification of significant changes or as required by Regulatory agencies.

66 2. Detection of Fraud, Waste and Abuse

Data Analysis

DData analysis is essential in determining the existence of aberrancies outliers or patterns in pharmacy and medical claims. Data analysis is a tool to compare various claims and other related information to identify potential errors, identify areas of risk and establish a baseline to recognize trends.

The SIU utilizes monitoring tools and controls to detect fraud, waste, and abuseabuse and waste such as:

• Random pPayment rReviews • Compliance aAudits • Monitoring of nNew Fraud fraud Schemesschemes • Detailed cClaims reports • Trend reportsing & Analysis Reports to identify outliers and under/over- utilization patterns • Facility Site Review (FSR) information • Credentialing information • Membership information • Licensing information • Medical record review • On-site reviews • Information from our Utilization, Quality, and Care Management departments • Public information databases (e.g., Accurint or the Internet) • System eEdits

The SIU shall monitor issues such as, but not limited to:

• Billing for services or goods not rendered • Billing of services under another subscriber ID • Billing under another provider’s license number • Billing for medically unnecessary tests • Unbundling • Misrepresentation of diagnoses or services • Upcoding • Double billing • Soliciting, offering, or receiving kickbacks or bribes

67 • “Ping-ponging” of patients (referral of patients to other providers within the same medical group so the providers may benefit financially) • Billing professional services performed by untrained personnel • Billing for more complex surgical procedures than performed • Split billing over a period of days (separate billings for services rendered on the same day, billed on different days, with some charges being duplicated on each billing) • Altered claim forms • Treatment(s) and/or medication(s) prescribed by more than one provider appears to be duplicative, excessive, or contraindicated • Recipients using more than one physician to obtain similar treatments and /or medications • High volume of emergency room visits with a non-emergent diagnosis • Using multiple pharmacies to obtain drugs from the same therapeutic class • Report of recipient forging prescription • Report of recipient loaning a card to another individual to obtain MedicareMedicaid reimbursed services

3. Investigating Fraud, Waste and Abuse Investigating Fraud, Waste, and Abuse

Regulatory Affairs and ComplianceThe Compliance department investigator is responsible for conducting an thorough investigation of all suspected fraud, waste, and abuse allegations. In event that the investigation leads to credible information regarding the validity of the allegation, the Regulatory Affairs and Compliance department will make the appropriate referrals to the NBI MEDIC or other law enforcement agencies as required. d, abuse and waste. Procedures and job aides are used to provide guidance in conducting an investigation and ensure accurate reporting.

4. Data Management

The Regulatory Affairs and Compliance department will log all potential cases in the departmental database developed for this purpose. The database will be used to house all investigative documentation and will be used to monitor department performance metrics and case disposition. Regular reports will be generated to share with the SIU, ICC and Compliance and Quality Committee of the Board of Governors and monitored by the Compliance Officer.The SIU utilizes both provider and member fraud and abuse databases to track the investigation, house documentation and maintain regulatory notification. A log of all incidences of suspected fraud, abuse and waste is maintained by the Compliance Advisor. The log shall contain: • Subject of the complaint • Referral source • Allegation • Allegation/referral date

68 • Recipient or providers unique identifying number • Status of the investigation

5. Investigations

An investigation may consist of: • Identifying anyReview to determine any previous allegations • Determining if the provider has received any educational training pertaining to the allegation • Comparinge allegations to program policies and procedures • Reviewing licensing and credentialing information • Reviewing of Grievance and Appeals information • Reviewing of pertinent Medical Records • Reviewing of medical claims detail reports • Reviewing of pharmacy claims and utilization detail reports • Review by medical director • Review by legal advisor • Determining type(s) of corrective actions

Subcontractor Corrective Actions:

The method and/or resources used for corrective action depend on the scope and severity of the identified issue.

6. First Tier, Downstream and Related Entity (FDR) TrainingProvider Training

Provider training may be performed by our Quality Improvement, Provider Network Operations, and Facility Site review Departments. On-site training is provided by our Facility Site Review Department detailing the findings and the need for improvement. Educational material may also be sent via certified mail. Pursuant to the CMS requirements for provider training, the Regulatory Affairs and Compliance department shall deploy Fraud, Waste, and Abuse training as well as general Compliance training to its first tier, downstream and related entities (FDRs) on an annual basis. FDRs are required to attest that they have trained their employees on these topics. Completion of such training shall be tracked by the Regulatory Affairs and Compliance department and any non-compliance identified will be managed in accordance with L.A. Care policies.

Medical Record Audit

69 Medical records may be reviewed to substantiate allegations or validate claims submission.

7. Special Claims Review

When billing issues are egregious or provider fails to comply despite intervention, the provider may be placed on Special Claims Review (SCR), which is a pre-payment mechanism to prevent L.A. Care from making inappropriate payments. Claims submitted by the identified provider are monitored for accuracy and evaluated for medical appropriateness. for further monitoring and evaluation. SCR uses system edits to prevent automatic payment of claims and requires a medical reviewer evaluation prior to payment..

8. Recoveries

Overpayments will be recovered directly from the provider within 30 days. Failure to send payment may reflect in reduced payment of future claims or further legal action.

Termination

Failure to comply with L.A. Care requirements such as policies and procedures, contractual requirements laws and regulations could result in termination.

9. Quality of Care

Potential quality of care issues identified during the referral process or in the course of the investigation shall be referred to the Quality Management department for further evaluation. Based on the results of this investigation, the case may be referred to the Credentialing Committee and/or Peer Review Committee for possible disciplinary action, as appropriate. In addition, the SIU may refer Members to Case Management to assist them in the appropriate coordination of their medical care and to ensure that the Member is receiving the appropriate care from the most qualified provider. Further, should the Member’s behavior be problematic, Case Management can centralize any documentation needed to support notification to the Member that improvement in behavior must occur to continue receiving services through L.A. Care. Providers compromising patient care are referred to the Quality Management Department. The provider may be presented to the Credentialing Committee and/or Peer Review Committee for disciplinary action. The provider may also be reported to the appropriate licensing authority.

The provider may be monitored for any changes in billing patterns until compliant, using updated claims reports or medical records.

Beneficiary (Member)

70 Significant effort is made to provide intervention on behalf of the Member to correct abusive behavior. The SIU, through collaboration with specific departments, makes every effort to offer intervention: • A recipient may be referred to Case Management to assist with access to care, coordination of services, mental health or pain management referrals and community resources. • At the SIU’s discretion, recipient may receive a certified written warning letter documenting their behavior and the need for improvement. This letter may provide educational and resource information.

10. Composition and Function of the SIU

Advisors

The SIU is supported by Medical and Legal professionals who provide guidance on investigations or audits. • The Medical Directors provide medical oversight, clinical guidance and expertise, and review of medical records. • The Legal department provides legal oversight, responses to legal questions and interpretation of legislation.

Request of Investigations Assistance

Federal, State and local law enforcement agencies may seek information to further their investigations or prosecutions of those alleged to have committed health care fraud. The SIU will fully cooperate with and promptly respond to all fraud and abuse investigation efforts by Regulatory, State and Federal agencies.

Agencies tasked by the Federal and State Government to investigate all acts of provider fraud against the Medicare system or any of its contracting agencies are considered H.I.P.A.A exempt Health Care Oversight Agencies, as defined in 45 CFR 164.501.

Training

OOn an annual basis, L.A. Care provides training to employees and associates on fraud, waste, and abuse., abuse and waste. New associates employees receive mandatory training within 90 days of employment. An online training program educates claims processors, member service representatives, medical review personnel, and other L.A. Care staff and associates to identify patterns and trends indicating potential fraud, waste, or abuse. The online training program also provides education on how to identify and report suspicious activity as defined in the False Claims Act. The SIU staff undergoes additional formal training provided by professional organizations such as The National Health Care Fraud Association and the Association of Certified Fraud examiners.

71 .

An online training program educates claims processors, customer service representatives, medical review personnel, and other L.A. Care staff and associates to identify patterns and trends indicating potential fraud and abuse.

The online training program also provides education on how to report fraud, abuse and waste and the False Claims Act. The SIU staff undergoes additional formal training provided by professional organizations such as those sponsored by:

SIU Team Members

The SIU staff undergoes additional formal training provided by professional organizations such as those sponsored by:

• National Health Care Anti-Fraud Association • Association of Certified Fraud Examiner • Institute of Internal Auditors • Or other recognized professional organization

Providers & Beneficiaries and Members

Public awareness Public awareness is a vital part of any effective fraud prevention program. Education is provided to beneficiaries Members and providers in order to raise their awareness of potential fraud schemes that could impact them. We use methods such as Member and provider newsletters to educate and assist our Members and providers in the identification and reporting of such issues.outlining their responsibilities, the definition and common examples of fraud and abuse, and how to report it. The SIU provides direction to the Compliance staff as to appropriate steps to take to increase this awareness both among L.A. Care employees as well as with our Members and providers.

Methods of educating include: • Newsletters • Evidence of Coverage / Member handbook • Bulletins • Provider Manuals • Family Resource Centers • Provider Training

11. Subcontractor / Vendor Compliance

Subcontractors and vendors are contractually obligated to uphold State and Federal regulations regarding the submission of claims for reimbursement, including the False Claims Act. They are also required to maintain policies for detecting, preventing and investigating fraud, abuse or waste. identifying, investigating and preventing fraud, waste, and abuse. They are required by contract with L.A. Care to report these potential cases to the appropriate regulatory bodies, law enforcement or to L.A. Care for follow up. The SIU will share information and coordinate investigative efforts as necessary when an allegation involves portions of claims for which the subcontractors and vendor have financial responsibility.

The SIU will share information and coordinate investigative efforts as necessary when an allegation involves portions of claims for which the subcontractors and vendor have access.

12. Compliance Helpline

L.A. Care has a dedicated telephone line (“Compliance Helpline”) for L.A. Care Board members, employees, contractors, providers and members and other interested persons to report all violations or suspected violations of law and/or the compliance program and/or questionable or unethical conduct or practices including, without limitation, the following:

• Incidents of fraud, waste, and abuse • Criminal activity (fraud, kickback, embezzlement, theft, etc) • Conflict of interest issues • Code of Conduct violations

L.A. Care currently uses a contracted vendor to manage the intake of calls intoadminister its Compliance Helpline. A caller to the Compliance Helpline will initially be greeted by a preerecorded message that provides information regarding Compliance Helpline procedures and the caller’s right to anonymity. Calls to the Compliance Helpline are not tape-rerecorded and will not be traced. The vendor’s operator will ask the caller several questions relating to the reported issue, incident, etc. All reports will be referred to L.A. Care’s Compliance Officer and investigated. Follow-up calls may be scheduled; however, information regarding the investigation and status of any action taken relating to the report may not be available to the caller.

13. Reporting potentially fraudulent activities

The SIU is set up to handle all types of potentially fraudulent activities and compliance matters. Written or verbal allegations of fraudulent activities are forwarded to L.A. Care’s Regulatory Affairs & Compliance dDepartment for follow-up. Potentially

73 fraudulent activities and compliance matters can be reported by calling L.A. Care’s Compliance HelplineFraud and Abuse hotline at 1-800-400-4889 or directly to the Compliance Officer. If credible evidence of fraud, waste, or abuse is suspected, d or abuse is found, the fraudulent incident or activity is the pertinent information is reported to the appropriate outside law enforcement and/ or regulatory agency as required..

14. Communication of L.A. Care’s Fraud & Abuse Detection Efforts

L.A. Care uses various means to educate its provider network and membership about its fraud & abuse. Information about L.A. Care’s SIU is communicated to its Members and providers via the following ways: provider bulletins,; provider mailings, ; provider trainings,; member newsletters,; Evidence of Coverage and L.A. Care’s Regional Community Advisory Committee (RCAC) meetings.

15. Privacy and Information Security Compliance

The Privacy and Information Security Program directs and supports L.A. Care’s business units in protecting the confidentiality, integrity and availability of members’ Protected Health Information (PHI). This includes protection from unauthorized access, disclosure, modification and destruction.

Privacy and Information Security program oversight activities include, but are not limited to the following:

Privacy Policies and Procedures The Regulatory Affairs and Compliance Department has responsibility for developing or directing the development of organization-wide privacy policies and procedures. This includes the review of department policies impacting PHI privacy and information security.

Training and Education All staff, regardless of job responsibility, are expected to have a basic awareness of L.A. Care’s rules for protecting PHI. The Privacy and Information Security Program requires privacy training of all workforce members upon hire as well as refresher training to existing staff members.

Incident Response Staff are encouraged to report privacy and information security incidents to the Privacy & Information Security Officer via [email protected] or by phone. If an incident occurs, the Privacy and Information Security Program directs L.A. Care’s investigation, mitigation, and reporting of such incidents to appropriate agencies and entities and coordinates the development of corrective actions to prevent reoccurrence.

74 Auditing & Monitoring The Privacy and Information Security program requires periodic assessment of internal staff compliance with safeguards to protect member information as well as oversees completion of HIPAA-required risk assessments and risk analyses.

Leadership Compliance with federal and state privacy laws, rules, and guidelines does not rest within the Regulatory Affairs and Compliance Department, but is an organization-wide effort. In addition to everyday compliance with privacy policies and procedures and requirements, L.A. Care’s business units also support privacy and information security activities through participation in the Security & Privacy Oversight Committee (SPOC) and serving other roles of accountability within the program. Individual roles and accountability for the program rest with the below:

• Program Leadership – The Privacy & Information Security Officer in Regulatory Affairs and Compliance department will be responsible for overseeing regulatory compliance addressing the privacy and security of PHI.

• Program Compliance – The Compliance Officer in Regulatory Affairs and Compliance will be responsible for overall Program compliance.

• Information Security – The Chief Information Officer along with the Director of Technology and Security in Information Technology (IT) will be responsible for information security operations and administration. This includes implementation of some administrative and technical controls, such as disaster recovery planning and encryption and decryption of electronic PHI.

• Physical Security – The Manager of Facility Services will be responsible for implementation of some physical access controls (i.e., door and stairwell locks, provision of file cabinets, etc.).

Conclusion

L A. Care’s Compliance Program is constantly evolving to ensure that the organization adopts and monitors the implementation of policies and procedures and other performance standards that require L.A. Care Health Plan and its employees, participating providers, and other contracted entities to act in full compliance with all applicable laws, regulations and contractual requirements. The Compliance Program description is subject to future amendments in order to reflect the compliance department’s scope of activities and L.A. Care Health Plan’s legal and financial compliance with applicable laws, regulatory requirements, industry guidelines and policies 3. Privacy & Information Security Compliance

The Privacy & Information Security Program is to direct and support L.A. Care’s business units in protecting the confidentiality, integrity and availability of information

75 assets. This includes protection from unauthorized access, disclosure, modification and destruction. A description of L.A. Care’s Privacy & Information Security program in the context of background, compliance requirements, privacy and security are outlined in the subsequent sections. HIPAA Background

The Health Insurance Portability & Accountability Act of 1996 (HIPAA), Public Law 104-191, amended the Internal Revenue Service Code of 1986. The act includes a section, Title II, entitled Administrative Simplification, requiring:

1. Improved efficiency in healthcare delivery by standardizing electronic data interchange, and 2. Protection of confidentiality and security of health data through setting and enforcing standards.

More specifically, HIPAA called upon the Department of Health and Human Services (DHHS) to publish new rules that will ensure:

1. Standardization of electronic patient health, administrative and financial data 2. Unique health identifiers for individuals, employers, health plans and healthcare providers 3. Security standards protecting the confidentiality and integrity of individually identifiable health information.

Compliance Requirements3

• Building initial organizational awareness of Privacy & Information Security. • Comprehensive assessment of the organization’s privacy practices, information security systems and procedures, and use of electronic transactions. • Developing an action plan for compliance with each rule. • Developing a technical and management infrastructure to implement the plans. • Implementing a comprehensive implementation action plan, including • Developing new policies, processes and procedures to ensure privacy, security and patients’ rights. • Building business associate agreements with business partners to support Privacy & Information Security objectives. • Developing a secure technical and physician information infrastructure • Updating information systems to safeguard protected health information (PHI) and enable use of standard claims and related transactions. • Training of all workforce members.

76 • Developing and maintaining an internal privacy and security management program and enforcement infrastructure, including providing a Privacy Officer and Information Security Officer. Information Security Program Overview

L.A. Care has adopted the Privacy & Information Security (“The Security Program4,5) to comply with Privacy & Information Security requirements and provide the appropriate focus on information protection. Individual roles and accountability for the program will be as follows:

• Program Leadership – The Privacy & Information Security Officer in Regulatory Affairs and Compliance department will manage The Security Program. • Program Compliance – The Compliance Officer in Regulatory Affairs and Compliance will be responsible for the overall Program compliance. • Logical Security – The Chief Information Officer along with the Director of Technology and Security in Information Services (IS) will be responsible for logical (i.e., electronic) security operations and administration. This includes the policies and procedures to protect electronic information and computing assets. • Physical Security – The Manager of Facility Services will be responsible for physical security. The role reports to the Chief of Human and Community Resources.

In addition, L.A. Care business units will support the program. This includes the Security and Privacy Oversight Committee (SPOC), IS Technology and Security, Human Resources (HR) and business unit managers.

Privacy Rule

The Privacy Rule is intended to protect the privacy of all individually identifiable health information in the hands of covered entities, regardless of whether the information is or has been in electronic form. The Privacy standards6,7 are as follows:

• Provides beneficiaries new rights to access their medical records, restrict access by other, request changes and to learn how they been accessed.

4 HIPAA Security Rule, 45 CFR 160,162,164 ( February 20,2003) Office for Civil Rights – HIPAA, United States Department of Health & Human Services

5 Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services

6 Office for Civil Rights – HIPAA, Medical Privacy – National Standards to protect the privacy of personal health information, U.S. Department of Health and Human Services

7 Standards for Privacy of Individually Identifiable Health Information, Final Rule 45 CFR 160,162,164 (February 20, 2003), US. Department of Health and Human Services

77 • Mandates that all beneficiaries are formally notified of covered entities’ privacy practices. • Allows beneficiaries to decide if they will authorize disclosure of their protected health information (PHI) for uses other than treatment or healthcare business operations. • Establishes new criminal and civil sanctions for improper use or disclosure of PHI • Establishes new requirements for access to records by researchers and others. • Establishes business associate agreements with business partners and vendors that safeguard their use and disclosure of PHI. • Mandates the implementation of a comprehensive compliance program including: • Conducting an impact assessment to determine gaps between existing information practices, policies and Privacy & Information Security requirements • Reviewing functions and activities of the organization’s business partners to determine where Business Associate Agreements are required. • The developing and implementation of organization wide policies and procedures regarding privacy, security and standards for electronic transactions. • Assigning a Privacy Officer who will administer the organizational privacy program and enforce compliance • Training all members of the workforce on HIPAA and organizational privacy policies.

Administrative Safeguards

The Administrative Safeguards contain eleven addressable implementation specifications for four standards: Workforce Security; Information Access Management; Security Awareness and Training; and contingency Planning. L.A. Care has implemented the addressable implementation specifications or alternative security measures based on a formal risk analysis and risk mitigation strategy.8 The Privacy and Information Security Officer and the Director of Technology & Security are responsible for developing policies and procedures and working with the other business units to ensure implementation.

The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009, is designed to promote the widespread adoption and standardization of health information technology, and requires HHS to modify the HIPAA Privacy, Security, and Enforcement Rules to

8 Centers for Medicare and Medicaid Services, Office for Civil Rights – HIPAA

78 strengthen the privacy and security protections for health information and to improve the workability and effectiveness of the HIPAA Rules.

The proposed modifications to the HIPAA Rules include provisions extending the applicability of certain of the Privacy and Security Rules’ requirements to the business associates of covered entities, establishing new limitations on the use and disclosure of protected health information for marketing and fundraising purposes, prohibiting the sale of protected health information, and expanding individuals’ rights to access their information and to obtain restrictions on certain disclosures of protected health information to health plans. In addition, the proposed rule adopts provisions designed to strengthen and expand HIPAA’s enforcement provisions.

VIII. Conclusion

79 2014

Principles Code of StandardsConduct of Conduct

L.A. Care conducts all activities and L.A. Care Board Members, Employees, temporary staff, operations in compliance with applicable and Contractors shall not lie, cheat, steal or intentionally laws, regulations, and contractual or unintentionally violate any laws in connection with obligations. their employment and/or engagement with L.A. Care. L.A. Care shall market its services in a truthful and accurate way, relying on the merit of its services. All marketing efforts shall be in compliance with all applicable laws and regulations.

L.A. Care shall refrain from conduct which would violate the laws applicable to fraud, waste and abuse detection and prevention. L.A Care expects and requires that its Board members, Employees and Contractors abide by those laws that prohibit direct or indirect payment in exchange for the referral of patients or services paid by Federal, State, and/or other funds.

L.A. Care funds, property, and/or resources shall not be used for political activity. At no time may an L.A. Care Board Member, Employee, or Contractor imply that his or her personal political views represent those of L.A. Care.

L.A. Care shall not do business with any Provider, Consultant, or Contractor if it or any of its officers, directors or employees are, or becomes excluded by, debarred from, or ineligible to participate in any Federal or State health care program, or is convicted of a criminal offense in relation to the provision of health care.

L.A. Care Board Members, Employees, and Contractors shall not unlawfully discriminate on the basis of race, color, religion, gender, national origin, ancestry, age, physical disability, mental disability, medical condition, family care leave status, veteran status, marital status, sexual orientation or any other category protected under applicable laws.

L.A. Care shall strive to provide a work environment free from violence, discrimination, and harassment for all its Employees and Contractors. L.A. Care shall not provide or accept kickback, bribes or any other illegal form of compensation or incentive to increase its membership or to receive favorable treatment from providers, vendors, or other contractors 1 | Page 6/27/14

80 2014

Principles Code of StandardsConduct of Conduct

L.A. Care is committed to the highest L.A .Care Board Members, Employees, and Contractors standard of business ethics. shall conduct business with candor and honesty and shall not make any false or misleading statements to any persons, Members or entities doing business with L.A. Care or about goods and services provided by L.A. Care.

L.A. Care shall not engage in practices that are inconsistent with sound medical practices, result in reimbursement by Federal and State health care programs for services that are unnecessary or substandard, or services that fail to meet professionally recognized standards of practice.

L.A. Care shall interact with Regulators in an open and honest fashion and will not mislead or provide false information at any time to these Regulatory bodies.

L.A. Care shall produce reports and maintain accurate financial records and at no time, will L.A. Care misrepresent the financial picture of the agency. L.A. Care shall ensure that all transactions are executed in accordance with management authorization and are well documented to represent the true nature of the transaction.

L.A. Care records shall not be altered for any improper use, including the unauthorized payment or diversion of government funds.

L.A Care shall make appropriate clinical decisions by duly licensed and qualified medical professionals and shall not be improperly influenced by financial incentives. L.A. Care Employees, Board members and Contractors shall report all suspected cases of fraud, waste, and abuse to their immediate supervisor or to the Compliance Officer immediately upon notice of a potential issue. L.A. Care shall maintain an anonymous Compliance Helpline at 1-800-400-4889 twenty-four hours a day, seven days a week where such reports can be made. L.A. Care shall encourage Employees, Board members and Contractors to make such reports and shall prohibit retaliation or retribution for reports made in good faith regarding suspected activities.

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81 2014

Principles Code of StandardsConduct of Conduct

L.A. Care and its Board members, employees L.A. Care shall provide access to public records to any and subcontractors shall comply and/or person, corporation, partnership, firm or association cooperate with the laws and regulations requesting to inspect and copy such records in governing public agencies. accordance with the California Public Records Act, California Government Code Sections 6250 et seq. and L.A. Care policies. L.A. Care, Board members, and Employees shall not make gifts of public funds or assets, or lend credit to private persons without adequate consideration unless such actions clearly serve a public purpose consistent with the mission and authority of the agency and are otherwise approved by L.A. Care’s legal counsel and are in compliance with applicable law. L.A. Care, Board members and Employees shall comply with requirements relating to the notice and operation of public meetings in accordance with the Ralph M. Brown Act, California Government Code Sections 54950 et seq. L.A. Care Board members, Employees and Contractors shall comply with applicable laws and L.A. Care policies relating to gifts, honoraria, filing of Form 700 and conflicts of interest. L.A. Care, Board members, employees and L.A. Care, Board members, Employees and Contractors contractors shall maintain all confidential shall at no time use any L.A. Care confidential or information in accordance with applicable proprietary information for their own personal benefit or law and shall not disclose any confidential or for the benefit of any other person or entity. proprietary information except as specifically authorized by L.A. Care policy and applicable law. L.A. Care shall maintain all personal information contained in employee personnel files in a manner that ensures the confidentiality of the record in accordance with applicable law.

L.A. Care shall safeguard proprietary information including contractor information and proprietary computer software in accordance with the requirements in contract or law. L.A. Care shall conduct all business L.A. Care, Board members, and Employees shall not relationships at arm’s length in fact and in profit in any way or gain a business advantage by appearance from improper inducements and providing or accepting any type of inducement from any in accordance with applicable law and person or entity with which L.A. Care does or plans to do ethical standards. business.

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82 2014

Principles Code of StandardsConduct of Conduct

L.A. Care, Board members, and Employees shall avoid engaging in actual or perceived favoritism toward a supplier, contractor, consultant, vendor, or provider. L.A. Care shall participate in a public procurement process when choosing business associates in accordance with L.A. Care policy and applicable law. [

L.A. Care, Board members and Employees shall conduct their activities free from impropriety or the appearance of impropriety that might arise from the influence of those activities on L.A. Care’s business decisions. L.A. Care, Board members, and Employees shall not engage in outside interests that could interfere with making non-biased business decisions of behalf of L.A. Care.

L.A. Care, Board members and Employees may not permit the use of his or her name in any way that would imply a business connection with any vendor, contractor or association of contractors. L.A. Care, Board members, Employees and L.A. Care requires that all Board members, Employees, Contractors have a duty to comply with L.A. Contractors, Providers, and Suppliers who are required Care’s Compliance Program and such to be licensed, credentialed, certified and/or registered compliance shall be a condition of their in order to furnish goods or services to L.A. Care shall respective appointment, employment or have valid and current licensure, credentials, engagement. certification and/or registration as applicable.

L.A. Care, Board members, Employees and Contractors are required to promptly report suspected violations of any statute, regulation or guideline, applicable to Federal and/or State health care programs or one of L.A. Care’s policies and/or its Compliance Program.

L.A. Care may impose disciplinary action on Board members, Employees or Contractors for failure to comply with its Compliance Program, including the Code of Conduct, policies, and/or applicable statutes, regulations and guidelines. Failure to comply with the L.A. Care Compliance Program may range from verbal correction to termination in accordance with L.A. Care policies.

L.A. Care, Board members, Employees and Contractors shall not be currently suspended, terminated, debarred, or otherwise ineligible to participate in any Federal or State health care program, including Medicare and Medi-Cal. Board members, Employees and Contractors 4 | Page 6/27/14

83 2014

Principles Code of StandardsConduct of Conduct

must disclose to L.A. Care if they are currently suspended, terminated, debarred, or otherwise ineligible to participate in any Federal or State health care program including Medicare or Medi-Cal.

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84 LA Care Annual Audit Workplan 2014-2015

CAP Date Audit Met/ CAP Review Audit Accepted Monitoring Audit Title Authorities Department to be Not Receipt Risk Status Period Findings or Required? Conducted Met Date Rejected? SNP Enrollment Requirements

Verification of Eligibility Member Services Q4 2014 Enrollment & Enrollment Decisions: Procedures, Requirements, Notifications, and Timeframes Member Services Q4 2014 Required Information Provided to Member Prior to Effective Date Member Services Q4 2014 Disenrollment Procedures and Notice Requirements Member Services Q4 2014

Disenrollment Processing Requirements Member Services Q4 2014 Effective Date of Disenrollment Determinations Member Services Q4 2014 Outbound Enrollment Verification (OEV) Member Calls Services/Marketing Q4 2014 Late Enrollment Penalty (LEP) Member Services Q4 2014 Post-Enrollment Activities Member Services Q4 2014 Retroactive Enrollments and Disenrollments Member Services Q4 2014 Notice Requirements Member Services Q4 2014

Marketing Required Documents (at enrollment and specified times thereafter) Marketing Q4 2014 General Marketing Material Requirements Marketing Q4 2014 Marketing Material Identification Marketing Q4 2014 Rewards, Incentives, Promotion Activities, Events, Outreach Marketing Q4 2014 Call Center Requirements Marketing Q4 2014

Marketing Material Review Submission Marketing Q4 2014 Website Requirements Marketing Q4 2014

85 LA Care Annual Audit Workplan 2014-2015

Formulary & Benefit Administration

Rejected Claims Pharmacy Q1 2015

Transition Supply for Continuing Members with a Cross Year Formulary Change and New Members Pharmacy Q1 2015 Website Review Pharmacy Q1 2015

Pharmacy and Therapeutics Committee Pharmacy Q1 2015

Part D Effectuation Timeliness: Organizational Determinations and Appeals

Effectuation Timeliness - Coverage Determinations (all approved Part D Coverage Determination requests) Pharmacy Q1 2015 Effectuation Timeliness - Redetermination (all Part D Appeal requests overturned by LA Care and/or IRE) G&A Q1 2015

Part D Clinical Decision-Making & Compliance with CDA Processing Requirements

Clinical Decision-Making & Compliance - Coverage Determinations (all Part D Coverage Determination requests that were denied) Pharmacy Q1 2015

Clinical Decision-Making & Compliance - Redeterminations (all Part D Appeals upheld by LA Care and/or IRE) G&A Q1 2015

86 LA Care Annual Audit Workplan 2014-2015

Effectuation Timeliness - Part C Pre- Medical Service (approved pre-service requests) Management Q1 2015 Effectuation Timeliness - Part C Claims (non-contracted paid claims) Claims Q1 2015 Effectuation Timeliness - Part C Appeals (appeals overturned by LA Care and/or IRE) G&A Q1 2015

Part C Clinical Decision-Making & Compliance with ODA Processing Requirements

Clinical Decision-Making & Compliance - Part C Pre-Service (denied pre-service Medical requests) Management Q1 2015

Clinical Decision-Making & Compliance - Part C Claims (all denied claims) Claims Q1 2015 Clinical Decision-Making & Compliance - Part C appeals (appeals upheld by LA Care) G&A Q1 2015 Clinical Decision-Making & Compliance - Part C appeals (appeals upheld by IRE, ALJ, or MAC) G&A Q1 2015

Part C Grievances

Part C Grievances G&A Q2 2015 Part C Appeal Dismissals (all appeals dismissed due to missing WOL, AOR or other procedureal defect) G&A Q2 2015 Establishment of Procedures and Required Procedure Elements G&A Q2 2015 Timeframes G&A Q2 2015 Required Notice Content G&A Q2 2015

87 LA Care Annual Audit Workplan 2014-2015

SNP Model of Care Implementation

Inclusion of 11 required MOC elements Case Management Q2 2015

MOC is evidence-based and measures the extent to which evidence-based care management is an ongoing process Case Management Q2 2015

Quality Improvement Program Quality Improvement Program Requirements QI Q2 2015 Data Collection, Analysis, and Reporting Requirements QI Q2 2015 Requirements for Health Information Systems QI Q2 2015 System of Monitoring Effectiveness of Model of Care QI Q2 2015

FDR Contracts Required Provisions Legal/PNO Q3 2015

Requirements for delegated functions Legal/PNO Q3 2015

Provider Relations/PNO Supplemental Benefit Requirements PNO Q3 2015 Adequate Provider Network PNO Q3 2015 Establishment and Maintenance of Provider Network P&Ps PNO Q3 2015 Implementation of Policies for Coordination of Care PNO Q3 2015

88 LA Care Annual Audit Workplan 2014-2015

Provider Relations and Provider Eligibility Notice Requirements when Declining to Include Providers in Network PNO Q3 2015

Eligibility Confirmation: OIG Sanction List PNO Q3 2015 Eligibility Confirmation: Opt-Out Providers PNO Q3 2015 Required Policy and Procedures PNO Q3 2015 Credentialing Requirements Credentialing Q3 2015 Site Visit Policy Established FSR Q3 2015 Ongoing Monitoring of Sanctions and Grievances Filed Against Health Care Professionals Credentialing Q3 2015 Notice and Reporting Requirements for Contract Termination PNO Q3 2015 Requirements for and Disclosure of Physician Incentive Plans PNO Q3 2015 Provider Contracts (Specialty, PCP, Ancillary, Hospital, and PPG) PNO Q3 2015

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. GOV 100.0914

Committee: Governance Chairperson: Alexander K. Li, MD

Issue: Approval of the 2015 schedule of meetings for the Board of Governors and Committees.

Background: The Governance Committee has been delegated approval of the schedule of meetings for the next calendar year. The schedule proposed for 2015 is based on the same principles as past years:

In putting together this schedule, Board Services followed the criteria established by the Board of Governors in November 2008 : · Meetings which would normally be held November 25 have been moved up to November 18 due to the Thanksgiving holiday on November 26. · Five of the ten Board meetings will have a strategic focus discussion. · There are no Board meetings scheduled for January or August. · Committee meetings are scheduled at intervals established by the Board in 2009; the Finance & Budget continues on a monthly meeting schedule established at its March 2010 meeting. · No Committee meetings are scheduled in August or December. · Meetings of the Audit, Governance and Services Agreements Committees will be added as needed. · The L.A. Care Community Health Board of Directors and the L.A. Care Health Plan Joint Powers Authority are included on the schedule.

1. Committee meetings occurring at the end of July are moved up one week to add flexibility for scheduling summer vacations. The Finance & Budget and Executive Committees would meet one week earlier, on July 15, 2015. 2. A Board retreat is tentatively scheduled in place of the May meeting as has been done in recent years; urgent matters could be discussed in a shortened session during the retreat. 3. Strategic discussions are calendared for March, May, July, October and December, with staff reports in February, April, June, September and November.

The attached schedule will be effective when approved by the Board at its September meeting. It should be noted that following the election of officers, there may be changes to committee meeting schedules based on preferences of the new members.

Budget Impact: None.

Motion: To approve the proposed schedule of meetings of the L.A. Care Board and its committees for the calendar year 2015, as attached.

90 Revised 2015 Board and Committee Meeting schedule Regular meeting schedule according to the dates and times below: BoG: Board of Governors, meets at 2:00 for approximately 3 hours, and BoG meets at 12:00 Noon in March, July, October and December for strategic discussion C&Q: Compliance and Quality Committee, meets at 2:30 p.m. for approximately 2 hours Exec: Executive Committee meets at 2:30 p.m. for approximately 2 hours F&B: Finance & Budget Committee meets at 1:00 p.m. for approximately 90 minutes CHCAC: Children’s Health Consultant Advisory Committee meets at 8:30 a.m. for approximately 2 hours ECAC: Executive Community Advisory Committee meets at 10:00 a.m. for approximately 2 hours TAC: Technical Advisory Committee meets at 9:00 a.m. for approximately 2 hours

All meetings are held at 1055 West 7th Street, 10th Floor, Los Angeles, CA 90017

January 2015 February 2015 March 2015 April 2015 No BoG meeting 2/5 – BoG 3/5 – BoG 4/2 – BoG 1/14 - ECAC 2/11 - ECAC (strategic focus 12-2 pm) 4/8 - ECAC 1/15 – C&Q 2/25 –F&B, Exec 3/11 - ECAC 4/22 – F&B, Exec 1/20 - CHCAC 3/18 - CHCAC 1/28 –F&B, Exec 3/19 - C&Q 1/28 - TAC 3/25 – F&B, Exec 3/26 - TAC

May 2015 June 2015 July 2015 August 2015 5/7 – BoG (All day Retreat) 6/4 – BOG 7/2 – BoG (strategic focus No meetings 5/13 - ECAC 6/10 - ECAC 12-2 pm) 5/19 – CHCAC 6/24 – F&B, Exec 7/8 - ECAC 5/21 – TAC 7/14 - CHCAC 5/21 – C&Q 7/15 – F&B, Exec* 5/27 – F&B, Exec 7/16 – C&Q 7/23 - TAC

September 2015 October 2015 November 2015 December 2015 9/3 – BoG 10/1– BoG (strategic focus 11/5– BoG 12/3 – BoG (strategic focus 9/9 - ECAC 12-2 pm) 11/11 - ECAC 12-2 pm) 9/15 - CHCAC 10/7 - ECAC 11/17 - CHCAC LACH & JPA (if needed to 9/17 - C&Q 10/28 F&B, Exec 11/18 – F&B, Exec confirm officers) 9/23 - F&B, Exec 11/19 - TAC 12/9 - ECAC 9/24 - TAC 11/19– C&Q

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. ECA 100.0914

Committee: Executive Community Advisory (ECAC) Chairperson: Aida Aguilar

Issue: Approval of additional member (s) to the Regional Community Advisory Committees (RCACs).

Background: Senate Bill 2092 requires that L.A. Care Health Plan ensure community involvement through a Community Advisory Committee. L.A. Care’s Regional Community Advisory Committee (RCAC) structure is composed of 5-35 members per RCAC. RCAC member recruitment is on-going to ensure the highest possible community involvement.

Budget Impact: None.

Motion: To approve the following candidate(s) to the Regional Community Advisory Committees (RCAC) as reviewed by the Executive Community Advisory Committee (ECAC) during the July 9, 2014 ECAC meeting.

Name RCAC # Type of Member (Agency, if applicable)

AMPM Home Health Agency 2 Provider

American Cancer Society 4 Community Partners

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. CHC 100.0914

Committee: Children’s Consultant Advisory Chairperson: Lyndee Knox, PhD Committee (CHCAC)

Issue: Approval of CHCAC member.

Background:

Budget Impact: None

Motion: To approve the nomination of Clayton Chau, M.D, as Member of the Children’s Health Consultant Advisory Committee, for an undesignated seat; for the first 4-year term from July 2014 to July 2018.

August 28, 2014

TO: Board of Governors

FROM: Howard A. Kahn, Chief Executive Officer

SUBJECT: CEO Report – September 2014

Welcome back from the summer break in our Board schedule. Please find below an update on organizational activities that occurred in July and August 2014. Additional updates will be given during my CEO report at the September 4, 2013 Board meeting.

1. Coordinated Care Initiative (CCI) and Cal MediConnect (CMC) L.A. Care has enrolled over 5,000 members in our CMC product, including over 4,000 members in July as part of the the crosswalk population (members who are eligible for CMC and are enrolled with L.A. Care for their Medi-Cal benefit and fee-for-service for Medicare). The current opt out rate of approximately 40% is within our estimated projections. L.A. Care has enrolled over 100,000 members as a result of the CCI since April.

L.A. Care has finalized an agreement with Cedars-Sinai to provide services for our CMC members. The Cedars-Sinai Medical Group and Cedars-Sinai Health Associates will be available to members effective September 1, only through L.A. Care.

As previously reported, the Los Angeles County Medical Association (LACMA), Westside Center for Independent Living, and other stakeholders filed a lawsuit seeking to halt the implementation of Cal MediConnect. The Petitioners requested the Court issue a preliminary injunction to stop passive enrollment and the implementation of the pilot, as well as the disenrollment of all duals that have been enrolled. On July 31, the judge released her preliminary ruling denying the request for an injunction, which would have halted enrollment into Cal MediConnect. However, at the hearing, the Petitioners made rebuttal statements to the tentative ruling. The Petitioners also revised their request to seek only a temporary stay for the enrollees moving forward (August, September, and October). The judge is considering the stay based on the revised request, a final decision has yet to be released.

L.A. Care continues to engage stakeholders in the CCI and CMC implementation process. On August 20, L.A. Care participated in a joint CMC stakeholder meeting with the other CMC plan is Los Angeles County at the Cathedral of Our Lady of the Angeles. Melanie Bella, Director of the Medicare-Medicaid Coordination Office at the Centers for Medicare and Medicaid Services (CMS), participated in the meeting addressing health risk assessments and the difficulties with reporting requirements.

2. Covered California (California Health Benefits Marketplace/Exchange) On July 31, 2014, Covered California released the plans and rates for 2015. There are 10 plans statewide, including the same six in Los Angeles as last year. With the exit of Contra Costa Health Plan, L.A. Care is now the only public plan in the Covered California portfolio. Kaiser and Molina reduced rates to garner a better market position; we remain among the lowest priced in Bronze tier and 4th in price for the Silver tier; however all plans are significantly more tightly grouped than in the first year.

The second open enrollment period occurs November 15 through February 15, 2015. New for 2015 is the inclusion of pediatric dental benefits for members under the age of 19. This addition now provides our youngest members with a full complement of medical, dental, and vision benefits. Approximately 38,000 enrolled in L.A. Care Covered with over 26,000 effectuated; we look forward to offering affordable healthcare to more Angelenos in the upcoming year.

3. CalFresh Express Lane Update As previously reported, in an effort to streamline Medi-Cal enrollment, a federal waiver allows the Department of Health Care Services (DHCS) to grant Medi-Cal eligibility without the need for an application or a determination for 12 months by using CalFresh income eligibility for enrolled adults and children. L.A. Care received its first CalFresh members in March and as of July 1, over 20,000 members have joined L.A. Care, with a total of 230,000 new Medi-Cal members in California. To further enrollment, DHCS will be sending approximately 350,000 additional notices of eligibility to newly enrolled CalFresh recipients as was to those that have yet to enroll in Medi-Cal, which could translate into increased membership for L.A. Care.

4. Anthem and Blue Shield to Create Health Information Exchange On August 5, Anthem Blue Cross and Blue Shield of California announced plans to form the California Integrated Data Exchange or Cal Index. They plan to launch Cal Index by the end of 2014 with partner Dignity Health and provide online access to approximately 9 million health information records. Cal Index officials expect other large health systems to join in the coming months and that up to 30 large organizations will join over the next three years. The exchange will operate as a non-profit organization governed by a five-member board of directors representing physicians, hospitals, health plans, and the public sector.

5. Michael Engelhard, Chief Executive Officer, Gold Coast Health Plan, Announces Resignation On August 19, Michael Engelhard, CEO of Gold Coast Health Plan, which administers Medi-Cal managed care to 160,000 people in Ventura County, announced his resignation to be effective in 30 days. Mr. Engelhard joined Gold Coast nearly two years ago and will join Health Management Associates.

6. Boom in Managed Care Alters Medicaid’s Calculations Attached to my CEO report for your reference is a news article regarding health plans’ previous reluctance to cover Medicaid patients. The reluctance has ebbed over recent years as states are accepting the managed cared model for their Medicaid programs. As a result there is a new focus on managed care’s potential savings and increased federal regulations from lobbyists and the Centers for Medicare and Medicaid Services.

95 7. L.A. Care Giving Back Program In 2008, L.A. Care implemented the Giving Back Program, as a way for L.A. Care staff to raise funds and donate goods for a variety of local charities. In June, L.A. Care held a casual week fundraiser to purchase school supplies for the Alexandria House, Salvation Army and Lake Street Elementary. L.A. Care was able to purchase 400 back to school kits, which included colored pencils, scissors, crayons and other school supplies, that were delivered the second week of August.

8. Operations Report Please find attached to my report the quarterly update on health plan operations from John Wallace, Chief Operating Officer.

9. Organizational Performance Report Please find attached to my report the organizational performance report for the third quarter of this fiscal year from Jonathan Freedman, Chief of Strategy, Regulatory and External Affairs

10. Meetings and Events of Interest On July 22, 2014, I had the opportunity to participate in the Health Promoters Program graduation. It was the seventh class of Health Promoters graduates, adding 23 new Health Promoters to support the dissemination of important health information to the community.

On July 29, I, along with other members from the Leadership Group, met with Andrew Laming, a member of the Australian Parliament, to discuss the American health care system.

L.A. Care provided downtown meeting space for community activities and training this past month:

• July 1, 2014 – L.A. Care hosted a Health Promoters training on the Coordinated Care Initiative and access to care issues. • July 16, 2014 – L.A. Care hosted a share of cost training for directly contracted providers. • July 22, 2014 – L.A. Care hosted the Health Promoters graduation ceremony and reception. • August 29, 2014 – L.A. Care hosted a Behavioral Health stakeholder meeting.

Attachments: • July and August 2014 sponsorship list • Operations report • Organizational performance report • Boom in Managed Care Alters Medicaid’s Calculations news article

96 July and August 2014 Participation and Sponsorship List

Event Date Organization Event Location 7/26/2014 Coalition for Responsible Central Ave. Jazz Festival Los Angeles Community Development 7/27/2014 Familia Unida Wheelchair Wash Los Angeles

7/30/2014 Eisner, Southside Coalition, The Los Angeles Dental Los Angeles California Dental Hygienist, Forum CCALAC, CareHarbor, LACDPH and Supervisor MRT Office 8/1/2014 Monet Cares Music, Theater and Health Pasadena Institute and Event 8/16/2014 Southside Coalition of Walk for Health and Los Angeles Community Health Centers Community Health & Resource Fair 8/23/2014 211 L.A. County Family Fun Day Los Angeles

97 Boom in Managed Care Alters Medicaid’s Calculations CQ HEALTHBEAT NEWS Aug. 6, 2014 By Rebecca Adams, CQ HealthBeat Associate Editor

Health insurance companies have not always been eager to cover Medicaid recipients, in part because some low-income people have complex medical needs and don’t have all the resources that help wealthier people stay healthy.

But that reluctance has turned to enthusiasm in recent years as more states have switched their Medicaid programs to managed care plans, some of which seek to control costs by, among other steps, limiting a patient’s choice of physicians and the fees that doctors charge. Some health insurers cover Medicaid patients in return for a flat monthly payment from the government. The expansion of Medicaid to many more low-income Americans under the 2010 health care law is making the program even more attractive to insurers.

As a result, federal spending on Medicaid managed care is expected to increase 39 percent, from $74 billion in 2013 to $103 billion in 2015, according to the Congressional Budget Office. The higher federal spending, as well as the enrollment of 13 million people in plans through new insurance marketplaces, makes it more attractive for health plans to offer government-financed coverage.

Though states manage their own Medicaid programs and pay for part of the cost, they must get federal permission to make big changes. In the Obama administration, the Centers for Medicare and Medicaid Services is drafting regulations for Medicaid managed care that are being closely followed by lobbyists.

Insurance companies that provide managed care coverage are lobbying for as few new regulations as possible, as are the states that run the programs.

The first step for CMS, however, has been to gather more data, because it’s not clear that managed care is universally better for consumers or taxpayers than the traditional fee-for-service program that allows patients to see any doctor that accepts Medicaid.

“There’s an increasing recognition that we really don’t have data of the quality and rigor that are needed to answer the quality and access and cost questions that everyone is interested in,” says Julia Paradise, a Medicaid expert at the Kaiser Family Foundation. “It’s hard to assemble a coherent national picture. It’s hard to make categorical statements about whether managed care is a good thing or bad thing, or something in between.”

As part of its efforts to learn more, CMS is conducting another survey. The agency contracted with NORC, an independent research organization affiliated with the University of Chicago, to poll an additional 1.5 million Medicaid beneficiaries. The results are expected next spring. Federal officials appear to be exploring whether additional quality reviews should be added to requirements for managed care plans.

98 One complaint that federal officials already started to address about health plans offered in the new marketplaces under the health care law is that some plans allow patients to use only a limited number of doctors, hospitals and other medical providers. Federal officials are urging health care plans in the insurance exchange to create larger networks of providers. CMS may consider whether similar action is needed for Medicaid managed care plans.

Some states report saving money through managed care plans, which typically limit patients to a network of medical providers, but there isn’t evidence that such plans save money nationwide. Some studies suggest that managed care gives patients better access to treatment, but not all reach that conclusion.

“It’s an issue that’s important to keep an eye on,” says Joan Alker, executive director of the Georgetown University Center for Children and Families, who doesn’t view managed care as inherently positive or negative. “We do want accountability for these taxpayer dollars and to ensure that beneficiaries are going to receive high-quality care.”

Almost 72 percent of people covered by Medicaid now are in some kind of managed care, including a version that pays doctors and other providers largely for the services they give but also offers them more money to coordinate patients’ care, according to the federal commission that provides policy and data analysis on Medicare and the Children’s Health Insurance Program.

About half of Medicaid beneficiaries are in the type of managed care in which plans are paid a preset amount to cover all of a patient’s medical needs. In 1995, just 15 percent were in such programs.

Most states embarked on their managed care strategies years ago by shifting families with children, who are relatively inexpensive to treat, into the plans. A growing number of states have since moved over more costly patients with complex medical problems, including disabilities.

In addition, CMS officials encouraged some states to direct people who are eligible for both Medicaid and Medicare, the federal program for seniors and people with disabilities, into managed care through a demonstration program.

Thirty-six states and the District of Columbia contract with risk-based Medicaid managed care plans, according to the Medicaid Health Plans of America, which represents managed care organizations.

The health care law (PL 111-148, PL 111-152) allows states to choose whether to expand eligibility to more people. Starting this past January, states can cover low-income people with income of up to 138 percent of the federal poverty level. The 27 states including the District of Columbia that broadened eligibility are enrolling many of those people in managed care.

“The Medicaid market has changed irrevocably,” says Matt Salo, executive director of the National Association of Medicaid Directors. “We’re not going back to uncoordinated fee-for-service, so now how do we pivot as government officials, state and federal, to best maximize that and prepare for the future?”

99 States’ experiences with managed care have brought mixed results, according to an analysis of 20 studies by the Robert Wood Johnson Foundation in 2012 and a separate 2012 paper by the Kaiser Family Foundation.

“There is little evidence of national savings from Medicaid managed care,” said the Robert Wood Johnson report, by Columbia University School of Public Health professor Michael Sparer.

A 2011 paper by the National Bureau of Economic Research found that “shifting Medicaid recipients from fee-for-service into [managed care] did not reduce Medicaid spending in the typical state” from 1991 through 2003. On average, moving to managed care “did not lead to lower Medicaid spending.”

That 2011 study did find that in some states that already generously paid medical providers in the traditional program, health care plans were able to reduce spending somewhat. The opposite was true in states that paid low rates to providers in the traditional program.

The Kaiser Foundation found that managed care may have the potential to save money over time by avoiding expensive hospitalizations through encouraging preventive or primary care and managing patients’ chronic conditions. But savings “are unlikely in the short term,” the paper found, “and budget-driven efforts to achieve savings from managed care could have adverse consequences for beneficiaries’ access to needed care.”

Even in some states where managed care plans haven’t been more cost-effective than regular Medicaid, though, state officials like managed care because they can predict their costs more accurately.

Risk-based managed care plans are paid predetermined monthly rates for each person they enroll, while under the traditional fee-for-service program, state officials pay for each medical service that a patient receives.

One concern about the managed care plans, though — and one that might lead to regulation — is that they may spend fewer of their premium dollars on medical claims than insurers that cover other populations.

The 2010 health care law requires private insurance plans to spend at least 80 percent of their premium revenues on medical costs or initiatives to improve the quality of patients’ health care, instead of on administrative costs or profits. Large group plans and Medicare plans must spend at least 85 percent of premiums on medical care. But no such federal requirement, known as a medical loss ratio, exists yet for Medicaid.

Eleven of the states that responded to a 2011 survey by the nonpartisan Kaiser Family Foundation reported that they have a state requirement that Medicaid plans spend at least 80 percent of premiums on medical costs.

100 But the Health and Human Services inspector general found that plans that did not meet state requirements often failed to pay states back the excess revenue that the plans had inappropriately kept, as they are supposed to do.

Federal officials have told Medicaid directors privately that CMS may add a minimum spending requirement for managed care plans, to match the responsibilities of other insurers, as part of the proposed rule.

Medicaid directors have written to say they don’t like that idea. But if federal officials insist on adding a medical loss ratio requirement, then state officials suggest that several types of efforts by plans, including anti-fraud initiatives and programs to manage the care of people with serious health needs, be counted as medical costs rather than administrative costs.

One area where Medicaid managed care plan lobbyists say they do better than traditional Medicaid is in paying doctors. A Government Accountability Office analysis released last month found that managed care plans paid doctors 12 percent more than fee-for-service plans did. Industry lobbyists say the extra money entices more physicians to accept Medicaid managed care patients.

101 Health Plan Operations Report through August 2014

John Wallace, Chief Operating Officer

102 ¡ Total L.A. Care membership as of July 1st, was 1,475,155, an increase of 32,206 members (approximately 2.2% increase) month over month.

% Growth % % % % May- Growth % Variance Growth Growth Variance to May-14 Jun-14 Jun FY to Budget Jun-14 Jul-14 Jun - Jul FY Budget

Line of Business

MediCal-PlanPartner 778,430 782,933 0.6% 1.1% -3.8% 782,933 789,486 0.8% 2.0% -3.5%

MCLA 573,323 584,329 1.9% 55.4% 1.5% 584,329 595,690 1.9% 58.4% 0.5%

Medicare 7,758 7,974 2.8% 29.5% 7.6% 7,974 8,252 3.5% 34.0% 8.8%

PASC-SEIU 47,421 47,663 0.5% 10.7% 5.7% 47,663 48,153 1.0% 11.9% 6.3%

Healthy Kids 836 815 -2.5% -24.7% -28.6% 815 777 -4.7% -28.2% -31.9%

CMC 14 358 2457.1% N/A -90.7% 358 7,057 1871.2% N/A -49.1%

L.A Care Covered 14,317 18,877 32% N/A -57.1% 18,877 25,740 36.4% N/A -42.8%

Total 1,422,099 1,442,949 1.5% 20.2% -3.2% 1,442,949 1,475,155 2.2% 22.9% -3.2%

103 ¡ Overall membership is under budgeted projections at -48,382 members or – 3.2%*.

Total Membership FY2014 Actual vs. Budget

Actual Budget

1,500,000

1,400,000

1,300,000

1,200,000

1,100,000

1,000,000

900,000

800,000 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14

* Due mainly to delay in CMC passive enrollment

104 Call Center ¡ Call volume has remained steady for the last five months, averaging 176,596. In the month of July the call center experienced a 16% increase month over month, a significant portion of the increase in calls can be attributed to individuals calling regarding their Cal MediConnect enrollment. ¡ The abandonment rate remained well below goal at 0.98 and over 80% of calls were answered within 60 seconds.

FY2014 Call Center Metrics Call Volume and Abandonment Rate Trend 250,000 7.00%

6.00% 200,000 5.00%

150,000 4.00%

3.00% 100,000

2.00% 50,000 1.00%

- 0.00% Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14

Calls Received Abandonment Rate Goal

105 ¡ Claims volumes stabilized during the second quarter. Examiner Productivity dropped early in the quarter as new examiners were added to the claims department to address increased volumes; however productivity is beginning to return to normal levels. Daily Receipts 9,000

7,000

5,000 Jun- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul-13 13 13 13 13 13 13 14 14 14 14 14 14 Daily Receipts 6,663 6,936 6,407 6,475 7,942 6,046 7,282 6,669 7,497 9,310 9,143 8,007 8,261

Examiner Productivity 90 80 70 60 50 40

106 ¡ Claims examiner quality scores have steadily increased. Staff audits continue to be conducted on a weekly basis allowing examiners to receive more timely feedback. The increased emphasize on quality may be contributing to a decrease in overall production.

Quality 99.00%

98.00%

97.00%

96.00%

95.00%

94.00%

93.00%

92.00%

91.00%

90.00%

89.00% Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Quality 93.54% 92.52% 94.70% 94.08% 95.34% 95.68% 95.48% 94.63% 95.01% 97.38% 97.14% 97.21% 97.96%

107 ¡ Auto adjudication rates have seen a slight increase since key enhancements were implemented in the MHC system during the first quarter of 2014. Auto Adjudication has not yet begun in the QNXT system but is anticipated to begin during the second half of 2014.

Monthly AA Rate and DOFR 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Mar- May- Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Apr-14 Jun-14 14 14 MHC AA Rate 18% 19% 19% 18% 19% 12% 13% 18% 20% 19% 21% 22% 21% MHC Auto DOFR 39% 36% 35% 35% 35% 36% 36% 38% 40% 35% 34% 35% 34% QNXT AA Rate 0% 0% 0% 0% 0% 0%

108 D-SNP ¡ In August, L.A. Care’s D-SNP averaged risk adjustment factor (RAF) score of 1.020. ¡ On July 24, 2014, the mid-year risk scores for payment year 2014 was posted and reflected in the August 2014 Payment. The retro risk adjustment reconciliation amount is $1,056,502.00, comparing to last year, $939,250.76.

Cal MediConnect (CMC) ¡ Total enrollment for Cal MediConnect is currently 5287 (as of 8/22) ¡ L.A. Care received 4,574 passive crosswalk members in July. These are beneficiaries that are currently with L.A. Care for their Medi-Cal benefits. These members were received in addition to 172 voluntary members. ¡ We continue to experience multiple challenges with enrollment files from CMS and DHCS. Recently, we have been tracking retroactive disenrollments, which were not expected to be used during the demonstration, of close to 1,000 members. ¡ L.A. Care continues to work through these issues as identified internally and with the DHCS and CMS. ¡ We are currently working with DHCS and CMS to prepare for the transition of CMC- eligible D-SNP members into the demonstration on January 1st.

109

Stars Continuing to develop short and long term interventions focused on members, providers, and systems for the following prioritized areas: ¡ Part C: Breast cancer screening; Colorectal cancer screening, Plan All-Cause Readmissions § Focus groups to better understand the barriers/challenges to receiving a mammogram § Breast Cancer Screening incentive program for primary care providers § Fecal Occult Blood Test kits mailing to eligible members § Evaluate TOC program to enhance interventions for increased impact

¡ Part D: Call Center TTY/Foreign Language Line, Medication Adherence § Member Medication Adherence reminder letter § Provider Opportunity Report that includes medication adherence measures § Finalizing vendor contracts to perform Annual Wellness Exams (AWE) for homebound/institutionalized members § Developing intervention to target top 25 chain/independent pharmacies § Conducted bi-weekly calls review to ensure that appropriate TTY/ Foreign Language phone number/ information were issued ¡ Member Retention/Satisfaction Ratings § Developing a member/provider touch point grid that catalogs all member outreach & communication Developing companywide Customer Service training § Targeting top PPGs with highest disenrollment percentage rates to address member retention issues

¡ We are currently validating rates and calculating estimated Stars.

110 ¡ D-SNP membership from October - August increased to 8,769 members. D-SNP FY 2013-14 Enrollment Production Production Plan Actual Variance Q1 Production 900 1,385 485 Q2 Production 900 1,127 227 Q3 Production + 1,500 2,729 1,329 July & August

§ L.A. Care Covered Special Enrollment Period (SEP) community education events are scheduled throughout the summer months. Planning is underway for the 2015 Open Enrollment Period that runs from November 15, 2014 to February 15, 2015.

Cal MediConnect ¡ Member model documents are in multiple stages of completion to meet regulatory guidelines. 2015 Annual Notice of Change (ANOC) and Summary of Benefits are prioritized to be mailed to members by September 30, 2014. The EOC is required by December 31, 2014. All materials are required to be translated into ten (10) threshold languages. ¡ Continued development of beneficiary, care giver and provider product education and enrollment guidelines have been revised to reflect current enrollment information and will be submitted to CMS prior to use. ¡ Community outreach and marketing events include product information. ¡ L.A. Care Field and Direct Response Unit Representatives received product training and now certified to represent all L.A. Care product lines.

111 Cal MediConnect (CMC) • Robust PPG, Hospital, and Ancillary Network Developed • Includes Shared Risk, Dual Risk and Full Risk Arrangements • 200 SNF’s contracted for skilled and long term care • Extensive Provider Relations training and implementation planning • Focused Provider Data system configuration efforts.

ACA PCP Enhanced Payment Distribution • PPG Amendments signed • Two payments made for 2013 DOS in June and August • Administrative fee for facilitating payments.

Contracted Providers PPGs Hospitals Ancillaries Cal MediConnect 21 57 698 Covered CA 28 38 124

112 Medi-Cal Expansion and Healthy Way LA (HWLA)

¡ L.A. Care continues to partner with the L.A. County Department of Health Services (DHS) and community clinic providers to provide high quality care and customer service to the 164,543 former Healthy Way LA (HWLA) members who transitioned to L.A. Care Medi-Cal on January 1, 2014. ¡ From January through June 2014, L.A. Care created special processes for former HWLA members to switch their assignment back to their former DHS or community clinic providers. These simplified processes mitigated potential delays in care for former HWLA members. ¡ L.A. Care continues to provide support to DHS in developing and implementing effective referral and pre-authorization processes for Continuity of Care services to former HWLA members who had been previously been receiving specialty care at DHS through the HWLA program. ¡ External discussion and collaborative work on post transition issues is continuing to take place with the Department of Health Services (DHS) and with our community clinic partners.

113 L.A. Care-DHS Operational Realignment for MCLA

¡ Upon the request of the L.A. County Department of Health Services (DHS), L.A. Care agreed to assume additional operational and financial responsibilities for DHS- assigned patients in the MCLA line of business as of July 1, 2014. ¡ Specifically, L.A. Care is now responsible for utilization management of emergency inpatient admissions to non-DHS hospitals in L.A. County, and claims processing for emergency transportation and for emergency inpatient admissions and emergency rooms visits to non-DHS hospitals in L.A. County. ¡ L.A. Care, DHS, and the Hospital Association of Southern California collaborated to educate L.A. County hospitals about the change using letters, email blasts, remittance advice, and direct outreach to high-volume hospitals. ¡ L.A. Care’s Medical Management Department successfully operationalized a program to support approximately 800 out of network admissions per month. L.A. Care and DHS medical management staff are continuing to work on process flows to transfer members in out of network hospitals back to a DHS facility when necessary and to reconnect to the assigned medical home upon discharge. ¡ L.A. Care has implemented changes to its capitation and claims processing programming for the new contract responsibilities.

114

July 16, 2014

TO: Executive Committee

FROM : Jonathan Freedman, Chief of Strategy, Regulatory, and External Affairs

SUBJECT: 3nd Quarter FY 2013-14 Organizational Performance Report

The organizational performance report summarizes the status of organizational goals and objectives outlined in the Board-approved FY 2013-2014 budget and other major projects undertaken during the fiscal year.

The new report format now includes previous updates for easy reference.

Among the notable activities for the third quarter were:

· The HEDIS 2014 performance goal was not met in the well child visits and adult diabetes care categories. As part of the newly established HEDIS work teams, these measures will be prioritized and actions taken to improve for the next reporting year.

· The Medical Cost Ratio for MCLA (L.A. Care Medi-Cal direct program) was 94.1% for the seven months ending April 2014. The year-to-date budgeted ratio for this period was 95.0%, so the actual performance was 0.9% favorable to the plan.

· The goal for the 2014 Medi-Cal Consumer Assessment of Healthcare Providers and Systems Getting Needed Care score was met with a composite score of 77.36%. An improvement over 2013 and slightly exceeding the goal of 77%.

· Employee turnover was above target in the third fiscal quarter. This is partly explainable due to the high volume of recent new hires, as turnover rate is always greater during the first six months of employment.

· The Coordinated Care Initiative was implemented at L.A. Care with 322 voluntarily enrolled members, despite several external complications with the coordination of Medicare and Medi- Cal enrollment files.

· L.A. Care Covered™ continues to thrive with 37,000 enrollees. Seventy-three percent of those members had been effectuated as of June 18, 2014.

115 L.A. Care FY 2013-14 Goals – Performance Report

Goal Measure Status Quarterly Update 1. Maintain robust provider networks to ensure timely access to quality care. 1.1. Design a clearly defined approach Approach Q1: Oct – Dec 2013: Compensation-Care Alignment Plan to network focus and aligned developed and (CCAP) program Work Group was established. Pilot payment incentive options for documented Providers have been identified. Possible enhancements to various product lines by June 30, original model are currently being reviewed. Tertiary Care 2014 and develop an Implementation Committee was established. Reviewing Network for implementation plan by September plan developed Opportunities to provide quality care and improved access 30, 2014. for Members. Currently working with Bailit Consulting and a multi- Lead: Wallace departmental group on payment incentives with Participating Physician Groups (PPG) and large volume hospitals. Reporting: Paul Van Duine Q2: Jan – Mar 2014: The CCAP project is on track to be presented to the target hospital system on July 1, 2014.

Q3: Apr – Jun 2014: Provider financial incentives have been aligned with the newly developed Cal MediConnect Provider Network. Quality metrics have been defined for all lines of business, and amendments will go out to all PPGs in the next quarter. The established Tertiary Care Committee meets regularly to strategize on ways to improve member access to high quality care. 1.2. Strengthen the County and private A majority of Q1: Oct – Dec 2013: safety net provider network by passively enrolled L.A. Care prepared for and received approximately 164,026 successful assignment to existing members are newly eligible Medi-Cal members, who transitioned from the medical homes for those members assigned to their county Department Health Services (DHS) Healthy Way LA that are passively enrolled. existing medical (HWLA) program to Medi-Cal Managed Care on January 1, homes Lead: Wallace 2014. Q2: Jan – Mar 2014: The vast majority of new Medi-Cal Reporting: Maribel Ferrer/Maria members that transitioned from HWLA were assigned to the Calleros members’ prior clinic affiliation that was reported to L.A. Care by the State Department of Healthcare Services

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 1 116 Goal Measure Status Quarterly Update (DHCS). Of those new members, L.A. Care received approximately 20,000 enrollees for whom no prior clinic home affiliation was received. Those members were auto assigned to a primary care provider. L.A. Care has streamlined systems in place for auto assigned members to request a change to their primary care provider.

Q3: Apr – Jun 2014: L.A. Care collaborated with the county Department of Health Services to ensure accurate medical home assignment for the small number of former HWLA members who enrolled in Medi-Cal during this quarter. 2. Improve quality of health plan and medical care services. 2.1. Improve Healthcare Effectiveness HEDIS score of Q1: Oct – Dec 2013: Scores for the 2013 calendar year will Data and Information Set (HEDIS) 82.9% for well be available July/August 2014. Several end of year Medi-Cal performance scores to national child visits HEDIS initiatives were successfully implemented targeting benchmark of 82.9% for well child Well Child visits age 3-6 yrs (W34) and HbA1c testing. visits age 3-6 (WC34) and national HEDIS score of LA Care also stationed two nurses at UCLA Oliveview benchmark of 90.9% for adult 90.9% for adult Medical Center and UCLA Harbor Medical Center to comprehensive diabetes care diabetes care support DHS staff in performing outreach and scheduling (HbA1c testing) in MCLA and Plan for well child visits and A1c lab testing. Partners. (Measurement year: CY Q2: Jan – Mar 2014: L.A. Care nurses were successful in 2013 /Reporting year: 2014) assisting members with scheduling necessary appointments. The data concerning the completed appointments was routed Lead: Carter to the Healthcare Outcome & Analysis department, to be Reporting: Jim Banks abstracted into the non-supplemental format for HEDIS 2014 reporting. HEDIS results to be finalized and reported June 2014.

Q3: Apr – Jun 2014: The HEDIS 2014 performance goal was not met. Well child visits scored 69.49% and adult diabetes testing for all Medi-Cal members was 83.54% for measurement year 2013. As part of the newly established HEDIS work teams, these measures will be prioritized and actions taken to improve.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 2 117 Goal Measure Status Quarterly Update 2.2. Achieve Medicare Star Rating of 3 Star rating of 3 or Q1: Oct – Dec 2013: Conducted focused interventions for or higher for the 2013 and 2014 higher in Parts C & Medication Adherence measures including Primary Care reporting periods. (Measurement D Provider (PCP) and pharmacy outreach and incentives; year: CY 2012 & 2013 / Reporting member adherence survey, fill reminders, and incentives; year: 2014) conversion to 90-day fills. Initiated three-part flu reminder program. 2014 Star Improvement program and work plan is Lead: Carter/Wallace in development. Reporting: Linda Lee Q2: Jan – Mar 2014: The 2014 Star Improvement program and work plan have been finalized. Comprehensive interventions for each Part C measure have been developed. Initiated bi-weekly meetings to improve Part D measures, data, and access issues. Created a Member Retention workgroup to address low member retention rating. Focus areas include: Low Performing Icon (LPI) strategy, member, PPG, Providers, brokers, stakeholders/advocates, and health plan.

Q3: Apr – Jun 2014: Comprehensive interventions were developed to address Part D measures such as, creating a medication list that will be included in the Annual Wellness Exam (AWE) and amending contracts with GeriNet and House Call to provide institutionalized and in-home AWEs for members who have not seen a PCP in the last 15 months. Member retention workgroups have met with top PPGs with highest disenrollment rates and created a member disenrollment survey to begin July 1, 2014.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 3 118 Goal Measure Status Quarterly Update 2.3. Maintain National Committee for NCQA Q1: Oct – Dec 2013: L.A. Care’s NCQA Accreditation Quality Assurance (NCQA) accreditation survey submission is scheduled for April 30, 2014 and the accreditation. (Measurement year: on-site file review is scheduled for June 16, 2014. L.A. Care 2013 / Reporting year: 2014) will receive results with accreditation status in or about August 2014. Lead: Carter Q2: Jan – Mar 2014: L.A. Care is on target for the April 30, Reporting: Jim Banks/Mike Shook 2014 survey submission.

Q3: Apr – Jun 2014: The NCQA Interactive Survey System submission of Structure and Process documentation was completed with no outstanding issues. On-site file review was conducted June 16, 2014 with no issues identified. Final report is anticipated in July 2014, which will provide us with the results and accreditation status. 3. Optimize administrative and operational performance to ensure financial stability and the success of critical activities. 3.1. Implement Core System Project System rollout on Q1: Oct – Dec 2013: System rollout is on schedule. L.A. (QNXT), beginning in the 4th schedule Care Covered launched on the new QNXT core system. quarter of 2013 and rolling out to Additionally, the Healthy Kids and PASC-SEIU lines of all product lines by the end of the business converted to the new system on December 1, 2nd quarter of 2014. 2013. While there have been some problems, as expected with any major system conversion and launch, key business Lead: Wallace/Schwaninger processes are being performed and issues are being addressed as they arise. The next targeted lines of business are Dual Reporting: Tom Schwaninger Eligible Special Needs Plan (D-SNP) and Cal-MediConnect (CMC), depending upon launch date and finally the Medi-Cal line of business. Q2: Jan – Mar 2014: The QNXT Core system and the Clinical CareAdvance (CCA) medical management system continue to process transactions for the Healthy Kids, PASC-SEIU, and L.A. Care Covered lines of business with much greater stability and transaction throughput (rate of successful message delivery). The new systems will be ready to support the CMC launch which starts with voluntary enrollment on April 1 and passive enrollment on July 1.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 4 119 Goal Measure Status Quarterly Update Activity is now focused on converting the Medi-Cal business and D-SNP during the summer, after the CMC launch has stabilized.

Q3: Apr – Jun 2014: During the CMC launch, approximately 8,000 CMC members were successfully loaded into QNXT for enrollment, authorizations, provider payments and claims processing. Medical case management for these members is also being handled by the new CCA medical management system. Work is continuing on converting the Medi-Cal business to the new core system. Given the very large volume of members and transactions, extensive testing will be conducted to ensure any system glitches are minimal. Final user acceptance testing is expected to be completed during October 2014. 3.2. Ensure that the MCR (medical cost MCLA MCR meets Q1: Oct – Dec 2013: First quarter financial information is ratio) for the MCLA (L.A. Care the budgeted ratio not yet available. The MCLA MCR for Dec. 2013 will be Medi-Cal direct program) line of of 94.2% reported at the January Finance & Budget Committee business meets the MCR adopted meeting and the February Board of Governors Meeting. in L.A. Care’s FY 2013-14 budget. Q2: Jan – Mar 2014: The MCLA MCR was 96.4% for the five months ended February 2014. The year-to-date budgeted Lead: Reilly ratio for this period was 95.3%, so the actual performance Reporting: Gary McHolland was 1.1% unfavorable to plan. The full second quarter financial information will be reported at the April Finance & Budget Committee meeting and the May Board of Governors meeting.

Q3: Apr – Jun 2014: The MCLA MCR was 94.1% for the seven months ended April 2014. The year-to-date budgeted ratio for this period was 95.0%, so the actual performance was 0.9% favorable to the plan. YTD financial performance through July 2014 will be reported at the September Finance

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 5 120 Goal Measure Status Quarterly Update & Budget Committee meeting.

3.3. Develop a mechanism for Plan Plan Partner MCR Q1: Oct – Dec 2013: The Quality Improvement department Partners to optimize quality of exceeds 85% (per is revising the plan partner incentive program for 2014 to service with an MCR that aligns ACA) emphasize quality scores, including HEDIS auto-assignment with Affordable Care Act (ACA) measures, encounter data reporting, and PPG collaboration goals. Plan Partner quality to improve quality and data reporting. rating Q2: Jan – Mar 2014: The plan partner Incentive program Lead: Carter has been updated and approved by the Compliance & Reporting: Jim Banks Quality Committee and the Board including the new program component of gates for encounter submission. This will be distributed for plan partner review early April.

Q3: Apr – Jun 2014: Plan partner meetings were conducted with Anthem Blue Cross and Care1st to discuss the plan partner incentive. An all plan partner meeting is scheduled for mid-July to coordinate improving HEDIS scores and quality of care. 3.4. Improve the financial performance Financial Q1: Oct – Dec 2013: Significant increases in revenue have of L.A. Care overall and the performance been achieved since the adoption of this goal. Seniors and People with improvement Q2: Jan – Mar 2014: Staff continues to work with the State Disabilities (SPD) lines of business on improving rates for various programs and populations. specifically through pursuit of revenue enhancements and actions Q3: Apr – Jun 2014: Update unchanged. to control medical costs.

Lead: Reilly Reporting: Gary McHolland 3.5. Reconfigure L.A. Care’s Restructured Q1: Oct – Dec 2013: Phase IV of the organizational chart is organizational structure to organizational chart with the CEO for final review. Plan to begin Phase V accommodate significant, rapid changes to the organizational chart by the end of January growth in staff and organizational 2014. complexity. Q2: Jan – Mar 2014: Work has begun on Phase V of the organizational charts. CEO to review draft in April 2014.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 6 121 Goal Measure Status Quarterly Update Lead: Turner/Cook Q3: Apr – Jun 2014: Phase V of the organizational charts is almost complete. Final edits and justification for new positions are in progress. 3.6. Appropriately add staff to Adjusted staffing Q1: Oct – Dec 2013: Based on membership growth and accommodate major growth in plan based on approved budgeted staffing, 133 employees have been hired membership and product lines, in product line since the beginning of FY 13-14. accordance with the staffing plan implementation, Q2: Jan – Mar 2014: Based on membership growth and assumptions and timeline adopted membership and approved budgeted staffing 263 employees have been hired in the FY 2013-14 budget and approved staffing since the beginning of FY 2013-14. modified by changing ratios. implementation timelines. Q3: Apr – Jun 2014: Based on membership growth and Staff hired relative approved budgeted staffing 432 employees have been hired Lead: Turner/Cook to adjusted staffing since the beginning of FY 2013-14. plan. 3.7. Ensure that turnover among staff Turnover below Q1: Oct – Dec 2013: Employee turnover for the first quarter employed with L.A. Care for at 15.2% of 2013-14 was 3.27%. Annualized, the turnover rate would least one year remains below the be 13.08% based on the current quarter’s rate. industry standard of 15.2% and New employee Q2: Jan – Mar 2014: Employee turnover for the second monitor the turnover rate among turnover remains quarter of 2013-14 was 4.7%. Annualized, the turnover rate employees with less than one year consistent with would be 14.43% based on data from April 2013 through to ensure that it remains consistent industry standards March 2014. with industry standards for new employees. Q3: Apr – Jun 2014: Employee turnover for the third quarter of 2013-14 was 4.19%. Annualized, the turnover rate Lead: Turner/Cook would be 16.14% based on data from July 2013 through June 2014. 4. Increase member and provider satisfaction and engagement. 4.1. Maintain a rating > 75% for each Overall provider Q1: Oct – Dec 2013: Survey results were reported in provider type in the "Overall satisfaction exceeds October 2013. Overall provider satisfaction exceeded 75% Satisfaction with L.A. Care" 75% for each provider type: category as indicated in the 2013 Medi-Cal 89.2% Provider Satisfaction survey. Medicare 84.7% (Survey administered : 2013 / Healthy Kids 85.4%

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 7 122 Goal Measure Status Quarterly Update Reporting year: 2013) Activities for continuous improvement of provider satisfaction are ongoing in 2014. Lead: Carter Q2: Jan – Mar 2014: Next Survey to be fielded summer 2014. Reporting: Jim Banks Q3: Apr – Jun 2014: 2014 results to be reported in FY 14- 15. 4.2. Maintain a rating > 80% for each Provider Q1: Oct – Dec 2013: Provider satisfaction was achieved for provider type in the "Satisfaction satisfaction with 3 out of 4 provider types. with Utilization Management" UM exceeds 80% 80.7% for PCP 95.2% for Clinic category as indicated in the 2013 92.7% for Specialty Care Provider (SCP) 62.5% for PPG Provider Satisfaction survey. Overall level of satisfaction with the Utilization Management (Survey administered : 2013 / processes for L.A. Care Health Plan is 81.0%. Reporting year: 2013) The Performance Management Unit will be expanded for the Lead: Carter 2014 survey in order to closely monitor delegated PPGs, Plan Partners, and subcontracted health plans. Information identified by this unit will be shared with providers and used Reporting: Jim Banks to identify opportunities for network improvement. Q2: Jan – Mar 2014: Next Survey to be fielded summer 2014.

Q3: Apr – Jun 2014: 2014 results to be reported in FY 14- 15. 4.3. Improve the 2014 Adult Consumer Getting Needed Q1: Oct – Dec 2013: Activities to improve the CAHPS Assessment of Healthcare Care CAHPS score score for Getting Needed Care include: Providers and Systems (CAHPS) is 77% 1) Member education mailer regarding the referral process score for Getting Needed Care for specialty care sent out in November 2013 (72%) by at least 5 percentage 2) eConsult support and roll out points (77%). Patient Centered Medical Home (PCMH) initiative to (Survey administered: 2014 / support 17 practices to transition to a PCMH model delivery Reporting year: 2014) of care Q2: Jan – Mar 2014: Member education mailer regarding the Lead: Carter referral process for specialty care was sent out in March

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 8 123 Goal Measure Status Quarterly Update Reporting: Jim Banks 2014. The newly established work group for member satisfaction focused on Member, Provider, and Health Plan strategies. The focus for D-SNP is on improving member retention.

Q3: Apr – Jun 2014: The goal was met with a composite score of 77.36% for 2014 Medi-Cal CAHPS Getting Needed Care score. An improvement over 2013 and slightly exceeding the goal of 77%. Medicare results pending.

4.4. Improve the 2014 Child CAHPS Overall Rating Q1: Oct – Dec 2013: Some activities to improve the CAHPS score for Overall Rating of Health Child CAHPS score score for Overall Rating of Health Plan include: Plan (84%) by at least 4 percentage is 88% · Member surveys at the end of a member services call points (88%). · Member education mailer regarding the referral (Survey Administered: 2014/ process for specialty care Reporting year: 2014) · Support 17 practices to transition to a PCMH model delivery of care Lead: Carter Q2: Jan – Mar 2014: Work continues on post member Reporting: Jim Banks service calls. Member education mailer regarding the referral process for specialty care sent out in March 2014.

Q3: Apr – Jun 2014: The 2014 Medi-Cal Child CAHPS goal was not met. The NCQA summary report shows that performance remains flat at about 84%. As part of our member retention work group with a focus on CAHPS, results will be reviewed and a strategy to improve the satisfaction with the health plan will be identified.

5. Strengthen market position and ensure robust implementation of ACA-related product lines.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 9 124 Goal Measure Status Quarterly Update 5.1. Implement the Coordinated Care Milestone: decision Q1: Oct – Dec 2013: Revised and updated comprehensive Initiative (CCI) beginning April to participate CCI/CMC work plan. Successfully completed Centers for 2014, contingent on reasonable Medicare and Medicaid Services (CMS) Readiness Review rates and timelines. Implementation on process, final CMS letter pending. Reviewed and provided schedule pursuant comments on CMS/Department of Health Care Services Lead: Wallace to CMS/DHCS (DHCS) materials, policies and guidance, including draft 3- Reporting: Gretchen Brown/ program launch way contract, LA County enrollment strategy, etc. Maribel Ferrer schedule Q2: Jan – Mar 2014: Monitored and participated in discussions regarding ongoing changes in the Los Angeles County CCI enrollment strategy. Plans previously participating in L.A. County as subcontractors (Care1st & CareMore) were transitioned to prime contractors, requiring an amendment to L.A. Care’s three-way contract. This amendment is currently pending with CMS. Received final readiness report from CMS and NORC (research organization) and clearance to move forward with demonstration implementation.

Q3: Apr – Jun 2014: CCI voluntary enrollment began in the third quarter, with a total of 322 members at the end of June 2014, despite significant complications with the coordination of Medicare and Medi-Cal enrollment files. This has required ongoing collaboration with the State and internal analyses and systems focus to ensure requirements are met to serve membership. A major issue was DHCS’ inappropriate inclusion of Share of Cost (SOC) members in the eligibility file three months early. Staff and DHCS are working together to disenroll SOC members. A fourth quarter task is to develop and deliver SOC training for providers and modify procedures to accommodate the SOC Medi-Cal membership to begin in August. The Contract Management Team (CMT), representatives from CMS and DHCS, was established during third quarter to provide oversight and to offer guidance to L.A. Care staff implementing CCI.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 10 125 Goal Measure Status Quarterly Update 5.2. Implement L.A. Care Covered, Implementation on Q1: Oct – Dec 2013: Implementation was successful. with coverage beginning on schedule Coverage began January 1, 2014 for 6,917 L.A. Care January 1, 2014. Covered™ (LACC) members. LACC member materials and provider documents were Lead: Freedman approved by the Department of Managed Health Care and Covered CA (CC) in time to implement the CC products. The LACC member website was launched in English and Reporting: Laura Jaramillo Spanish, featuring new electronic payment options and member engagement tools, as required under the ACA. An extensive advertising campaign was launched in early November in key market areas of the county. Company-wide staff training was conducted to ensure product awareness. Q2: Jan – Mar 2014: L.A. Care Covered™ exceeded the enrollment forecast of 20,000 enrollees by the end of the Open Enrollment Period which ended March 31, 2014. The total enrollment at the end of March was nearly 26,000.

Q3: Apr – Jun 2014: LACC currently has over 37,000 assigned enrollees. More than 27,000 (73%) members have been effectuated as of June 18th. Less than one percent or 220 LACC members were disenrolled in the second quarter due to non-payment of premium. These numbers are more favorable than the forecasted. The 2015 re-certification application and rates proposal was submitted to Covered CA on June 2nd. Contract negotiations are scheduled for mid- July and final rates will be announced by Covered CA by mid-August. 5.3. Implement transition of Healthy Implementation on Q1: Oct – Dec 2013: The goal was achieved. L.A. Care Way LA members to Medi-Cal and schedule prepared for and received over 164,000 newly eligible Medi- ensure readiness for Medi-Cal Cal members, who transitioned from the county DHS expansion by January 1, 2014. HWLA program to Medi-Cal Managed Care on January 1, 2014. L.A. Care assigned the vast majority of these members Lead: Wallace by choice or prior clinic affiliation. Reporting: Maria Calleros Q2: Jan – Mar 2014: L.A. Care continues to work with

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 11 126 Goal Measure Status Quarterly Update county and community partner clinic providers to streamline medical home change requests and ensure Continuity of Care for over 164,000 new Medi-Cal members received on January 1, 2014.

Q3: Apr – Jun 2014: Both medical home change requests and continuity of care requests have decreased over the past quarter. L.A. Care continues to work with county and community partner clinic providers to resolve any outstanding issues. 5.4. Conduct an analysis and strategy Analysis completed, Q1: Oct – Dec 2013: Analysis will be conducted closer to for the Covered California bridge w/recommendation summer of 2014, when Covered California rates for 2015 are option by June 30, 2014. or criteria for better known. participation Q2: Jan – Mar 2014: Update unchanged. Lead: Freedman Q3: Apr – Jun 2014: Covered California is not pursuing the bridge option so an L.A. Care analysis is not warranted. Reporting: Wendy Schiffer 6. Actively engage in the community and be an accountable and responsive partner. 6.1. Work with health advocates on Reporting on Q1: Oct – Dec 2013: L.A. Care Health Plan worked closely policy and systems solutions to activities related to with the L.A. County HWLA program staff to ensure that maximize enrollment in health outreach and the HWLA members were able to preserve their medical coverage and support the safety enrollment, and home after the Medi-Cal transition. There were net. enrollment approximately 15,000-20,000 members out of 165,000 transitions and members in which a prior HWLA medical home was not Lead: Freedman/Wallace simplifications. identified. To address this issue, L.A. Care collaborated with community clinics and associations to ensure a timely Reporting: Maria Calleros/Regina mechanism was in place to allow member/medical home Lightner/Cherie Fields assignment changes from January 1 -20, 2014, with a retroactive effective date of January 1, 2014. Q2: Jan – Mar 2014: L.A. Care Health Plan conducted multiple education and training for our safety net providers and administrative staff on the Affordable Care Act and the Covered California Marketplace. The Marketplace serves as

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 12 127 Goal Measure Status Quarterly Update the entry point for newly eligible Medi-Cal beneficiaries and people without insurance due to cost and pre-existing conditions. Field Sales Teams collaborated with safety net clinics to sponsor community based marketing and enrollment events. There were nearly 26,000 people enrolled in L.A. Care Covered™ at the end of March.

Q3: Apr – Jun 2014: L.A. Care continues to support countywide health reform efforts and activities to expand our reach to communities served by the safety net. L.A. Care is an active participant in the cross-functional “Everyone on Board” coalition and is sponsoring “ACA 201” education sessions for consumers and advocates through the Insure the Uninsured Project throughout the remainder of 2014. 6.2. Have signed lease for the San Signed lease Q1: Oct – Dec 2013: The lease agreement for El Zocalito, Fernando Valley Family Resource the third FRC located in the San Fernando Valley, was signed Center (FRC) by December 31, on October 21, 2013. 2013. Projected move-in date is June 2014, contingent upon the build-out timeline. A contractor has been selected and Lead: Wallace renovation plans will begin during the 2nd quarter of FY 13- 14. Reporting: Maribel Q2: Jan – Mar 2014: Delivery date of leased space is Ferrer/Christina Delgado postponed until April 2014. New projected move-in date is October 2014.

Q3: Apr – Jun 2014: Leased space was delivered to L.A. Care on June 10, 2014. As part of the lease, payment and term commence 120 days from the delivery date. Tenant improvements (TI) will be made during this rent-free period. Construction is scheduled to be completed by October 2014. 6.3. Provide grants to community At least one grant Q1: Oct – Dec 2013: Out of a $5M allocation, the Board organizations that improve will focus on approved a $200,000 ad hoc grant to LAC+USC Medical community health and align with improvement of Center Foundation (Wellness Center) in November 2013; in L.A. Care’s strategic priorities. HEDIS measures. December 2013 a $1M expansion of the eConsult program

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 13 128 Goal Measure Status Quarterly Update Grant no less than to be managed by the Health Information Technology Lead: Freedman 90% of funds. department was approved. The current Community Health Leverage at least Investment Fund (CHIF) balance is $3,800,000. Reporting: Roland Palencia 70% of granted Q2: Jan – Mar 2014: The current CHIF balance remains at funds with $3,800,000. Staff will bring recommendations for funding participation from oral health projects to the May Board meeting for a other funders. minimum of $500,000 across all projects. Due to few fundable ad hoc requests, some CHIF funds may be reallocated during the next two quarters.

Q3: Apr – Jun 2014: The Board approved $675,000 for 14 Oral Health Initiative VI grants at its May 2014 meeting; over 100% in match funds has been leveraged from other funders. Staff is requesting Board approval at the July 2014 meeting for seven Tranquada V-HEDIS initiative proposals in the amount of $1,350,000. If approved, the unspent CHIF balance will be $1,775,000. That means less than 90% of the CHIF approved funds might not be allocated by the end of the current fiscal year. Overall, fewer than expected proposals were received that were consistent with our priorities. Considerations for remaining funds will be brought to the September 2014 Board meeting.

Status: Green – On target; Yellow – Partially met or at risk for not meeting target; Red – Not on target; No color – Update pending Updated 07/02/2014; Page 14 129

August 25, 2014

To: Board of Governors

From: Trudi Carter, MD, Chief Medical Officer

Subject: CMO Report for September 2014

HEDIS 2015 L.A. Care has selected a new HEDIS vendor, Inovalon, for the HEDIS 2015 reporting year. Previously, we provided our vendor with data and the vendor did the HEDIS measure calculations. With the new vendor, the program will be hosted at the vendor’s data center and L.A. Care staff will have remote access to the software to perform the HEDIS measure calculations. This model provides capability of timely data process, step-by-step data quality check, and rate validation. The overall timeline is to have completed the transition by October 31, 2014 when the current vendor contract expires. This will necessitate running parallel systems in September and October so the cutover will be seamless. The goal is for no disruption of process and to ensure reporting consistency. We feel this will have a major positive effect on HEDIS data integrity.

We are meeting with the Plan Partners in order to coordinate our HEDIS efforts. These include sharing best practices, joint provider outreach initiatives, integrated encounter data process, and the use of the California Immunization Registry (CAIR) files.

Medicare Star We are currently reviewing preview data for the Part C and D star ratings. This review provides raw data for data validation and accuracy analysis. Based on our review, L.A. Care contested rates for the Call Center- Foreign Language and TTY measures. After the first plan preview, CMS notified plans that the Call Center measures will be removed from both the Part C and D ratings due to data errors.

We continue to develop short and long term interventions focused on members, providers, and systems for the following prioritized areas: · Part C: Breast Cancer Screening Focus Groups: In July 2014, four breast cancer screening focus groups were conducted in Westchester and Sherman Oaks. Two groups were in English and two in Spanish. The goal was to determine motivators and barriers to receiving a mammogram. Study findings indicate that members believe mammograms cause cancer by awakening a sleeping gene, injuring breast tissue or due to radiation exposure. Members generally believe a self-breast exam is sufficient to screen for breast cancer/lumps and because they feel fine they do not get mammograms. A consistent finding in the discussion was that leveraging the doctor-patient relationship may be the single most important influencer in driving members’ decisions to get mammograms. We are in the process of determining next steps.

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· Part D: Medication Adherence, Medication Therapy Management (MTM), and High Risk Medication Management

Behavioral Health L.A. Care Behavioral Health (BH) clinical staff has been working hand in hand with Medical Management to ensure continuity of care for members with behavioral health needs.

The collaborative screening form and process that facilitates appropriate referrals for members with behavioral health needs is working. The process links and transitions members to appropriate levels of care in a timely manner. There have been no cases needing dispute resolution between L.A. Care and the County Department of Mental Health and Department of Public Health. Even though the process was initially created for Medi-Cal Expansion, we have successfully implemented it into Cal MediConnect.

The work of the department continues to expand. The July stakeholder meeting occurred in July focused on addiction and gambling. Sixty-five individuals attended the meeting and received information on resources for low to no cost services. Also, the department is now engaging with DHCS in the workgroup focusing on guideline for autistic individuals in need of ABA services for individuals 21 and younger.

Centers for Medicare and Medicaid Services (CMS) Audit Health Services has been actively working on implementation of the corrective actions in response to the CMS audit. We submitted corrective action documents to CMS in early August. CMS requested additional information on August 19th, and have submitted those documents on August 22. We are now focusing on implementing and tracking all corrective action plans.

Cal MediConnect Health Risk Assessment Completion (as of 8/18/14) Important to the CMC program is the HRA completion rate. CMS’ standard for HRA completion rates is 100%. Our rate has been between 70% and 45% as evident by the table below.

Total Enrolled Total Completed Monthly Completion Enrollment Month Members HRAs to Date Rate May 2014 12 9 75% June 2014 213 148 69% July 2014 5033 2325 46% August 2014 243 118 49%*

Chart does not included members who have disenrolled; *49% completion as of 8/18.

Managed Long Term Services and Support (MLTSS) Milestones for the MLTSS department during the past quarter are: 1) establishing a Triage Service Center to receive calls and make referrals to MLTSS and community-based services—MLTSS is now receiving nearly 500 calls a month; and 2) using HRA responses to identify 1,600 frail and/or disabled Cal MediConnect members who are experiencing issues such as the need for a caregiver or changes to home environment to remain living safely, difficulty getting to medical appointments, and recent falls

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August 2014 Chief Medical Officer Report August 25, 2014 or member impairment in activities of daily living. MLTSS is analyzing the responses and developing an approach to addressing these members’ needs.

Currently, MLTSS serves 6,400 members in CBAS (with an addition of 1,300 members with Plan Partners), 300 members residing in custodial long term care facilities, and 27,019 members in In-Home Supportive Services (IHSS) (with the addition of 23,985 with Plan Partners).

Disease Management In July 2014, L.A. Care discontinued our affiliation with our disease management vendor, Healthways for provision of disease management services for high risk diabetic members. The transition of the members has required staffing changes and system adjustments. The transition was seamless. With moving this segment of the diabetic population in- house, L.A. Care now offers in-house disease management programs for diabetes, asthma, and cardiovascular health.

All programs provide a comprehensive, ongoing, and coordinated approach to achieving desired outcomes. All programs include a comprehensive assessment, health education materials, interaction with assigned Disease Management Nurse and tailored interventions to support the members individual care plan. The programs focus on empowering the member and improving the member’s ability to self-manage their condition.

National Committee for Quality Assurance (NCQA) On July 21, 2014, NCQA accredited L.A. Care for the Medicaid and Exchange product lines. L.A. Care’s Medi-Cal product line achieved an overall score of 77.43 points out of 100. This was the first full accreditation for the Exchange product line, which received a score of 50 points out of 50. The accredited status for both product lines is effective July 10, 2014 through July 10, 2017. NCQA recently announced new standards, and L.A. Care has begun preparing for the next accreditation survey cycle.

Quality Improvement (QI) Update We have completed our first Plan Partner HEDIS Collaboration meeting on August 12, 2014. Our immediate focus is on developing collaborative interventions to improve performance in the 2014 measurement year and developing a strategy to address priorities in measurement year 2015. Specific focus will be on improving rates for auto assignment measures and addressing measures where performance has been below the Minimum Performance Level (MPL). It is our intent to apply best practices from participating plans, coordinate outreach and engagement, and minimize multiple often times confusing messages to providers.

A separate QI work team has been instituted to work with DHS to focus on two auto assignment measures: Childhood Immunization Status (CIS), and Prenatal/Postpartum Care. Our initial priority is to improve performance on the CIS measure. Our partnership with DHS has been encouraging in identifying areas in where significant improving can be obtained.

Health Information Technology HITEC-LA: As of August, HITEC-LA passed 87% of its goal of helping 3,000 PCPs reach meaningful use. The program goal is still forecasted to be achieved. L.A. Care has added additional provider enrollment initiatives in order to meet the goal. Of note, nationally, upgrading to 2014 versions of certified EHR software has resulted in significant slower progress in meeting the national HITECH program goals. L.A. Care continues to be one of the nation’s top performers in the HITECH arena.

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Health Center Controlled Network (HCCN): As of August 2014, 21 of the 27 health centers are receiving the technical support required by the grant. The remaining six clinics are scheduled to start in September. Fourteen health centers achieved NCQA Patient Centered Medical Home recognition. Ten health centers upgraded their EHRs to meet 2014 meaningful use requirements. Overall, we are meeting all targets under this grant.

Blue Button: As previously mentioned, L.A. Care members can now use Blue Button to access their prescription histories online. A pilot focused on driving adoption in five small practices initially scheduled for May is now expected to start in September due to contract delays. For the pilot, computer kiosks placed in practice waiting areas will allow L.A. Care members to print prescription history to give to their doctors. As an option to kiosks, we are exploring patients being able to securely email their prescription history to providers.

Staffing Joan Byrd, the new Executive Director of Health Services, re-joined the organization during the first week of August. Joan comes to us with extensive background in leading clinical services at health plans as well as physician organizations. Most recently Joan spent 2 years as the Vice President Clinical Services at Regence Blue Cross/Blue Shield and 8 years at Health Net in positions such as Clinical Operations Officer. At L.A. Care, she is responsible for Medical Management, Pharmacy, and Grievances and Appeals. We are happy she has chosen to re-join us.

Sean Scott, Director of Pharmacy Part D Operations, joined L.A. Care to lead the non-clinical efforts around Medicare Pharmacy operations and compliance. Sean has over 14 years of experience in regulatory compliance. He is a subject matter expertise in Medicare and Medicaid Regulations, Affordable Care Act, Federal and State False Claims Acts, Federal Anti-kickback and Stark laws, and HIPAA privacy. He also has expert experience in corporate compliance program development and implementation. He comes at an opportune time to help us in our CMS Part D work. We welcome Sean on board.

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Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 101.0914

Committee: Chairperson: Thomas Horowitz, DO

Issue: Amend the existing contract with Ansafone Communications for services totaling an amount not to exceed $2,575,000 through January 31, 2015.

Background: The Ansafone Call Center vendor contract was initially executed in 2008. Following a 2011 competitive request for proposal (RFP) process, Ansafone was selected due to its lowest pricing, ability to achieve L.A. Care’s service level standards, and overall proposal. L.A. Care is currently finalizing a call center vendor RFP process; requests the amendment to the current contract until a new contract is executed.

Member Services- $2,500,000 Through 2014, inbound Call Center volume has been significantly impacted by the Healthy Way L.A. transition (164,000 members), L.A. Care Covered enrollment (27,553 members), Cal Fresh Medi-Cal enrollment (18,540 members), and the Cal MediConnect launch (7,162 members). As the Medi-Cal application backlog is addressed in the next several months, call center volume will likely increase.

Membership growth has driven consistently high inbound call overflow and after hours call volume, including provider calls for the Medi-Cal, Medicare, PASC-SEIU, and Healthy Kids programs. L.A. Care Covered provider calls were retained by the L.A. Care call center. Provider calls were notably impacted and Ansafone began taking the majority of non-L.A. Care Covered provider calls in January 2014.

Provider Line Calls Answered- Average Monthly Volume Medi-Cal, Medicare, PASC-SEIU, Healthy Kids L.A. Care Ansafone January 2013 – December 2013 29,138 1,455 January 2014 – June 2014 4,094 49,056

Staff requests to increase the funding limit for the current Ansafone contract, adding $2,500,000 for additional overflow, after hours, and outbound support through January 31, 2015, the existing contract term. L.A. Care is evaluating the expansion of full time Member Services staff to address the volume and handle the majority of provider calls in house.

L.A. Care Covered ™ Sales and Marketing- $75,000 L.A. Care Covered™ is one of six Qualified Health Plans (QHPs) for Covered California. The product is designed as a commercial insurance product that provides L.A. County residents with affordable and comprehensive health care insurance. During the 2014-2015 open enrollment period (November 2014- February 2015), call volume will likely increase significantly as existing members seek plan renewal options and prospective members request information or enrollment assistance. 134 Board of Governors MOTION SUMMARY

Staff requests to amend the Ansafone contract adding $75,000 for L.A. Care Covered ™ sales and marketing support through January 31, 2015, the existing contract term. During open enrollment, Ansafone will supplement Direct Response Unit activities and conduct targeted outbound campaigns, including providing enrollment information to former Healthy Families members that transitioned to Medi-Cal in 2014 or lost eligibility.

Staff requests to amend the Ansafone contract adding a total of $2,575,000 for continued overflow, after hours, and outbound support through January 31, 2015, the existing contract term.

The new contract total amount will be $15,353,000.

Budget Impact: Sufficient funds are budgeted in Member Services FY 2013-14 budget and Member Services and Sales and Marketing FY 2014-15 budgets.

Motion: To authorize staff to amend a contract with Ansafone Communications adding $2,575,000 for call center support services through January 31, 2015. Total contract amount not to exceed $15,353,000.00

135

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 102.0914

Committee: Board of Governors Chairperson: Thomas Horowitz, DO

Issue: Amend the existing contract with Dickerson Employee Benefit Insurance Services (Dickerson), adding $400,000 through September 30, 2015.

Background: During initial planning and membership forecasting for L.A. Care Covered, the Sales and Marketing Department identified key elements to generate new membership. L.A. Care released a request for proposal in October 2013 to select brokerage firms to represent the L.A. Care Covered product line.

Dickerson was selected as one of four agencies to provide enrollment support for L.A. Care Covered for a contract amount of $250,000 through September 30, 2014. This was the only contract with Dickerson in the last 12 months.

Due to the large success of L.A. Care Covered, staff requests to amend the Dickerson contract to continue to provide education, outreach, and enrollment support for L.A. Care Covered. Continuing the agreement with Dickerson will ensure that there will be no interruption in services during the Covered California 2015 open enrollment cycle, to be held November 15, 2014 through February 15, 2015. The agency is in good standing with the Department of Insurance and Covered California and there have not been any sales allegations associated with their 2,061 enrolled members.

Budget Impact: Sufficient funds are budgeted in the Sales and Marketing Department for FY2013-14 budget and have been accounted for in the FY2014-15 budget.

Motion: To authorize staff to amend a contract with Dickerson Employee Benefit Insurance Services adding $400,000 (total contract not to exceed $650,000) through September 30, 2015, for enrollment support for the L.A. Care Covered line of business.

136

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No: BOG 103.0914

Committee: Board of Governors Chairperson: Thomas Horowitz, DO

Issue: Amend existing contracts with vendors that provide L.A. Care with temporary staffing services.

Background: L.A. Care requests approval to authorize staff to execute contract amendments totaling $2,553,158 with Act 1, Robert Half, ATI, Kforce, Bridgelinx, and Ranstad, to provide temporary staffing services through September 30, 2014.

Due to L.A. Care’s continued growth, there is a need to increase the amount of temporary services above the amounts that were originally included in the FY 2013-14 Budget. This includes temporary staffing vendors on the Preferred Vendor list included in the budget. The amounts will be sufficient for expenses through the end of the fiscal year, and amounts have been included in the new fiscal year budget that starts on October 1, 2014. Vendor Current Expense FY13-14 Budget Revised Amount Amendment Act 1 $4,749,711 $4,500,000 $5,500,000 $1,000,000 Robert Half $383,243 $375,000 $500,000 $125,000 ATI $567,492 $500,000 $750,000 $250,000 Kforce $2,866,932 $2,848,717 $3,500,000 $651,283 Bridgelinx $292,940 $292,940 $500,000 $207,060 Ranstad $430,185 $430,185 $750,000 $319,815

Total $9,290,503 $8,946,842 $11,500,000 $2,553,158

Budget Impact: While temporary staffing expenses will further exceed FY 2013-14 budgeted amounts with this request, offsetting savings are being realized in organization-wide salary expenses and projects. These temporary staffing vendors have been included in the FY2014-15 Budget.

Motion: To authorize staff to amend contracts with existing temporary staffing vendors, for a total amount not to exceed $2,553,158, through September 30, 2014.

137

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 104.0914

Committee: Board of Governors Chairperson: Thomas Horowitz, D.O.

Issue: Approval of a $60,000 ad hoc planning grant to The Achievable Foundation clinic to obtain a Special Population designation from the Health Resources and Services Administration (HRSA) for developmentally disabled patient populations.

Background: In May 2012, L.A. Care’s Board of Governors approved a $100,000 ad hoc grant to the Achievable Foundation to expand a clinical program to provide medical services to individuals with developmental disabilities such as autism, intellectual disabilities, cerebral palsy, Down syndrome and epilepsy. In November 2013, with L. A. Care’s support, the clinic received its full Federally Qualified Health Center (FQHC) designation, becoming the first FQHC clinic in the nation that specializes in comprehensively addressing the needs of developmentally disabled populations.

The clinic proposes to engage in a strategic planning project to identify the process whereby other populations such as the homeless, seasonal agricultural workers and residents of public housing received Special Population designation. By understanding the factors that were considered and the mechanisms used by advocates to secure that designation for the selected groups, it will provide the clinic with key information to assist in their application. The FQHC Special Population designation could benefit up to 1,500 developmentally disabled Achievable patients by the end of 2015, including L.A. Care members; and in the long-run benefit up to 250,000 individuals in California alone who receive support from the California Department of Developmental Services.

This new designation will translate into additional resources to support the clinic and provide comprehensive services to attend to the complex medical, mental, physical and social needs. It will serve as a replicable model with local, state and nationwide impact, and help FQHCs that address the needs of this population to become more financially viable.

Funds will be used to hire a consultant expert and support staff involved in data gathering, analysis and development of reports and documents.

Alignment with L.A. Care Organizational Goals: This project is consistent with L.A. Care’s mission of expanding access to comprehensive and high quality care to vulnerable and low income populations. It also builds on previous L.A. Care efforts to support and strengthen infrastructure programs that meet the needs of seniors and people with disabilities (SPDs) and those with complex needs. With the expanding SPD populations, L.A. Care members will benefit from a primary care provider that uniquely addresses the needs of developmentally disabled patients.

The project also supports L.A. Care’s organizational Goal 6.3 of strengthening the safety net, improving quality of care by integrating preventive and clinical care and providing grants to community 138 Board of Governors MOTION SUMMARY organizations that improve community health. The overarching goal of this project meets the triple aim goals of the Affordable Care Act: Improving patient experience and quality of care, improving population health and reducing per capita health care costs.

L.A. Care will be acknowledged as a funder in joint press releases, program literature, website placement, e-newsletter announcement and other materials related to this project.

Budget Impact: The 2013-14 fiscal year Community Health Investment Fund (CHIF) budget is $5.0 million, of which $1 million is allocated for ad hoc grants. Only $375,000 of these ad hoc funds has been spent to date with a current balance of $625,000. If this $60,000 request and the other accompanying ad hoc requests totaling $585,000 are approved, the ad hoc balance will be $40,000.

Motion: To approve a $60,000 ad hoc planning grant to The Achievable Foundation to help obtain Special Population designation for developmentally disabled populations from the Health Resources and Services Administration (HRSA).

C:\Users\maloub.LAC\Desktop\090414 BOG\BOG 104 CHIF-The Achievable Foundation.doc Page 2 of 2 139

August 19, 2014

To: Board of Governors

From: Jonathan Freedman, Chief of Strategy, Regulatory and External Affairs Roland Palencia, Director, Community Benefit Programs

Subject: Approval of a $60,000 ad hoc planning grant to The Achievable Foundation to obtain special population designation for developmentally disabled patient populations.

Introduction Staff recommends approval to fund an ad hoc grant for $60,000 to the Achievable Foundation (Achievable clinic) to support a strategic planning process that will allow the clinic to make a case for developmentally disabled populations to be designated as a Special Population by the Health Resources and Services Administration (HRSA) federal agency.

Developmentally and intellectually disabled populations have an array of complex medical, mental, physical, social and economic needs. In Los Angeles County there are no Federally Qualified Health Centers (FQHCs) that specifically serve and understand the variety and depth of issues affecting this population. To adequately serve this population and prevent higher expenses upstream such as preventable hospitalizations and unnecessary institutionalization, the Achievable clinic needs additional resources. A reclassification of their target population will help to provide for those additional resources.

Issue Background and Rationale As reported in a 2007 California Department of Developmental Services Report Index, approximately 17% of U.S. children under the age of 18 have a developmental disability, and the incidence of autism has risen alarmingly. Of the four primary types of developmental disabilities, autism rates have grown at 253% over an 8-year period, mental retardation at 36%, epilepsy at 28%, and cerebral palsy at 27%. Almost half (46%) of all residents within Achievable’s proposed service area have incomes at or below 200% of the federal poverty level.

Individuals with developmental disabilities are more likely to experience twice the poverty rate as the general population. They have higher rates of obesity, hypertension, diabetes and chronic mental health problems than the general population, and experience significant barriers to care, including lack of sufficient time while at the medical offices and coordination of primary and sub-specialty care.

By the end of 2014, Achievable is slated to serve close to 1,300 patients, most of them developmentally disabled, and provide over 4,500 visits. They expect to serve over 2,000 patients

140 The Achievable Foundation

and provide 7,000 visits by the end of 2015. Of that last number, at least 70 percent will qualify for Medi-Cal, and as such could be part of a federal reimbursement rate under a Special Populations waiver. The FQHC Special Population designation could benefit up to 1,500 developmentally disabled Achievable patients, including L.A. Care members. In the long run, up to 250,000 individuals who receive support from the California Department of Developmental Services could benefit from this designation.

Organizational Background The Achievable clinic is located in Culver City and draws most of its patients from West Los Angeles, South Los Angeles, Gardena, Hawthorne, Lawndale and Inglewood. Achievable was created by the Westside Regional Center to provide ancillary and complementary client services beyond the regional center’s scope of work.1 The Westside Regional Center is one of seven not-for-profit, state-funded agencies in Los Angeles County dedicated to serving people with intellectual and developmental disabilities with a patient base of close to 7,000 clients, many of them receiving care at the Achievable Foundation’s clinic. Achievable provides a full continuum of preventive, primary and specialty care services that includes acute illness care, women’s health, well-child visits, cancer and other disease screenings, immunizations, hypertension and cholesterol testing, vision, hearing and dental assessments, behavioral health, and health education. Expanded services to be provided onsite include prenatal care and neurological care. Dental services are provided by a partner located adjacent to Achievable. Referrals are made for other specialty services not provided on site, including dermatology, endocrinology and radiology. The clinic is a patient centered medical home practice with intensive care coordination and connecting patients to a spectrum of medical care and social needs resources.

Proposed Project The Achievable clinic will engage in a strategic planning project to identify the process whereby other populations such as the homeless, seasonal agricultural workers and residents of public housing receive Special Population designations. By understanding the factors that were considered and the mechanisms used by advocates to secure the designation for the specific groups, it will provide the Clinic with key information to make its case for the inclusion of the developmentally disabled patient populations. The clinic will engage in an internal process that will document its current model, finances, the complexity of providing care, particularly around misdiagnosing; and a thorough inventory of the existing support networks, including those that connect patients to a vast spectrum of services.

Funds will be used to hire a consultant expert and support staff involved in this data gathering and analysis process.

Project Deliverables By September 2015, The Achievable Foundation will: 1. Develop a project roadmap that includes a clear purpose, timelines, role identification and assigned responsibilities, including those of external expert consultants. 2. Develop a methodology that captures developmentally disabled patient data that demonstrate differences in delivery of care, costs, and encounter frequency and intensity.

1 The Westside Regional Center’s mission is to empower people with developmental disabilities and their families to choose and access community services that facilitate a quality of life comparable to persons without disabilities.

141 The Achievable Foundation

3. Contact HRSA staff at appropriate levels to identify criteria that influences Special Populations designations. 4. Meet with HRSA and provide a document that summarizes Achievable’s findings and recommended next steps. 5. Create a project mapping process for next phase in negotiation to effect federal consideration of Special Populations for developmental disabilities for FQHCs. 6. Analyze and disseminate findings and map out a strategy for federal action on Special Populations designation process and approval.

Evaluation The evaluation plan will determine if key deliverables and milestones have been met in reaching the goal of obtaining an FQHC Special Population designation for persons with developmental disabilities. It will evaluate the process, methodology and procurement of data and the final analysis document to be presented to HRSA authorities and other stakeholders that can influence the process of special designation. Ultimately, the evaluation will also assess if the special benefits and assistance afforded to other Special Populations can indeed be provided to FQHCs like Achievable for developmental disabilities coverage.

142

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 105.0914

Committee: Board of Governors Chairperson: Thomas Horowitz, D.O.

Issue: To approve a $125,000 ad hoc grant to the Antelope Valley Community Clinic to renovate and expand the Lancaster Health and Wellness Urgent Care clinic.

Background: The Antelope Valley Community Clinic (AVCC) serves over 10,000 L.A. Care members. It was founded in 2008 and is located in the Antelope Valley, one of the most medically underserved areas of Los Angeles County. The clinic expects to provide over 120,000 visits in 2014. In spite of the significant expansion, AVCC has a waiting list of close to three months for adult dental care and up to two months for primary care visits. The existing urgent care clinic is too small and overcrowded, resulting in long waits of up to three hours. Many patients are turned away daily. In addition to expanding urgent care space, AVCC also proposes to renovate clinical and dental space. This clinical infrastructure expansion will result in an additional 18,000 urgent care, 10,000 primary care and 5,000 dental care visits by the end of calendar year 2015. The funds will be used to renovate physical space, medical equipment, pay for plans and permits, plumbing, electrical, flooring, and clinic relocation expenses.

Alignment with L.A. Care Organizational Goals: AVCC’s project is consistent with L.A. Care’s mission of expanding access and providing high quality care to vulnerable and low income populations in underserved areas. The project alights with L.A. Care’s organizational Goal 6.3 of strengthening the safety net and improving quality of care by integrating preventive and clinical care and providing support to community organizations that improve community health. The overarching goal of this project meets the triple aim goals of the Affordable Care Act: Improving patient experience and quality of care by increasing access and decreasing wait times, improving population health and reducing per capita health care costs by avoiding unnecessary hospitalizations.

L.A. Care will be acknowledged as a sponsor and primary contributor at the ribbon cutting and open- house ceremonies. It will also be acknowledged as a funder with a recognition plaque, in joint press releases, website placement, e-newsletter announcements and in other materials related to this project.

Budget Impact: The 2013-14 fiscal year Community Health Investment Fund (CHIF) budget is $5.0 million, of which $1 million is allocated for ad hoc grants. Only $375,000 of these ad hoc funds has been spent to date with a current balance of $625,000. If this $125,000 request and the other accompanying ad hoc requests totaling $585,000 are approved, the ad hoc balance will be $40,000.

Motion: To approve a $125,000 award to the Antelope Valley Community Clinic to renovate and expand urgent, medical and dental care clinical spaces at the Lancaster Health and Wellness clinic.

143

August 22, 2014

To: Board of Governors

From: Jonathan Freedman, Chief of Strategy, Regulatory and External Affairs Roland Palencia, Director, Community Benefit Programs

Subject: Approval of a $125,000 ad hoc clinical space renovation grant to the Antelope Valley Community Clinic to expand the Lancaster Health and Wellness Urgent Care clinic.

Introduction to the Proposed Project Staff recommends approval to fund an ad hoc grant for $125,000 to the Antelope Valley Community Clinic (AVCC) to renovate a 5,000 square feet administrative space to add urgent and primary care exam rooms and a dental care operatory. This expansion will result in an additional 18,000 urgent 10,000 primary and 5,000 dental care visits by the end of 2015. The program will be sustained by AVCC’s growing Medi-Cal enrollment. This proposed physical and services expansion could benefit over 10,000 L.A. Care members.

The requested funds will be used for physical renovation needs such as plans and permits, plumbing and electrical, flooring, and clinic relocation expenses. The clinic will also purchase and install medical equipment and furnishings. This proposed expansion supports AVCC’s goal to provide a “medical home” for the underserved by significantly expanding access to urgent care, primary care, dental care, disease management, prevention and educational services.

In 2013, when Affordable Care Act (ACA) infrastructure funds were available for building and physical renovations, AVCC did not qualify as it was still a Look-Alike clinic and only full Federally Qualified Health Centers (FQHC) were eligible for those funds. AVCC received its full FQHC designation later that year, but no ACA infrastructure funds have been available since then.

Issue Background and Rationale The Antelope Valley, a 2,000 square mile area in north Los Angeles County, with over 46% of the County’s land mass, has consistently scored very low for almost all Los Angeles County health indicators. Over 20% of children in grades 5, 7 & 9 are obese as well as 35% of the adults. One in three adults is diagnosed with hypertension and over one quarter with high cholesterol. Antelope Valley also has high levels of teen pregnancy, lack of pre-natal care, infant mortality and low-weight births in addition to high incidence of asthma, lung and colorectal cancer and overall mortality. 1 The area has the worst air quality in the County, resulting in a high incidence of respiratory diseases and the highest incidence of childhood asthma of 15.8% vs. 8.8% countywide. In 2007 Antelope Valley hospital

1 http://publichealth.lacounty.gov/chs/SPA1/index.htm

144 Antelope Valley Community Clinic (AVCC) emergency rooms saw 115,000 patients of which 30% where non-urgent visits. Most of those patients are now AVCC patients, receiving primary care in a less costly setting and are better managed. A typical emergency room visit costs approximately $1,600 compared to a primary care visit at AVCC for approximately $126.

In spite of the significant expansion in access to care, AVCC has a waiting list of close to three months for adult dental care and up to two months for primary care visits. The existing urgent care clinic is too small and overcrowded resulting in long waits of up to three hours, and many patients are turned away daily. This proposed expansion will dramatically decrease wait times and reduce or eliminate the number of patients not receiving urgent care due to lack of capacity. It will also allow the clinic to separate the Primary Care and Walk-In Clinic waiting areas for more efficient services.

Organizational Background AVCC was founded in 2008 as a result of a needs assessment developed by the Antelope Valley Partners for Health consortia, a community-based collaboration of residents, leaders, local organizations, city and county government agencies, health and social services agencies, hospitals, schools, colleges, and faith-based organizations who work together to identify and address health and social needs in the Antelope Valley.

In 2009, L. A. Care provided AVCC with a $500,000 start-up infrastructure grant to open its first clinic. Within a year, AVCC received its FQHC Look-Alike designation, and now all of its four clinics are full FQHC designated clinics.

Due to the vast need and effective leadership in addressing the needs of Antelope Valley residents, the clinic has increased its yearly visits from 3,500 in 2008 to a projected 120,000 visits in 2014, with 200 staff and 32 providers. The services include primary care (diagnosis, medication, treatment and follow- up care), pediatric care, full service dental, mental health, psychiatry, chronic disease management, pharmacy, immunizations and WIC exams. The clinic also provides comprehensive education and prevention, plus specialty care such as endocrinology, podiatry, psychiatry, cardiology and pain management. They also provide adult day health care and are currently applying to become a patient centered medical home (PCMH).

Project Deliverables By the end of 2015, the AVCC clinic will: 1. Renovate a 5,000 square feet administrative space to add ten urgent care walk-in exam rooms, five primary care exam rooms and one dental operatory clinic with six dental chairs. 2. Provide an additional 18,000 urgent care, 10,000 primary care and 5,000 dental care visits. 3. Double urgent care visits from 75 to 150 per day.

Evaluation AVCC’s administrative office and finance department will monitor and report units of service, demographics, clinical indicators and cost per unit and revenue to ensure services are sustainable and meet community needs. The clinic’s Quality Improvement and Risk Management departments will monitor patient quality outcomes including patient satisfaction, patient grievances, provider performance and PCMH compliance.

145

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 106.0914

Committee: Board of Governors Chairperson: Thomas Horowitz, D.O.

Issue: To approve a $200,000 ad hoc grant to the Corporation for Supportive Housing (CSH) to reduce re-hospitalization rates among L.A. Care Health Plan homeless members and $50,000 to contract a consultant to independently assess the needs and resources available to L.A. Care members who are homeless. Both requests total $250,000.

Background: This project has the potential to impact an estimated 20,000 L.A. Care members who are homeless. CSH will track hospitalized L.A. Care members who are homeless and provide intensive Frequent users of Systems Engagement (FUSE) case management and housing navigation services to the highest-need and highest-cost members. By the second year of its implementation, the project is estimated to generate up to $900,000 in savings to L.A. Care in reduced hospitalization rates. A Review Committee composed of L.A. Care staff and community experts reviewed this proposal and recommend it for funding.

As L.A. Care expands its Medicaid membership, the number of homeless individuals with complex medical needs and high costs, already estimated at 20,000 members, will increase. Furthermore, L.A. Care does not have an in-house comprehensive model that addresses the needs of this population. With over 20 years of experience in supportive housing, CSH is an industry leader, and its FUSE program has been implemented in over ten sites in the Los Angeles area.

Alignment with L.A. Care Organizational Goals: This project is consistent with L.A. Care’s mission of expanding access to high quality care for vulnerable and low income populations, and it specifically supports L.A. Care’s organizational Goal 6.3. An overarching goal of this project is to meet the triple aim goals of the Affordable Care Act: Improving patient experience and quality of care, improving population health and reducing per capita costs of healthcare. L.A. Care will be acknowledged as a funder in a joint press release, program literature, website placement, e-newsletter announcement and other materials related to this project.

Budget Impact: The 2013-14 fiscal year Community Health Investment Fund (CHIF) budget is $5.0 million, of which $1 million is allocated for ad hoc grants. Only $375,000 of these ad hoc funds has been spent to date with a current balance of $625,000. If this $250,000 request and the other accompanying ad hoc requests totaling $585,000 are approved, the ad hoc balance will be $40,000.

Motion: To approve a $200,000 award to the Corporation for Supportive Housing to reduce re-hospitalization rates of L.A. Care Health Plan members who are homeless and $50,000 for the hiring of independent consultant to assess the needs and resources available to this L.A. Care member population. Both requests total $250,000.

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August 22, 2014

To: Board of Governors

From: Jonathan Freedman, Chief of Strategy, Regulatory and External Affairs Roland Palencia, Director, Community Benefit Programs

Subject: Approval of a $200,000 ad hoc grant to the Corporation for Supportive Housing and $50,000 for a consultant to perform an independent assessment of L.A. Care’s homeless members’ needs.

Introduction Staff recommends approval of an ad hoc grant for $200,000 to the Corporation for Supportive Housing (CSH) for a two-year pilot program to reduce re-hospitalization rates among the highest- need, highest-cost L.A. Care Health Plan members who are homeless. Staff also requests $50,000 to hire an independent expert consultant to assess the needs and resources available to L.A. Care’s members who are homeless.1

As L.A. Care Health Plan expands its membership, particularly in Medicaid, the number of homeless individuals with complex medical needs will increase. An estimated 20,000 L.A. Care members are currently homeless and could potentially be impacted by this project, especially the top 10% with the most complex medical, physical and social needs. Moreover, L.A. Care does not have an in-house model to specifically address the needs of homeless members. 2

Through CSH’s network, the proposed project will provide immediate services to L.A. Care’s homeless member populations while complementing our services. Concurrently, an independent consultant will help L.A. Care staff to assess the depth and magnitude of the needs of this homeless population. Although all lines of business will be included, there will be an emphasis on our direct Medi-Cal product (MCLA).

1 A homeless person lacks a fixed, regular, and adequate nighttime residence; and has a primary nighttime residence that is: a supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare/voucher hotels or shelters, designed for homeless persons); or a public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings (street, park, hallway, freeway underpass, car).

2 L.A. Care Health Plan has approximately 40,000 General Relief members, and it is estimated that half of those are homeless.

147 Corporation for Supportive Housing (CSH)

Project Background and Rationale The report from Los Angeles County Homeless Services Authority’s 2013 Homeless Count notes that the number of persons who were chronically homeless increased from 2011 to 2013 by 16% for a total of 58,423. Over 30% of the unsheltered homeless were mentally ill; 31.4% were substance users and 18.2% had a physical disability. The highest-need, highest-cost top 10% of homeless patients in Los Angeles County account for 72% of homeless healthcare spending.3

This top 10 % is also most likely to experience co-occurring and multiple disorders that include chronic health conditions, mental illness and substance use and also more likely to use hospital emergency rooms as primary care access.4

In 2008, the California Endowment and the California HealthCare Foundation sponsored the “Frequent Users of Health Services” initiative, which found that the model of providing housing and social service interventions led to a 61% decrease in emergency room visits and a 62% decrease in inpatient days, demonstrating that housing stability is fundamental to improving health and well- being and reducing costs.

To address the needs of this high-need, high-cost homeless population and to parallel the “Frequent Users of Health Services” success, CSH developed the Frequent Users of Systems Engagement (FUSE) model, engaging 15 hospitals (twelve are in L.A. Care’s network), nine homeless service providers, six Federally Qualified Health Centers (FQHCs) and a number of supportive housing providers and private landlords. FUSE incorporates the “housing first” principle which entails homeless persons moving into supportive housing directly from the street without preconditions for treatment; harm reduction rather than mandatory abstinence; providers bring robust services into housing; and housing is not dependent on participation in services.

This “housing-first” model has been rigorously evaluated and is considered the preferred model of treatment for individuals with severe mental illness and co-occurring addictions (SAMHSA/CSAT Treatment Improvement Protocols). This approach is built on the finding that once homeless individuals are housed, their health can be improved and their utilization of emergency rooms and hospital beds reduced. From a financial perspective, housing and preventive medical care costs much less than hospitalization or other in-patient options, resulting in substantial savings for the healthcare system.

Organizational Background CSH’s mission is to advance solutions that use housing as a platform to improve the lives of some of the most vulnerable residents, to maximize public resources and to build healthy communities. With over 20 years of experience in supportive housing, the organization is an industry leader with deep connections in communities around the country. It promotes supportive and affordable housing that is linked to comprehensive services to address some

3 http://www.latimes.com/local/la-me-skid-row-cleanup-20140814-story.html 4 Economic Roundtable's 2009 first research report on the 10th decile, Where We Sleep: Costs when Homeless and Housed in Los Angeles, by Daniel Flaming, Patrick Burns, Michael Matsunaga, and Gerald Sumner. Also, Economic Roundtable's 2011 report, Crisis Indicator: Triage Tool for Identifying Homeless Adults in Crisis, by Daniel Flaming, Patrick Burns, and Gerald Sumner. The data is corroborated in the Roundtable's 2013 report, Getting Home: Outcomes from Housing High Cost Homeless Hospital Patients, by Daniel Flaming, Susan Lee, Patrick Burns, and Gerald Sumner.

148 Corporation for Supportive Housing (CSH)

of the most intractable issues including homelessness and extensive use of emergency services. To date, their FUSE program network collaboratives have been implemented in a number of Los Angeles neighborhoods, including Downtown LA, Boyle Heights, Glendale, Pasadena, Hollywood, West Los Angeles, South Los Angeles, and the San Fernando and San Gabriel Valleys.

Proposed Project CSH proposes to provide on-the ground, intensive case management services to hospitalized L.A. Care members who are homeless with complex medical needs and of highest cost. They will also work with a consultant expert to assess the overall needs of L.A. Care’s homeless populations and outline a service model that could impact over 20,000 homeless L.A. Care members. They will use tracking and case management services data to determine baselines and to assess the challenges of serving this population in a managed care environment, and specifically in an L.A. Care Health Plan environment.

The program will go beyond care coordination to include “patient navigators” who will provide intense on-the-ground case management that includes identifying L.A. Care members in hospitals, transition from hospital to community facilities with clear discharge instructions, and immediate temporary housing if no permanent supporting housing is available. Housing resources include. Los Angeles County’s Housing for Health program, Section 8 vouchers, Shelter + Care, recuperative care and site-approved housing providers. L.A. Care is not funding housing services but rather the case management and coordination that will connect qualified members who meet the criteria to a large network of comprehensive resources. Funds will also support CSH staff participating in L.A. Care’s needs assessment and care model development.

L.A. Care’s Safety Net Initiatives, Behavioral Health, Medical Management and the Managed Long Term Services and Supports departments will partner with CSH in the planning and implementation of this project. A staff member of L.A. Care’s Homeless Workgroup, facilitated by the Safety Net Initiatives and the Behavioral Health departments, will be the main contact person to help CSH to operationalize this program. Already, the Community Benefits staff has facilitated communication between L.A. Care’s staff and CSH on items related to duplication, complementary and supplementary resources and the coordination of services. Additionally, CSH will continue to coordinate its services with the Los Angeles County Department of Health Services’ Housing for Health program to create further synergies and avoid duplication of services and resources.

Pilot Project Deliverables 1. L.A. Care’s Assessment of Members who are Homeless a. CSH will work with L.A. Care staff and independent expert consultant to assess the needs of L.A. Care’s homeless population, especially the top 10% who are of highest-need and of highest-cost. b. Share key information to assist in the development of an effective service model that addresses the needs of an estimated 20,000 L.A. Care members who are homeless, especially the top 10% with complex needs and highest-cost.

149 Corporation for Supportive Housing (CSH)

2. Provide direct services to hospitalized L.A. Care patients, including tracking 166 high- need, high-cost patients, determine baselines and assess the effectiveness of the FUSE program in a managed care environment and specifically in an L.A. Care environment. a. Track key indicators for at least 150 hospitalized L.A. Care members to provide key base data for needs assessment. b. Provide on-the-ground intensive, 24/7 and comprehensive case management to at least 16 new L.A. Care Health Plan members who do not qualify for other programs and who are of highest-need and highest-cost (with an estimated savings of $60,000 per patient member, totaling over $900,000 in savings by year two of the program).5 c. Decrease of 45% in emergency room costs within 12 months of new pilot program members moving into supportive housing. d. Decrease of 60% in inpatient costs within 12 months of new pilot program members moving into supportive housing. e. At least 75% of new pilot program participants in supportive housing for six months will have at least one primary care visit within a six-month period. f. At least 75% of new pilot program participants with chronic mental illnesses in supportive housing for six months will have at least one behavioral health visit within a six-month period. g. At least 85% of new pilot program supportive housing placements will remain housed for at least six months.

Evaluation CSH will report on the project’s effectiveness based on the ability to secure housing, health and social services and the accomplished pilot project deliverables outlined above. L.A. Care staff will receive six-month progress reports plus it will monitor the project on an as needed basis until completion. Staff will evaluate the effectiveness of this pilot project and assess the potential benefits. Some of the potential benefits could include adapting the FUSE model in-house, contracting with CSH to deliver non-overlapping services or enhancing some elements of the FUSE model to benefit L.A. Care members who are homeless.

5 Actual 2013 FUSE utilization and cost data for 60 patients from five hospitals.

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Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 107.0914

Committee: Board of Governors Chairperson: Thomas Horowitz, D.O.

Issue: Staff recommends approval to fund a $150,000 planning and convening grant to adapt and integrate the existing Multipurpose Senior Services Program into L.A. Care’s managed care network. This program could impact up to 1,000 current L.A. Care members and about 3,400 seniors countywide.

Background: The California’s Coordinated Care Initiative (CCI) promotes an integrated delivery of Medi-Cal medical, behavioral and long-term care services. One of the covered services is the Multipurpose Senior Services Program (MSSP). By October 2014, Los Angeles MSSP beneficiaries will be mandatorily enrolled into one of five Los Angeles County’s CCI health plans that include L.A. Care Health Plan. L.A. Care is relatively new to home and community-based services while some of Los Angeles MSSP programs have little to no experience with managed care. This planning process will help L.A. Care to assess a number of indicators for adaptation and integration and make stakeholder recommendations to the State of California to transition from a federal waiver program to a health plan benefit; fully administered by health plans.

This project will be managed by L.A. Care’s Managed Long-Term Services and Supports department. The project deliverables include developing a document that is vetted by a number of stakeholders, including current MSSP providers, for submission to the State with specific recommendations for the transition of MSSP to a managed care benefit. Staff will also evaluate and disseminate the project results to a wide audience of stakeholders.

Funds will be used to hire an expert consultant, in-house staff, and cover travel and other related expenses.

Alignment with L.A. Care Organizational Goals: This project is consistent with L.A. Care’s mission to expand access to integrated care and provide high quality care to vulnerable and low income populations. MSSP promotes and improves community and public health, and it expands health insurance coverage and benefits by adding care management and purchased services for people over the age of 65 who meet clinical eligibility for nursing facility care. Also the overarching goal of this project meets the triple aim goals of the Affordable Care Act: Improving patient experience and quality of care by increasing access and decreasing wait times, improving population health and reducing per capita health care costs by avoiding unnecessary hospitalizations or institutionalization.

Budget Impact: The 2013-14 fiscal year Community Health Investment Fund (CHIF) budget is $5.0 million, of which $1 million is allocated for ad hoc grants. Only $375,000 of these ad hoc funds has been spent to date with a current balance of $625,000. If this $150,000 request and the other accompanying ad hoc requests totaling $585,000 are approved, the ad hoc balance will be $40,000.

151 Board of Governors MOTION SUMMARY

Motion: To approve up to $150,000 for a planning grant that involves stakeholders to adapt and integrate the existing Multipurpose Senior Services Program (MSSP) into an L.A. Care benefit.

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August 19, 2014

To: Board of Governors

From: Jonathan Freedman, Chief of Strategy, Regulatory and External Affairs Roland Palencia, Director, Community Benefit Programs

Subject: Approval of a $150,000 ad hoc grant to plan for Multipurpose Senior Services Program adaptation and integration into an L.A. Care health plan benefit.

Introduction Staff recommends approval to fund a $150,000 planning and convening grant to adapt and integrate the existing Multipurpose Senior Services Program (MSSP) into L.A. Care’s managed care network. This program could impact up to 1,000 current L.A. Care members and 3,400 seniors countywide.

Funds will be used to hire a facilitator for stakeholder meetings, a project analyst, a project evaluator, and partially fund L.A. Care staff directly involved in the transition project. Funds will also be used for MSSP provider stipends and meeting facilities, and travel expenses.

L.A. Care’s Managed Long-Term Services and Supports (MLTSS) Department will coordinate this planning and convening process, and hire expert consultants to convene and facilitate the meetings, gather information and produce reports.

Background and Rationale The California’s Coordinated Care Initiative (CCI), approved by the Centers for Medicare and Medicaid (CMS) in March 2013, promotes an integrated delivery of Medi-Cal medical, behavioral, and long-term care services. One of the covered services is the Multipurpose Senior Services Program (MSSP); and by October 2014, Los Angeles MSSP beneficiaries will be mandatorily enrolled into one of five Los Angeles CCI health plans that include L.A. Care Health Plan. 1

The Multipurpose Senior Services Program (MSSP) is a federal 1915 (c) home and community- based waiver under California’s Medicaid program. This waiver provides care management and purchased services to people over the age of 65 who meet clinical eligibility for nursing facility care but wish to remain living in their homes and communities. Recommendations for the MSSP

1 The other four CCI health plans are Care 1st, CareMore, Health Net and Molina Healthcare.

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transition from a federal waiver program to a health plan benefit; fully administered by health plans, need to be made to the State of California within 19 months after L.A. Care launches its MSSP offering in October 2014. This transition planning process will engage health plan representatives, MSSP providers and local stakeholders, and this process is scheduled to end by May 2016. 2

Proposed Project L.A. Care Health Plan is new to home and community-based services while Los Angeles MSSP programs have little to no experience with managed care. L.A. Care has not yet begun to offer MSSP services or to determine capabilities required for a successful program transition. This planning project will help L.A. Care assess the following indicators for adaptation and integration:3 (1) the MSSP network adequacy, including the number and types of MSSP providers needed to meet L.A. Care member’s needs; (2) the service delivery capacity of MSSP providers to deliver the range and volume of services needed; provider’s coverage area, hours of operation and ability to serve individuals with differing disabilities and needs; (3) assess the quality of services that help individuals maintain or improve their quality of life by using person-centered techniques and tools; (4) established policies and procedures, including providers’ hiring and credentialing practices that assess qualifications, criminal background checks, performance measures and metrics; deterrents in place to detect and prevent fraud and abuse; (5) workforce competencies such as staff training, cultural and linguistic competency and proficiency as well as the ability to address functional and cognitive impairments, mental illness or behavioral health issues; and (6) member satisfaction protocols that measure patient, family or caregiver experiences.

Project Deliverables By May 2016, L.A. Care’s MLTSS Department will meet the following objectives:

1. Establish project staffing and consultation, protocols, materials and advisory oversight. 2. Incorporate the learnings from other health plans in California in adapting and integrating MSSP care coordination services, 3. Meet with each of the six MSSP providers and key community-based organizations in Los Angeles County to identify a panel of stakeholders representing interests of providers and the consumer. 4. Conduct a telephone survey of each MSSP provider and the leadership of their parent entity to identify challenges and best practices for MSSP model development, as well as any issues that emerge from the survey. 5. Convene monthly meetings with MSSP providers and stakeholder panel (s) to educate stakeholders, brainstorm key operational and policy issues in executing effective coordination with MSSP providers and community organizations. 6. Assist Los Angeles MSSP providers to assess readiness to transition MSSP services into managed care.

2 MSSP providers include: Altamed Health Corporation, Human Services Association, Huntington Memorial Hospital, Jewish Family Services, Partners in Care and SCAN Health Plan. 3 www.resoucesforintegratedcare.com The Lewin Group, Resources for Integrated Care, Resources for Health Plans to Support Coordinated Long-Term Services and Supports, July 17, 2014

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7. Develop a new model of integrated care management for recommendation to the State of California Departments of Health Care Services, Aging and Managed Health Care. 8. Make specific recommendations for the implementation of MSSP as a managed care benefit to be submitted to the State by (DATE). 9. Evaluate and disseminate the project results.

Evaluation With assistance from consultants, L.A. Care staff will determine if key deliverables and milestones have been met in adapting and integrating MSSP into L.A. Care’s managed care network. This includes tracking the number of: · MSSP executives that participate in a telephone survey to identify challenges and best practices for MSSP model, as well as any issues that emerge from the telephone survey, · Organizations and individuals that participate in monthly meetings and the one-day all Los Angeles health plans-MSSP conference, as well as the responses of participants with respect to the utility of these forums. · MSSP provider organizations that agree to transition to the new integrated care management model, as well as any notable obstacles, and the number of presentations and publications during the project period.

Staff will also track the number and type of tools developed during the project to assist MSSP providers with the transition and “lessons learned” from input of participating MSSP providers and stakeholders.

Project participants will be asked about their satisfaction with the project and their assessment of the extent to which the project helped transition MSSP successfully. A project timeline and work plan, evaluation protocol, and tools to disseminate project results will be developed prior to project implementation. MSSP provider organizations will each receive a stipend to cover expenses related to participation in the project.

155 L.A. Care Legislative Matrix Updated as of August 21, 2014

The following are bills being tracked by L.A. Care’s Government Affairs Department. If there are any questions, please contact Timothy Kamermayer, Health Care Policy Specialist, at [email protected] or by telephone at (916) 930-0073.

AB 357 AUTHOR: Pan [D] TITLE: Medi-Cal Children’s Health Advisory Panel SUMMARY: Repeals the Healthy Families Advisory Board and instead renames and recasts the Board as the Medi-Cal Children's Health Advisory Panel to advise the State Department of Health Care Services on matters relevant to all children enrolled in Medi-Cal and their families. Requires the Department to submit a report to the Legislature on the Panel's accomplishments, effectiveness, efficiency, and any recommendations for statutory changes needed to improve the ability of the Panel to fulfill its purpose on or before January 1st, 2018. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 369 AUTHOR: Pan [D] TITLE: Continuity of Care SUMMARY: This bill would require a health care service plan and a health insurer to arrange for the completion of covered services by a nonparticipating provider for a newly covered enrollee and a newly covered insured under an individual health care service plan contract or an individual health insurance policy whose prior coverage was withdrawn from the market between December 1, 2013, and March 31, 2014, inclusive, as specified. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Signed and Chaptered.

AB 468 AUTHOR: Chavez [R] TITLE: Medi-Cal: Nondesignated Public Hospitals SUMMARY: This bill would require nondesignated public hospitals to report and certify specified information for the 2012-13 fiscal year and each fiscal year thereafter. Existing law authorizes a transferring entity, as defined, to make an intergovernmental transfer (IGT) to the state, and authorizes the department to accept all IGTs from a transferring entity for the purpose of providing support for the nonfederal share of risk-based payments to managed care health plans to enable those plans to compensate providers designated by the transferring entity for Medi- Cal health care services and support of the Medi-Cal program. Existing law, with some exceptions, authorizes the state to assess a fee of 20% on each IGT to reimburse the department for the administrative costs of operating the IGT program and for the support of the Medi-Cal program. This bill would provide that the 20% assessment shall not apply to nondesignated public hospitals. The bill would also require the department to pay rate range increases, as defined, to Medi- Cal managed care plans that contract with the department to provide Medi-Cal services in specified counties for the purpose of providing additional payments to nondesignated public hospitals for purposes of equaling the amount of reimbursement the nondesignated public hospital would have received through 156 Timothy Kamermayer, Government Affairs

certified public expenditures under the fee-for-service payment methodology. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Re-referred to Senate Committee on Rules.

AB 485 AUTHOR: Gomez [D] TITLE: In-Home Supportive Services SUMMARY: Changes the implementation date of provisions providing for the assumption of responsibilities by a certain State Authority with regard to wages, benefits, and other terms and conditions of employment for in-home supportive services providers, and responsibilities with regard to meeting and conferring with representatives of supportive services employee organizations over all 58 counties to January 1, 2015. Relates to the Coordinated Care Initiative, Medi-Cal benefits, managed care health care plans, and certain state and county funding. De-links the Statewide Authority from implementation of the Coordinated Care Initiative (CCI) so that the Statewide Authority is permanent regardless of what happens with the CCI; thus, no longer requiring a Cal MediConnect plan be operational. To read the current text of the bill, click here. POSITION: Watch SPONSOR: American Federation of State and County Municipal Employees (AFSCME) DISPOSITION: Removed from Assembly Appropriations Suspense File. Waiting for concurrence with Senate amendments.

AB 505 AUTHOR: Nazarian [D] TITLE: Medi-Cal: Managed Care: Language Assistance Services SUMMARY: This bill would require the department to require all managed care plans contracting with the department to provide Medi-Cal services, except as specified, to provide language assistance services, which includes oral interpretation and translation services, to limited-English-proficient Medi-Cal beneficiaries, as defined. The bill would require the department to determine when a limited-English- proficient population meets the requirement for translation services, as prescribed. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: To Enrollment.

AB 809 AUTHOR: Logue [R] TITLE: Healing Arts: Telehealth SUMMARY: This bill would require the health care provider initiating the use of telehealth to obtain verbal or written consent from the patient for the use of telehealth, as specified. The bill would require that health care provider to document the consent. This bill would declare that it is to take effect immediately as an urgency statute. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: To Enrollment.

AB 1124 AUTHOR: Muratsuchi [D] TITLE: Medi-Cal Reimbursement Rates SUMMARY: Existing law states the intent of the Legislature that the State Department of Health Care Services develop Medi-Cal reimbursement rates for clinical laboratory or 157 Timothy Kamermayer, Government Affairs

laboratory services in accordance with specified criteria. Existing law exempts from compliance with a specified regulation laboratory providers reimbursed pursuant to any payment reductions implemented pursuant to these provisions for 21 months following the date of implementation of this reduction, and requires the department to adopt emergency regulations by July 1, 2014. This bill would instead exempt these laboratory providers from compliance with the specified regulation until July 1, 2015, and would require the department to adopt emergency regulations by June 30, 2016. This bill would declare that it is to take effect immediately as an urgency statute. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Signed and Chaptered.

AB 1310 AUTHOR: Bonta [D] TITLE: Medi-Cal: Telehealth SUMMARY: This bill would prohibit the department from requiring a health care provider licensed in California to be located in California as a condition of Medi-Cal provider enrollment or reimbursement for telehealth services provided to Medi-Cal beneficiaries located in California at the time of service. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: On to Third Reading in Senate.

AB 1522 AUTHOR: Gonzalez [D] TITLE: Paid Sick Days SUMMARY: This bill would enact the Healthy Workplaces, Healthy Families Act of 2014 to provide that an employee who on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days, to be accrued at a rate of no less than one hour for every 30 hours worked. An employee would be entitled to use accrued sick days beginning on the 90th day of employment. The bill would authorize an employer to limit an employee's use of paid sick days to 24 hours or 3 days in each year of employment. The bill would require an employer to provide paid sick days, upon the request of the employee, for diagnosis, care, or treatment of health conditions of the employee or an employee's family member, or for leave related to domestic violence, sexual assault, or stalking. The bill would prohibit an employer from discriminating or retaliating against an employee who requests paid sick days. The bill would require employers to satisfy specified posting and notice and recordkeeping requirements. The bill would define terms for those purposes and make conforming changes. The bill would require the Labor Commissioner to administer and enforce these requirements, including the promulgation of regulations, and the investigation, mitigation, and relief of violations of these requirements. The bill would authorize the Labor Commissioner to impose specified administrative fines for violations and would authorize the commissioner or the Attorney General to recover specified civil penalties against an offender on behalf of the aggrieved, as well as attorney's fees, costs, and interest. The bill would specify that it does not apply to employees covered by a collective bargaining agreement that provides for paid sick days, nor lessen any other obligations of the employer to employees. The bill would not apply to employees in the construction industry covered by a collective bargaining agreement if the agreement contains specified terms and was either entered into before January 1, 2015, or expressly

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waives the requirements of the bill in clear and unambiguous terms. The bill would apply to certain public authorities established to deliver in-home supportive services, except where a collective bargaining agreement provides for an incremental wage increase sufficient to satisfy the bill's requirements for accrual of sick days. To read the current text of the bill, click here. POSITION: Watch SPONSOR: N/A DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 1552 AUTHOR: Lowenthal [D] TITLE: Community-Based Adult Services: Adult Day Health Care SUMMARY: Establishes the Community-Based Adult Services (CBAS) program as a Medi-Cal benefit and would specify eligibility requirements for participation in the CBAS program. Requires CBAS providers be licensed as ADHC centers and certified by the California Department of Aging as CBAS providers. Requires CBAS providers to meet specified licensing requirements and to provide care in accordance with specified regulations. Would take effect immediately as an urgency statute. To read the current text of the bill, click here. POSITION: Watch, LHPC – Watch, CAHP – Watch SPONSOR: California Association for Adult Day Services DISPOSITION: Read Second time in Senate. On to Third Reading.

AB 1559 AUTHOR: Pan [D] TITLE: Newborn Screening Program SUMMARY: This bill would, until January 1, 2018, require the department to expand statewide screening of newborns to include screening for adrenoleukodystrophy (ALD). By expanding the purposes for which moneys from the fund may be expended, this bill would make an appropriation. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: The Myelin Project DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 1578 AUTHOR: Pan [D] TITLE: Health: State Health Benefit Review Program (CHBRP) SUMMARY: This bill would request the University of California to include essential health benefits and the impact on the California Health Benefit Exchange in the analysis prepared under the program. The bill would further request that the University of California assess legislation that impacts health insurance benefit design, cost sharing, premiums, and other health insurance topics. The bill would request that the university provide the analysis to the appropriate policy and fiscal committees of the Legislature not later than 60 days, or in a manner and pursuant to a timeline agreed to by the Legislature and the program, after receiving the request, as specified. The bill would also extend the date by which the university is requested to report to the Governor and the Legislature on the implementation program until January 1, 2016. This bill would extend until June 30, 2016, the operative date of the program and the fund, including the annual charge on health care service plans and health insurers. The bill would repeal the above-described provisions as of June 30, 2016.. To read the current text of the bill, click here. POSITION: Support, CAHP – Support SPONSOR: DISPOSITION: Re-referred to Senate Committee on Rules.

159 Timothy Kamermayer, Government Affairs

AB 1877 AUTHOR: Cooley [D] TITLE: State Vision Care Access Council SUMMARY: This bill would establish the California Vision Care Access Council within state government and would require that the Council be governed by the executive board that governs the California Health Benefit Exchange. The bill would require the Council to establish an interagency agreement with the California Health Benefit Exchange allowing the Council to utilize the executive, administrative, and other related resources of the Exchange and would prohibit the use of specified Exchange funds for purposes of the Council. The bill would require the Council to construct, manage, and maintain an Internet Web site to inform consumers about individual and employer-based vision plans offered by participating carriers. The bill would require the Council to work with the Exchange to establish a direct link between that Internet Web site and the Internet Web site of the Exchange. The bill would require the Council to refer consumer questions regarding health care eligibility and enrollment options to the Exchange and to licensed insurance agents, as specified. This bill would impose specified requirements on participating carriers and would also require the Council to establish other requirements for carrier participation and the standards and criteria for participating vision plans that are in the best interests of individuals and employers eligible to purchase coverage through the Exchange. The bill would require participating vision plans to be issued on a guarantee issue basis without preexisting condition provisions and would require a participating carrier to make available to consumers an electronic directory of contracting vision care providers. The bill would also enact other related provisions. This bill would create the California Vision Care Access Trust Fund, the moneys of which would be available to the board for purposes of the bill's provisions upon appropriaton by the Legislature, would authorize the Council to assess a charge on participating vision plans that is reasonable and necessary to support the development, operations, and prudent cash management of the Council, and would make the implementation of the bill's provisions contingent on a determination by the board that sufficient moneys exist in the fund to implement the bill's provisions. The bill would prohibit General Fund moneys from being used for any of these purposes and would require that any costs associated with the implementation of these provisions be paid from the California Vision Care Access Trust Fund. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 1898 AUTHOR: Brown [D] TITLE: Public Health Records: Reporting: HIV/AIDS SUMMARY: Existing law provides exceptions to the above-described requirements on the disclosure of information regarding public health records relating to HIV or AIDS, and authorizes specified disclosures of that information for the purpose of enhancing the completeness of HIV/AIDS, tuberculosis, and sexually transmitted disease coinfection reporting to the federal Centers for Disease Control and Prevention (CDC), including authorizing local public agency tuberculosis control staff to disclose the information to certain state public health agency staff who may further disclose the information to the CDC, as specified. This bill would require any disclosure authorized under these provisions to include only the information necessary for the purpose of that disclosure and to be made upon the agreement that the information will be kept confidential. This bill would prohibit specified disclosures from being made without written authorization. The bill would include

160 Timothy Kamermayer, Government Affairs

hepatitis B, hepatitis C, and meningococcal infection for HIV/AIDS coinfection reporting to the CDC. The bill would additionally authorize, for purposes of the investigation, control, or surveillance of HIV and its coinfection with hepatitis B, hepatitis C, and meningococcal infection, local public health agency communicable disease staff to further disclose the information to state public health agency staff, who may further disclose the information to the CDC, as specified. Existing law authorizes local public health agency sexually transmitted disease control and tuberculosis control staff to disclose the HIV/AIDS-related information to state or local public health agency sexually transmitted disease control and tuberculosis control staff, the HIV-positive person, or his or her health care provider, for the purpose of facilitating appropriate medical care and treatment of persons coinfected with HIV, tuberculosis, syphilis, gonorrhea, or chlamydia. This bill would additionally authorize any local public health agency sexually transmitted disease control, communicable disease control, and tuberculosis staff to further disclose that information to state or local public health agency sexually transmitted disease control, communicable disease control, and tuberculosis staff for the purpose of facilitating appropriate medical care and treatment of persons coinfected with HIV, hepatitis B, hepatitis C, or meningococcal infection, as specified. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 1917 AUTHOR: Gordon [D] TITLE: Outpatient Prescription Drugs: Cost Sharing SUMMARY: With respect to a health care service plan contract or health insurance policy that is subject to those annual out-of-pocket limits, and is issued, amended, or renewed on or after January 1, 2016, for an individual contract or policy, or July 1, 2015, for a group contract or policy, this bill would require that the copayment, coinsurance, or any other form of cost sharing for a covered outpatient prescription drug for an individual prescription not exceed 1/12 of the annual out-of-pocket limit applicable to self-only coverage for a supply of up to 30 days of a drug that does not have a time-limited course of treatment or that has a time-limited course of treatment of more than 3 months. For a drug that has a time-limited course of treatment of 3 months or less, the bill would require that the copayment, coinsurance, or other form of cost sharing not exceed 1/2 of the annual out-of-pocket limit applicable to self-only coverage for the time-limited course of treatment. The bill would specify that its provisions also apply to specialized plan contracts and policies that offer essential health benefits, as specified. To read the current text of the bill, click here. POSITION: Watch, LHPC – Watch, CAHP – Oppose SPONSOR: Health Access DISPOSITION: In Senate. On to Third Reading.

AB 1962 AUTHOR: Skinner [D] TITLE: Dental Plans: Medical Loss Ratios: Reports SUMMARY: This bill would require health care services plans that issue, sell, renew, or offer specialized dental health care service plan contracts and health insurers that issue, sell, renew, or offer specialized dental health insurance policies to, no later than September 30, 2015, and each year thereafter, file a report, to be known as the MLR annual report, with the departments that contains the same information required in the 2013 federal Medical Loss Ratio (MLR) Annual Reporting Form. The bill would require the Department of Managed Health Care or the Department

161 Timothy Kamermayer, Government Affairs

of Insurance, as applicable and, if a financial examination is determined to be necessary to verify the representations in the MLR annual report, to provide the health care service plan or health insurer with a notification before conducting the examination, and would require the plan or insurer to electronically submit to the appropriate department specified requested records, books, and papers. The bill would declare the intent of the Legislature that the data reported pursuant to these provisions be considered by the Legislature in adopting a medical loss ratio standard for health care service plans and specialized health insurance policies that cover dental services that would take effect no later than January 1, 2018. The bill would authorize the Department of Managed Health Care and the Department of Insurance, until January 1, 2018, to issue guidance to health care service plans and health insurers of specialized health insurance policies subject to these provisions regarding compliance with these provisions, as specified. Because a willful violation of the bill's requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: Recently passed Senate Appropriations. On to Third Reading.

AB 1967 AUTHOR: Pan [D] TITLE: Drug Medi-Cal SUMMARY: This bill would require the department to promptly notify the behavioral health director, or his or her equivalent, of each county that currently contracts with a certified provider for Drug Medi-Cal services if the department has commenced or concluded a preliminary criminal investigation, as defined, of the provider. This bill would require that any communication between the department and a county specific to the commencement or conclusion of a preliminary criminal investigation is confidential and not subject to disclosure pursuant to, among other things, the California Public Records Act. This bill would prohibit a county from taking any adverse action against a provider solely upon the preliminary criminal information disclosed to the county. This bill would authorize the department to notify the county if a preliminary criminal investigation of a county owned or operated program is commenced or concluded by the department. The bill would also make technical, nonsubstantive changes to the definition of Drug Medi-Cal reimbursable services. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: To Assembly for Concurrence.

AB 2059 AUTHOR: Muratsuchi [D] TITLE: Medical Records: Electronic Delivery SUMMARY: This bill would require a health care provider, as defined, to provide an electronic copy of an electronic medical record or electronic health record, when an electronic a copy is requested, if the medical record exists in digital or electronic format and the medical record can be delivered electronically. The bill would extend the period following presentation of the written request and authorization after which a health care provider that fails to make the records available may be subject to reasonable expenses, including court costs, incurred to enforce these provisions from 5 days to 20 business days. The bill would additionally authorize a health care provider that provides electronic copies of medical records to charge the person whose written request required the availability of the records for the reasonable costs incurred to

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provide the electronic copies, as specified. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: On Third Reading in Senate.

AB 2088 AUTHOR: Hernandez [D] TITLE: Health Insurance: Minimum Value: Large Group Market SUMMARY: Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires that health benefit plans issued by health insurers and health care service plans in the small group market and the individual market comply with specified requirements. Existing law defines a health benefit plan for the purpose of health benefit plans issued by health insurers to exclude a policy or certificate of specified disease or hospital confinement indemnity if the insurer certifies to the commissioner that the policy is being offered as supplemental health insurance and not as a substitute for essential health benefits. Existing law requires an insurer issuing these policies in the small group market or the individual market to require that the persons to be covered are covered by coverage that is not designed to serve as supplemental coverage. This bill would extend that requirement to a health care service plan that offers, amends, or renews a group health plan contract and an insurer issuing a policy, except a health care service plan or insurer issuing a specialized health care service plan or policy, that does not provide 60% minimum value in the large group market. The bill would require a health care service plan and an insurer, except a health care service plan or insurer issuing a specialized health care service plan or policy, issuing those plan contracts and policies in the large group market to file a certification with the director or commissioner stating that the policies are being offered or marketed as supplemental health insurance and not as a substitute for minimum essential coverage. This bill would exempt an insurer that is subject to specified disclosure requirements from these provisions. By expanding the scope of an existing crime, this bill would impose a state- mandated local program. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 2177 AUTHOR: Achadjian [D] TITLE: Santa Barbara San Luis Obispo Health Authority SUMMARY: Existing law authorizes the Board of Supervisors of the County of Santa Barbara to order the formation of a health authority and authorizes the Board of Supervisors of the County of San Luis Obispo to authorize the provision of medical services by the authority within the County of San Luis Obispo. Existing law authorizes the Board of Supervisors of either the County of San Luis Obispo or the County of Santa Barbara, or the board of directors of the authority, to terminate the authority's operation of a health care system or systems in the County of San Luis Obispo, as specified. Existing law authorizes the Board of Supervisors of the County of Santa Barbara to order the dissolution of the authority by declaring that there is no need for the authority to function in the county. This bill would instead authorize the boards of supervisors of the County of Santa Barbara and the County of San Luis Obispo to order the dissolution of the authority, and would require

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both boards of supervisors to order the dissolution of the authority in order for the dissolution to become effective. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: DISPOSITION: Enrolled.

AB 2170 AUTHOR: Mullin [D] TITLE: Joint powers Authorities: Common Powers SUMMARY: Existing law provides that 2 or more public agencies, by agreement, may form a joint powers authority to exercise any power common to the contracting parties, as specified. AB 2170 provides that the parties to the agreement may exercise any power common to the contracting parties, including, but not limited to, the authority to levy a fee, assessment, or tax, as specified. To read the current text of the bill, click here. POSITION: Watch SPONSOR: Author DISPOSITION: Enrolled.

AB 2217 AUTHOR: Melendez [R] TITLE: Pupil and Personnel Health: AEDs SUMMARY: Existing law authorizes a school district or school to provide a comprehensive program in first aid or cardiopulmonary resuscitation training, or both, to pupils and employees, and requires the program to be developed using specified guidelines. This bill would authorize a public school to solicit and receive non-state funds to acquire and maintain an automated external defibrillator (AED). The bill would provide that the employees of the school district are not liable for civil damages resulting from certain uses, attempted uses, or non-uses of an AED, except as provided. The bill would provide that a public school or school district that complies with certain requirements related to an AED is not liable for any civil damages resulting from any act or omission in the rendering of the emergency care or treatment, except as provided. To read the current text of the bill, click here. POSITION: Watch SPONSOR: Author DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 2325 AUTHOR: Perez J [D] TITLE: Medi-Cal: CommuniCal SUMMARY: Requires DHCS to establish the Medi-Cal Patient-Centered Communication program (CommuniCal), to be administered by a 3rd-party administrator, to, commencing July 1, 2015, provide and reimburse for medical interpretation services to Medi-Cal beneficiaries who are limited English proficient (LEP). Requires the department to be the certifying body for CommuniCal certified medical interpreters (CCMIs), and to authorize other interpreters meeting specified requirements, including a screening test, to provide CommuniCal services. DHCS must (1) develop, monitor, and evaluate interpreter competency, qualifications, training, certification, and continuing education, (2) by September 1, 2015, approve an examination and certification process to test and certify the competency of medical interpreters, and (3) maintain a registry of those persons who meet the requirements to provide CommuniCal services. CommuniCal interpreters would have the right to form, join, and participate in the activities of a labor organization of their own choosing for the purpose of representation of specified employer- employee matters. CommuniCal interpreters would not be considered state

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employees for purposes of the bill, but would have the right to be represented by an exclusive labor organization of their own choosing for the purpose of collective bargaining with the state on matters of mutual concern, including their base reimbursement rate. Upon application by petition, authorization cards, or union membership cards of a labor organization adequately showing that a majority of CommuniCal interpreters in the state desire to be represented exclusively by that labor organization, and no other labor organization is currently certified as the exclusive representative, the Public Employment Relations Board shall certify and grant exclusive representation to that labor organization, and would establish other election procedures to be administered by that board. The bill would provide that, after the certification of a labor organization, the state shall approve and have deducted, upon authorization in the case of dues deduction, from the appropriate reimbursement or other payment to the members of the labor organization the monthly amount of dues or service fees as certified by an executive officer of the labor organization, and shall transmit the amount to the treasurer of the labor organization. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: Author DISPOSITION: In Senate. On to Third Reading.

AB 2418 AUTHOR: Bonilla [D] TITLE: Health Care Coverage: Prescription Drug Refills SUMMARY: This bill would require a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2016, that provides coverage for prescription drug benefits to permit and apply a prorated daily cost-sharing rate to refills of prescriptions that are dispensed by a participating pharmacy for less than the standard refill amount if the prescriber or pharmacist indicates that the refill is in the best interest of the enrollee or insured and is for the purpose of synchronizing the refill dates of the enrollee's or insured's medications, provided that certain requirements are satisfied. The bill would also require a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2016, that provides coverage for prescription drug benefits to allow for the early refill of covered topical ophthalmic products at 70% of the predicted days of use. Because a willful violation of the bill's requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program. To read the current text of the bill, click here. POSITION: Watch, LHPC – Oppose, CAHP – Watch SPONSOR: California Healthcare Institute, California Pharmacists Association DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 2533 AUTHOR: Ammiano [D] TITLE: Health Care Coverage: Noncontracting Providers SUMMARY: This bill would require a health care service plan or health insurer that contracts for alternative rates of payment to arrange for, or assist in arranging for, an enrollee or insured who is unable to obtain a medically necessary covered service to receive the care or service from a noncontracting provider in an accessible and timely manner. The bill would prohibit the health care service plan or health insurer from imposing copayments, coinsurance, or deductibles on an enrollee or insured that exceed what the enrollee or insured would pay for services from a contracting provider. The bill would also prohibit a noncontracting provider that agrees to provide services under these provisions from billing an enrollee or insured for any amount in excess of the in-network reimbursement rate, except as specified. The bill would require a health

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care service plan or health insurer to report annually to the respective department on the occurrences of denial of care and complaints received by the plan or insurer regarding accessible and timely access to care. The bill would require each department to review those complaints and any complaints received by the department regarding accessibility or timeliness of care and annually prepare and post on its Internet Web site a report of the information received. This bill would authorize the Insurance Commissioner to investigate and take enforcement action against insurers regarding noncompliance with these provisions and would authorize the commissioner to assess administrative penalties for violations, as specified. The bill would require the commissioner, on or before January 1, 2016, to promulgate related regulations and review the regulations every 3 years to determine if the regulations should be updated. To read the current text of the bill, click here. POSITION: Watch, LHPC – Oppose, CAHP – Oppose SPONSOR: N/A DISPOSITION: Recently Amended in Senate. On to Third Reading.

AB 2546 AUTHOR: Salas [D] TITLE: Kern County Hospital Authority SUMMARY: Authorizes the board of supervisors of the County of Kern to establish, by ordinance, the Kern County Hospital Authority to manage, administer, and control the Kern Medical Center and for the operation of additional programs, clinics and other facilities, care organizations, physician practice plans, and delivery systems that may be affiliated or consolidated with the medical center. Authorizes the establishment of the authority to negotiate and enter into contracts to provide or arrange, or provide directly, on a fee-for-service, capitated, or other basis, health care services to specified individuals. Requires the board of supervisors, in the enabling ordinance, to establish the terms and conditions of the transfers to the authority from the county, which includes, among other things, any transfer of real and personal property. Requires the authority to be governed by a board of governors, and would require the board of supervisors, in the enabling ordinance, to specify, among other things, the number of members and composition of membership of the board of governors and the qualifications of members. Grants the authority, among other powers, the duties, privileges, immunities, rights, liabilities, and limitations of a local unit of government within the state. The bill would specify that the transfer to the authority of the management, administration, and control of the medical center does not affect the eligibility of the county for, but authorizes the authority to participate in and receive, various sources of funding, as specified, including various Medi-Cal programs. Requires the board of supervisors to adopt, and the authority to implement, a personnel transition plan that requires specified actions, including ongoing communication to employees and recognized employee organizations regarding the impact of the transition on certain existing employees and employee classifications. Authorizes the board of supervisors to find and declare that the authority ceases to exist, and in that event, the bill would require the board of supervisors to provide for the disposition of the authority's assets, obligations, and liabilities, as specified. Existing law, the County Employees Retirement Law of 1937, authorizes counties to establish retirement systems, as specified, in order to provide pension benefits to county, city, and district employees. Existing law defines a district for these purposes as a district, formed under the laws of the state, located wholly or partially within the county other than a school district. This bill would include the authority within the definition of district and would authorize employees of the authority to participate in the Kern County Employees' Retirement Association, as specified. This bill 166 Timothy Kamermayer, Government Affairs

would incorporate additional changes to Section 31468 of the Government Code proposed by SB 673 that would become operative if this bill and SB 673 are both enacted and this bill is enacted last. To read the current text of the bill, click here. POSITION: Watch, LHPC – Watch, CAHP – N/A SPONSOR: N/A DISPOSITION: Sent to Assembly for Concurrence.

AB 2577 AUTHOR: Cooley [D] TITLE: Medi-Cal: Ground Emergency Transport Services SUMMARY: Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law authorizes certain ground emergency medical transportation providers to receive supplemental Medi-Cal reimbursement in addition to the rate of payment the provider would otherwise receive for those services. Existing law provides that participation in the supplemental reimbursement program by an eligible provider is voluntary, and requires the nonfederal share of the supplemental reimbursement to be paid only with funds from specified governmental entities. This bill would include, as eligible providers, those that provide ground emergency medical transportation to Medi- Cal fee-for-service or managed care beneficiaries. The bill would also authorize the governmental entities to include, as the nonfederal share of expenditures for ground emergency medical transportation services, and in collaboration with the department, voluntary intergovernmental transfers (IGTs) that conform with federal law. The bill would provide specific timeframes for the implementation of these provisions. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: N/A DISPOSITION: In Senate. On Third Reading.

AB 2612 AUTHOR: Dababneh [D] TITLE: Medi-Cal SUMMARY: Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing federal law prohibits federal financial participation for care or services provided to inmates of a public institution. Existing law authorizes the department, subject to federal approval, to create a health home program for enrollees with chronic conditions, as prescribed. This bill would require the department, in implementing that program, to request a waiver of federal law to authorize the state to claim federal financial participation for health home services provided to individuals, who are otherwise eligible under the health home program and who are state or county inmates in their last 30 days in custody, by a provider or team of providers, as specified, to ensure coordination of care and reduce gaps in care. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: N/A DISPOSITION: Recently Amended in Senate. On to Third Reading.

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SB 18 AUTHOR: Leno [D] TITLE: Medi-Cal Renewal SUMMARY: This bill would require the State Department of Health Care Services to accept contributions by private foundations in the amount of at least $6,000,000 for the purpose of providing Medi-Cal renewal assistance payments, as specified. The bill would also appropriate $6,000,000 from the Healthcare Outreach and Medi-Cal Enrollment Account and $6,000,000 from the Federal Trust F und, to be available for encumbrance or expenditure until December 31, 2016, and authorize the use of previously appropriated funds in that account for this purpose. The bill would require the department to seek federal matching funds for the contributions to the extent permissible for training, testing, certifying, supporting, and compensating persons and entities providing renewal assistance and for any other permissible renewal assistance related activities, and to seek all necessary federal approvals for purposes of obtaining federal funding. The bill would also require the department, in collaboration with the County Welfare Directors Association and legal services organizations, to develop renewal assistance training for employees of community- based organizations, as specified. To read the current text of the bill, click here. POSITION: L.A. Care - Support, CAHP – Watch SPONSOR: N/A DISPOSITION: Passed Assembly. On to Concurrence in Senate.

SB 20 AUTHOR: Leno [D] TITLE: Individual Health Care Coverage: Enrollment Periods SUMMARY: Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan or health insurer, on and after October 1, 2013, to offer, market, and sell all of the plan's insurer's health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in each service area in which the plan or insurer provides or arranges for the provision of health care services, as specified, but requires plans and insurers to limit enrollment in individual health benefit plans to specified open enrollment and special enrollment periods. Existing law requires a plan or insurer to provide an initial open enrollment period from October 1, 2013, to March 31, 2014, inclusive, and annual enrollment periods for plan years on or after January 1, 2015, from October 15 to December 7, inclusive, of the preceding calendar year. This bill would require a plan or insurer to provide an annual enrollment period for the policy year beginning on January 1, 2015, from November 15, 2014, to February 15, 2015, inclusive. To read the current text of the bill, click here. POSITION: Watch, CAHP – Support SPONSOR: N/A DISPOSITION: Signed and Chaptered.

SB 508 AUTHOR: Hernandez E [D] TITLE: Medi-Cal Eligibility SUMMARY: This bill would codify the income eligibility thresholds established by the department and would make other related and conforming changes. (2) Existing law requires the department to implement specified provisions of federal law to provide Medi-Cal benefits to an individual who is in foster care on his or her 18th birthday until his or her 26th birthday, as specified. This bill would instead require

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the department to implement those provisions to provide Medi-Cal benefits to an individual until his or her 26th birthday if he or she was in foster care on his or her 18th birthday or such higher age the state has elected under federal law. The bill would also require the department to exercise its option under federal law to extend Medi-Cal benefits to independent foster care adolescents, as specified. This bill would require the department to exercise its option under federal law to extend Medi-Cal benefits to individuals under 21 years of age placed in foster homes or private institutions and individuals under 21 years of age for whom a specified adoption agreement is in effect. The bill would require that all of the income considered when determining an individual's eligibility under these provisions be disregarded. Because counties are required to make eligibility determinations and this bill would expand Medi-Cal eligibility, the bill would impose a state-mandated local program. This bill would delete the requirement that the parent or caretaker relative meet the deprivation requirements. To read the current text of the bill, click here. POSITION: Watch, CAHP – Watch SPONSOR: N/A DISPOSITION: In Assembly. On to Third Reading.

SB 857 AUTHOR: Senate Budget & Fiscal Committee TITLE: Health Services SUMMARY: 2014 Budget Trailer Bill language related to Health services. Includes fines for unauthorized use of medical information, Health Benefit Exchange regulations, community-based consumer assistance, ombudspersons, medical and mental health benefits parity, alcoholism and drug abuse recovery program licensure and regulation, drug treatments for person with HIV, AIDS Drug Assistance Program eligibility, tuberculosis control program funding, Healthcare Workforce Policy Commission, State Medical Contract program, HMOs and health insurance, and Medi-Cal eligibility. To read the current text of the bill, click here. POSITION: Watch SPONSOR: N/A DISPOSITION: Enacted.

SB 870 AUTHOR: Senate Budget & Fiscal Committee TITLE: Health Services SUMMARY: 2014 Budget Trailer Bill language related to Health services. Includes outreach for HIV and Hepatitis C screenings and related health care, primary care or family residency programs contracting, school district mobile vision care services, behavioral health treatment under Medi-Cal, Medi-Cal prescription drug utilization data, PACE organization capitation rates, utilization of fee-for-service and managed care settings under Medi-Cal, and electronic medical records technical assistance funding under the Medi-Cal health information technology plan. To read the current text of the bill, click here. POSITION: Watch SPONSOR: N/A DISPOSITION: Enacted.

SB 873 AUTHOR: Senate Budget & Fiscal Committee TITLE: Human Services SUMMARY: Provides for a civil action to recoup the costs of the Department of Social Services taking over of a licensed facility for the care of the elderly. Requires a county welfare or probation department to be responsible for the care and placement of a

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child through an approved relative caregiver funding option program. Extends the limitation on foster care rates under the AFDC-FC program. Relates to CalWORKs eligibility. Updates hours under the In-Home Supportive Service Program. Increases appropriations. To read the current text of the bill, click here. POSITION: Watch SPONSOR: N/A DISPOSITION: In Assembly. On to Third Reading.

SB 878 AUTHOR: Senate Budget & Fiscal Committee TITLE: In-Home Support Services SUMMARY: Expresses the intent of the Legislature to enact legislation that would make statutory changes necessary to eliminate a specified percentage across-the-board reduction to in-home supportive services hours imposed by the settlement of specified court cases. To read the current text of the bill, click here. POSITION: Watch SPONSOR: N/A DISPOSITION: In Assembly. On to Third Reading.

SB 959 AUTHOR: Hernandez [D] TITLE: Health Care Coverage SUMMARY: Amends existing law requiring a health care service plan and a health insurer to consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered small employer plans, and to also consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered individual market plans. Requires that the index rate also be adjusted based on Exchange user fees. Makes changes to the small group market. Requires providing certain information. To read the current text of the bill, click here. POSITION: Watch SPONSOR: N/A DISPOSITION: On Assembly Consent Calendar. On to Third Reading.

SB 964 AUTHOR: Hernandez E [D] TITLE: Health Care Service Plans: Timeliness: Medical Surveys SUMMARY: This bill would authorize DMHC to develop standardized methodologies to be used by plans in making the reports on compliance with the timeliness standards, as specified, and would make the development and adoption of those methodologies exempt from the Administrative Procedure Act until January 1, 2020. The bill would require DMHC to annually review information regarding compliance with the timeliness standards and to post its findings from the reviews, and any waivers or alternative standards approved by DMHC, on its Internet Web site. The bill would also require a health care service plan, as part of the annual reports, to submit data regarding network adequacy to DMHC, as specified, and would require DMHC to review that data for compliance with the Knox-Keene Act. The bill would require, if DMHC requests additional information to be reported, that the department provide health care service plans with notice of the change by November 1 of the year prior to the change. The bill would also require a health care service plan that provides services to Medi-Cal beneficiaries to provide the report data to the State Department of Health Care Services. Because a violation of the requirements imposed on health care service plans would be a crime, the bill would impose a state-mandated local program. Existing law provides for the Medi- Cal program, which is administered by the State Department of Health Care Services (DHCS), under which qualified low-income individuals receive health care

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services. One of the methods by which Medi-Cal services are provided is pursuant to contracts with various types of managed health care plans. Existing law requires DHCS to conduct annual medical audits of specified managed care plans and requires that these reviews be scheduled and carried out jointly with reviews carried out pursuant to the Knox-Keene Act. The Knox-Keene Act requires DMHC to periodically conduct an onsite medical survey of the health delivery system of each health care service plan and exempts a plan that provides services solely to Medi- Cal beneficiaries from the survey upon submission to DMHC the medical audit conducted by DHCS as part of the Medi-Cal contracting process. This bill would eliminate that exemption and would require DMHC to coordinate the surveys conducted with respect to Medi-Cal managed care plans with DHCS, to the extent possible, provided that the coordination does not result in a delay of the surveys or the failure of DMHC to conduct the surveys. This bill would also require DHCS to publicly report its findings of finalized medical audits as soon as possible, as specified, and to share those findings and other information with respect to Knox- Keene plans with DMHC. The bill would specify that any preliminary audit findings shared with DMHC under this provision would be exempt from disclosure under the California Public Records Act. To read the current text of the bill, click here. POSITION: Watch, LHPC – Oppose, CAHP – Oppose SPONSOR: Health Access DISPOSITION: Recently Amended in Assembly. On to Third Reading.

SB 972 AUTHOR: Torres [D] TITLE: State Health Benefit Exchange: Board: Membership SUMMARY: Amends existing law regarding the qualifications for Board membership of the State Health Benefit Exchange. Adds marketing of health insurance products, information technology system management, management information systems, and enrollment counseling assistance, with priority to cultural and linguistic competency, to the list of areas of expertise. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Signed and Chaptered.

SB 1000 AUTHOR: Monning [D] TITLE: Public Health: Sugar-Sweetened Beverages: Warnings SUMMARY: This bill would establish the Sugar-Sweetened Beverages Safety Warning Act, which would prohibit a person from distributing, selling, or offering for sale a sugar-sweetened beverage in a sealed beverage container, or a multipack of sugar- sweetened beverages, in this state unless the beverage container or multipack bears a specified safety warning, as prescribed. The bill also would require every person who owns, leases, or otherwise legally controls the premises where a vending machine or beverage dispensing machine is located, or where a sugar-sweetened beverage is sold in an unsealed container to place a specified safety warning in certain locations, including, on the exterior of any vending machine that includes a sugar-sweetened beverage for sale. To read the current text of the bill, click here. POSITION: Watch SPONSOR: California Black Health, California Center for Public Health Advocacy, CMA, Latino Coalition for a Healthy California DISPOSITION: Failed Assembly Health. Granted reconsideration.

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SB 1002 AUTHOR: De Leon [D] TITLE: Medi-Cal: Redetermination SUMMARY: This bill would also require the State Department of Health Care Services to seek any federal waivers necessary to use eligibility information of certain individuals who have been determined eligible for the CalFresh program to redetermine their eligibility for Medi-Cal. The bill would similarly require the State Department of Social Services to seek any federal waivers necessary to use eligibility information of individuals who have been determined eligible for the Medi-Cal program to determine or redetermine their eligibility for CalFresh eligibility. The bill would require the State Department of Social Services to consult with stakeholders in the implementation of this provision and would authorize the State Department of Social Services to implement this provision by means of all-county letters or similar instructions. To read the current text of the bill, click here. POSITION: Watch, LHPC – Support, CAHP – Watch SPONSOR: California Food Policy Advocates, WCLP DISPOSITION: Passed Assembly. Sent for Concurrence with Senate.

SB 1004 AUTHOR: Hernandez [D] TITLE: Health Care: Palliative Care SUMMARY: This bill would require the department to develop a palliative care benefit under the Medi-Cal program. The bill would require that authorized providers include licensed hospice agencies and home health agencies licensed to provide hospice care, subject to criteria developed by the department for provider participation. This bill would require the department, to the extent practicable, to structure the delivery of the palliative care benefit in a manner that is projected to be cost neutral to the General Fund on an ongoing basis. The bill would also require the department, before implementing the benefit, to provide the fiscal and appropriate policy committees of the Legislature with estimates of costs and projected savings associated with providing the benefit. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Recently Amended in Assembly. On to Third Reading.

SB 1052 AUTHOR: Torres [D] TITLE: Health Care Coverage SUMMARY: This bill would require a health care service plan or health insurer that provides prescription drug benefits and maintains one or more drug formularies to post those formularies on its Internet Web site and update that posting with changes on a monthly basis. The bill would require the departments to jointly develop a standard formulary template by January 1, 2017, and would require plans and insurers to use that template to display formularies, as specified. The bill would make other related conforming changes. This bill would require the board of the Exchange to ensure that its Internet Web site provides a direct link to the formularies for each qualified health plan offered through the Exchange that are posted by plans and insurers pursuant to the bill's provisions. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Recently Amended in Assembly. On to Third Reading.

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SB 1053 AUTHOR: Mitchell [D] TITLE: Health Care Coverage: Contraceptives SUMMARY: This bill would require a health care service plan contract or health insurance policy issued, amended, or renewed on or after January 1, 2016, to provide coverage for women for all prescribed and FDA-approved female contraceptive drugs, devices, and products, as well as voluntary sterilization procedures, contraceptive education and counseling, and related followup services. The bill would prohibit a nongrandfathered plan contract or health insurance policy from imposing any cost- sharing requirements or other restrictions or delays with respect to this coverage, as specified. The bill would include Medi-Cal managed plans, as specified, in the definition of a health care service plan for purposes of these provisions. The bill would retain the provision authorizing a religious employer to request a contract or policy without coverage of FDA-approved contraceptive methods that are contrary to the employer's religious tenets. Because a willful violation of the bill's requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program. The bill would require utilization controls for family planning services for Medi-Cal managed care plans to be subject to the cost- sharing requirements described above. To read the current text of the bill, click here. POSITION: Watch, LHPC – Oppose, CAHP – Oppose SPONSOR: National Health Law Program, California Family Health Council DISPOSITION: Passed Assembly. On to Concurrence with Senate.

SB 1093 AUTHOR: Liu[D] TITLE: Developmental Services: Regional Centers: Services SUMMARY: Amends the Lanterman Developmental Disabilities Services Act. Requires regional centers to provide independent living skills services to an adult consumer. Requires performance objectives be designed to develop services and supports to include specified services and supports. Requires certain actions, if a regional center is placed on probation. Provides required data. Requires an annual report by such center and the placement of the report on its Internet Web site. To read the current text of the bill, click here. POSITION: Watch SPONSOR: DISPOSITION: Enrolled.

SB 1161 AUTHOR: Beall [D] TITLE: Drug Medi-Cal SUMMARY: Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing federal law prohibits federal financial participation for care or services provided to patients in an institution for mental diseases (IMD). Existing law establishes the Drug Medi-Cal Treatment Program (Drug Medi-Cal) under which the department is authorized to enter into contracts with counties for various drug treatment services for Medi-Cal recipients, or is required to directly arrange for these services if a county elects not to do so. This bill would authorize the department to seek federal approval to obtain federal financial participation for services provided by IMDs, which are otherwise excluded from federal financial participation under federal law. To read the current text of the bill, click here. POSITION: Watch

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SPONSOR: DISPOSITION: Recently Amended in Assembly. On to Third Reading.

SB 1182 AUTHOR: Leno [D] TITLE: Health Care Coverage Rate Review SUMMARY: Existing law, the federal Patient Protection and Affordable Care Act (PPACA), requires the United States Secretary of Health and Human Services to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage in which health insurance issuers submit to the secretary and the relevant state a justification for an unreasonable premium increase prior to implementation of the increase. Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan or health insurer in the individual, small group, or large group markets to file rate information with the Department of Managed Health Care or the Department of Insurance. For individual and small group contracts and policies, existing law requires a plan or insurer to file rate information at least 60 days prior to implementing a rate change and requires a plan or insurer to disclose with each filing specified information by aggregate benefit category. Existing law allows a health care service plan that exclusively contracts with no more than 2 medical groups to provide or arrange for professional medical services for enrollees of the plan to meet this requirement by disclosing its actual trend experience for the prior year using benefit categories that are the same or similar to those used by other plans. This bill would specify the benefit categories to be used for that purpose and would make other related changes. The bill would require a plan or insurer to disclose the methodologies used to develop base rates and other specified information, including, among other things, all of the base rates used for groups in the large group market and all of the factors used to adjust the base rates. The bill would also require a plan or insurer to provide additional aggregate information regarding rate changes for the large group market, including, among other things, the average monthly rate implemented during the prior year and the average rate change initially requested, as specified. The bill would require a plan or insurer, under certain circumstances, to annually disclose additional aggregate data for the large group market and to provide deidentified claims data at no charge to a large group purchaser that requests the information and meets specified conditions. Existing law prohibits, with exceptions, a health care service plan or health insurer from releasing any information to an employer that would directly or indirectly indicate to the employer that an employee is receiving or has received services from a health care provider covered by the plan unless authorized to do so by the employee. This bill would exempt from the prohibition the release of relevant information for the purposes set forth in the provisions regarding the review of rate changes. To read the current text of the bill, click here. POSITION: Watch, CAHP – Oppose SPONSOR: UNITE HERE – Teamsters DISPOSITION: Recently Amended in Assembly. On to Third Reading.

174 Timothy Kamermayer, Government Affairs

SB 1340 AUTHOR: Hernandez E [D] TITLE: Health Care Coverage: Provider Contracts SUMMARY: Relates to the Knox-Keene Health Care Service Plan Act of 1975 regarding licensure and regulation of health care service plans by the Department of Managed Health Care. Prohibits a contract between a plan or insurer and a provider or supplier from restricting the ability of the plan or insurer to furnish information to consumers or purchasers concerning the cost range of a procedure, full course of treatment or the quality of services performed. To read the current text of the bill, click here. POSITION: Watch, LHPC – Support, CAHP – Support SPONSOR: Author DISPOSITION: Signed and Chaptered.

SB 1341 AUTHOR: Mitchell [D] TITLE: Medi-Cal: Statewide Automated Welfare System SUMMARY: Requires the Statewide Automated Welfare System to be the system of record for Medi-Cal and to contain all Medi-Cal eligibility rules and case management functionality. Authorizes the Healthcare Eligibility, Enrollment, and Retention System (CalHEERS) to house the business rules necessary for an eligibility determination. Requires CalHEERS to make the business rules available to the System consortia to determine Medi-Cal eligibility. Requires notices for the Medi- Cal and premium tax credit programs. To read the current text of the bill, click here. POSITION: LA Care – Support , LHPC – Support, CAHP – Support SPONSOR: Author DISPOSITION: To Enrollment

SB 1445 AUTHOR: Evans [D] TITLE: Developmental Services: Individual Plans: Telehealth SUMMARY: Under existing law, the Lanterman Developmental Disabilities Services Act, the State Department of Developmental Services contracts with regional centers to provide services and supports to individuals with developmental disabilities. The services and supports to be provided to a regional center consumer are contained in an individual program plan, developed in accordance with prescribed requirements, and may include, but are not limited to, diagnosis, treatment, personal care, information and referral services, counseling, and specialized medical and dental care. This bill would include telehealth services and supports among the services and supports authorized to be included in an individual program plan. To read the current text of the bill, click here. POSITION: Watch, LHPC – Support, CAHP – Support SPONSOR: Author DISPOSITION: Enrolled.

175 Timothy Kamermayer, Government Affairs

SB 1465 AUTHOR: Senate Health Committee TITLE: Health SUMMARY: Relates to home health agency licensure, county report on the implementation and status of the Emergency Medical Services, establishing a health benefit review program, bridge plans under the Health Benefit Exchange and the Medi-Cal provider application process, minors participating in evaluation of youth tobacco purchases, grants for creating residency positions, a Medicaid-related health authority advisory committee, the Hospital Quality Assurance Fund, and State hospitals. To read the current text of the bill, click here. POSITION: Watch, LHPC – Support, CAHP – Support SPONSOR: Author DISPOSITION: Passed Senate Health Committee. Recommended for Concurrence with Assembly Amendments.

176 Timothy Kamermayer, Government Affairs

177 178 179 180 181 182 183 184

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. BOG 108.0914

Committee: Chairperson:

Issue: Acceptance of the Financial Report for the eight months ended June 30, 2014.

Background:

Budget Impact:

Motion: To accept the Financial Report for the eight months ended June 30, 2014, as submitted.

185

Financial Performance June 2014

186 Financial Performance Results Highlights June 2014

Overall Total enrollment for June is 1,442,949 members. Fiscal year-to-date (nine months) performance is a surplus of $44.3 million or 1.6% on revenue of $2.8 billion, and is $78.3 million favorable to plan. The Medical Cost Ratio (MCR) is 94.0% and is 0.8% favorable to budget, which reflects revenue related to the rate adjustments retroactive to October 2013. The operating expenses ratio is 4.3% and is 1.9% favorable to budget driven by savings, timing and capitalization of certain system related costs.

Plan Partners

Total enrollment for June is 782,933 members. Fiscal year-to-date performance is a surplus of $57.2 million, and is $32.6 million favorable to plan. The favorable variance is driven by higher revenue related to rate adjustments retroactive to October 2013 and savings in operating expenses.

Medi-Cal Direct (MCLA) Total enrollment for June is 584,329 members. Fiscal year-to-date performance is a surplus of $3.0 million, and is $42.9 million favorable to plan. The favorable variance is driven by administrative savings and higher revenue related to rate adjustments retroactive to October 2013.

Within Medi-Cal Direct (MCLA), Seniors and Persons with Disabilities (SPD) enrollment is 76,498. Fiscal year-to-date performance is a deficit of $39.5 million, and is $61.3 million unfavorable to budget due to lower than expected capitation revenue and higher inpatient claims and pharmacy expenses.

Cal Medi-Connect

Cal Medi-Connect began enrollment in May 2014 and is operated as a separate line of business with 14 members initially. Total enrollment for June is 358 members. Fiscal year-to-date performance is a deficit of $6.6 million driven by start-up costs associated with this new product.

L.A. Care Covered (LACC) L.A. Care Covered began enrollment on October 1, 2013. Total enrollment for June is 18,877 members. Fiscal year-to-date performance is a deficit of $247,000, and is $3.7 million favorable to plan driven by higher than budgeted revenue rates and lower healthcare expenses. Membership is significantly less than expected with 25,123 fewer members than budgeted; related to nationwide challenges associated with the launch of the program.

i 187 Financial Performance Results Highlights June 2014 Medicare

Total enrollment for June is 7,974 members. Fiscal year-to-date performance is a deficit of $1.7 million and is $1.5 million unfavorable to plan driven by higher inpatient and outpatient claims expenses.

PASC-SEIU

Fiscal year-to-date performance is a deficit of $1.2 million, and is $206,000 favorable to plan driven by favorable administrative expenses and lower than expected taxes. Effective December 2013, L.A. Care Health Plan Joint Powers Authority (JPA) received its Knox-Keene license and became exempt from Managed Care Organization (MCO) taxes.

Healthy Kids

Total enrollment for June is 815 members. Fiscal year-to-date performance is a surplus of $453,000, and is $272,000 favorable to plan driven by lower than expected inpatient and outpatient claims expenses.

Community Programs Fiscal year-to-date performance is a deficit of $2.6 million, and is $5.8 million favorable to plan driven by timing of grant activity.

HITEC-LA The federal grant is drawn-down based upon expenses incurred. Fiscal year-to-date performance is a deficit of $200,000, and is $241,000 favorable to plan.

i 188 Combined Operations Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 1,442,949 1,422,099 20,850 Current Membership 1,442,949 1,494,080 (51,131) 1,449,085 1,431,174 17,911 Member Months 12,124,366 12,416,796 (292,430)

Revenue $358,778 247.59 $378,407 264.40 ($19,629) (16.81) Capitation $2,729,813 225.15 $2,665,986 214.71 $63,827 10.44 8,679 5.99 8,493 5.93 186 0.05 Maternity Kick 81,471 6.72 103,748 8.36 (22,277) (1.64) 90.01 16 0.01 (7) (0.01) Premiums 84 0.01 32 0.00 52 0.00 84 0.06 379 0.26 (295) (0.21) Grants/Others 2,638 0.22 2,195 0.18 443 0.04 367,550 253.64 387,295 270.61 (19,745) (16.97) Total Revenues 2,814,006 232.10 2,771,961 223.24 42,045 8.85

Healthcare Expenses 225,028 155.29 239,918 167.64 (14,890) (12.35) Capitation 1,719,669 141.84 1,718,292 138.38 (1,377) (3.45) 5,957 4.11 7,027 4.91 (1,070) (0.80) Maternity Kick 58,264 4.81 69,217 5.57 10,953 0.77 5,174 3.57 5,113 3.57 61 (0.00) CBAS Centers 48,633 4.01 67,263 5.42 18,630 1.41 2,301 1.59 2,164 1.51 137 0.08 Provider Incentives 28,080 2.32 32,535 2.62 4,455 0.30 7,537 5.20 5,928 4.14 1,609 1.06 Shared Risk 44,555 3.67 1,044 0.08 (43,512) (3.59) 60,392 41.68 45,894 32.07 14,498 9.61 Inpatient Claims 350,136 28.88 264,184 21.28 (85,952) (7.60) 18,607 12.84 19,515 13.64 (908) (0.79) Outpatient Claims 162,430 13.40 232,804 18.75 70,374 5.35 27,331 18.86 26,209 18.31 1,122 0.55 Pharmacy 193,140 15.93 199,030 16.03 5,889 0.10 5,787 3.99 6,144 4.29 (357) (0.30) Medical Administrative Expenses 40,816 3.37 43,943 3.54 3,127 0.17 358,114 247.13 357,912 250.08 202 (2.95) Total Healthcare Expenses 2,645,723 218.22 2,628,311 211.67 (17,412) (6.54) 97.4% 92.4% 5.0% MCR(%) 94.0% 94.8% 0.8%

9,437 6.51 29,384 20.53 (19,947) (14.02) Operating Margin 168,283 13.88 143,650 11.57 24,633 2.31

15,561 10.74 15,960 11.15 (399) (0.41) Total Operating Expenses 121,609 10.03 173,079 13.94 51,470 3.91 4.2% 4.1% 0.1% Admin Ratio(%) 4.3% 6.2% 1.9%

(6,124) (4.23) 13,424 9.38 (19,548) (13.61) Income from Operations 46,674 3.85 (29,429) (2.37) 76,103 6.22

890 0.61 (1,092) (0.76) 1,982 1.38 Total Non-Operating Income (Expense) (2,338) (0.19) (4,563) (0.37) 2,225 (2.05)

($5,233) (3.61) $12,332 8.62 ($17,566) (12.23) Net Surplus(Deficit) $44,336 3.66 ($33,992) (2.74) $78,328 6.39 -1.4% 3.2% -4.6% Margin(%) 1.6% -1.2% 2.8%

189 MediCal Plan Partner Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 782,933 778,430 4,503 Current Membership 782,933 813,543 (30,610) 786,949 783,353 3,596 Member Months 7,036,305 7,172,489 (136,184)

Revenue $145,388 184.75 $151,080 192.86 ($5,692) (8.11) Capitation $1,188,478 168.91 $1,120,416 156.21 $68,063 12.70 5,640 7.17 5,337 6.81 304 0.35 Maternity Kick 54,370 7.73 64,926 9.05 (10,556) (1.33) 151,029 191.92 156,417 199.68 (5,388) (7.76) Total Revenues 1,242,848 176.63 1,185,342 165.26 57,506 11.37

Healthcare Expenses 134,001 170.28 140,687 179.60 (6,686) (9.32) Capitation 1,086,262 154.38 1,025,487 142.98 (60,775) (11.40) 5,104 6.49 4,953 6.32 151 0.16 Maternity Kick 51,059 7.26 59,504 8.30 8,445 1.04 20.00 (2) (0.00) 4 0.00 CBAS Centers 687 0.10 10,563 1.47 9,875 1.38 1,500 1.91 1,449 1.85 51 0.06 Provider Incentives 18,553 2.64 22,357 3.12 3,805 0.48 (6) (0.01) 1 0.00 (7) (0.01) Inpatient Claims 4 0.00 0 - (4) (0.00) 33 0.04 12 0.02 20 0.03 Outpatient Claims 207 0.03 0 - (207) (0.03) 669 0.85 725 0.93 (57) (0.08) Medical Administrative Expenses 7,062 1.00 6,828 0.95 (235) (0.05) 141,302 179.56 147,824 188.71 (6,523) (9.15) Total Healthcare Expenses 1,163,835 165.40 1,124,739 156.81 (39,096) (8.59) 93.6% 94.5% -0.9% MCR(%) 93.6% 94.9% 1.2%

9,727 12.36 8,592 10.97 1,135 1.39 Operating Margin 79,013 11.23 60,603 8.45 18,410 2.78

2,862 3.64 3,070 3.92 (208) (0.28) Total Operating Expenses 21,852 3.11 36,070 5.03 14,219 1.92 1.9% 2.0% -0.1% Admin Ratio(%) 1.8% 3.0% 1.3%

6,866 8.72 5,522 7.05 1,343 1.67 Income from Operations 57,161 8.12 24,532 3.42 32,629 4.70

$6,866 8.72 $5,522 7.05 $1,343 1.67 Net Surplus(Deficit) $57,161 8.12 $24,532 3.42 $32,629 4.70 4.5% 3.5% 1.0% Margin(%) 4.6% 2.1% 2.5%

190 MCLA Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 584,329 573,323 11,006 Current Membership 584,329 575,601 8,728 584,561 575,505 9,056 Member Months 4,533,664 4,521,913 11,751

Revenue $180,494 308.77 $201,135 349.49 ($20,641) (40.73) Capitation $1,328,007 292.92 $1,247,693 275.92 $80,314 17.00 3,038 5.20 3,156 5.48 (118) (0.29) Maternity Kick 27,101 5.98 38,822 8.59 (11,720) (2.61) 183,533 313.97 204,292 354.98 (20,759) (41.01) Total Revenues 1,355,109 298.90 1,286,515 284.51 68,594 14.39

Healthcare Expenses 71,277 121.93 79,290 137.77 (8,013) (15.84) Capitation 492,104 108.54 509,673 112.71 17,569 4.17 853 1.46 2,074 3.60 (1,221) (2.14) Maternity Kick 7,205 1.59 9,713 2.15 2,508 0.56 5,171 8.85 5,115 8.89 56 (0.04) CBAS Centers 47,945 10.58 56,700 12.54 8,755 1.96 617 1.06 618 1.07 (1) (0.02) Provider Incentives 8,196 1.81 7,318 1.62 (879) (0.19) 8,354 14.29 6,075 10.56 2,280 3.74 Shared Risk 43,084 9.50 0 - (43,084) (9.50) 56,010 95.82 41,906 72.82 14,104 23.00 Inpatient Claims 323,994 71.46 224,687 49.69 (99,306) (21.78) 16,615 28.42 17,329 30.11 (714) (1.69) Outpatient Claims 148,536 32.76 202,699 44.83 54,162 12.06 24,905 42.60 24,659 42.85 246 (0.24) Pharmacy 180,399 39.79 180,439 39.90 41 0.11 3,342 5.72 3,886 6.75 (544) (1.04) Medical Administrative Expenses 25,978 5.73 28,668 6.34 2,690 0.61 187,144 320.14 180,952 314.42 6,192 5.72 Total Healthcare Expenses 1,277,441 281.77 1,219,897 269.77 (57,544) (11.99) 102.0% 88.6% 13.4% MCR(%) 94.3% 94.8% 0.6%

(3,612) (6.18) 23,339 40. 55 (26,951) (46.73) Operating Margin 77,668 17.13 66,618 14.73 11,050 2.40

8,948 15.31 9,421 16.37 (474) (1.06) Total Operating Expenses 74,647 16.47 106,482 23.55 31,835 7.08 4.9% 4.6% 0.3% Admin Ratio(%) 5.5% 8.3% 2.8%

(12,559) (21.49) 13,918 24.18 (26,477) (45.67) Income from Operations 3,021 0.67 (39,865) (8.82) 42,885 9.48

($12,559) (21.49) $13,918 24.18 ($26,477) (45.67) Net Surplus(Deficit) $3,021 0.67 ($39,865) (8.82) $42,885 9.48 -6.8% 6.8% -13.7% Margin(%) 0.2% -3.1% 3.3%

Notes: MCLA includes MediCal Direct, Community, DHS, Medi-Cal Expansion, CMC Direct and CCI Direct.

191 Exhibit for information purposes only. Not a financial Statement MCLA SPD Exhibit ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 76,498 76,663 (165) Current Membership 76,498 78,508 (2,010) 75,575 76,344 (769) Member Months 671,893 698,472 (26,579)

Revenue $45,150 597.42 $45,608 597.40 ($458) 0.02 Capitation $400,719 596.40 $427,681 612.31 ($26,962) (15.91) 45,150 597.42 45,608 597.40 (458) 0.02 Total Revenues 400,719 596.40 427,681 612.31 (26,962) (15.91)

Healthcare Expenses 11,341 150.07 13,876 181.76 (2,535) (31.69) Capitation 113,633 169.12 123,435 176.72 9,802 7.60 900 11.91 874 11.45 26 0.46 CBAS Centers 7,790 11.59 0 - (7,790) (11.59) 104 1.38 112 1.46 (8) (0.09) Provider Incentives 2,127 3.17 1,249 1.79 (878) (1.38) (5,639) (74.61) (2,230) (29.21) (3,408) (45.40) Shared Risk (27,752) (41.30) 0 - 27,752 41.30 22,508 297.83 19,035 249.33 3,474 48.50 Inpatient Claims 150,656 224.23 102,080 146.15 (48,576) (78.08) 8,012 106.02 7,231 94.71 782 11.31 Outpatient Claims 64,629 96.19 66,872 95.74 2,243 (0.45) 12,829 169.75 13,235 173.36 (406) (3.61) Pharmacy 105,282 156.70 71,792 102.78 (33,490) (53.91) 187 2.47 435 5.70 (249) (3.23) Medical Administrative Expenses 1,808 2.69 5,060 7.24 3,252 4.55 50,244 664.82 52,568 688.57 (2,324) (23.75) Total Healthcare Expenses 418,174 622.38 370,488 530.43 (47,685) (91.95) 111.3% 115.3% -4.0% MCR(%) 104.4% 86.6% -17.7%

(5,093) (67.40) (6,960) (91.16) 1,866 23.77 Operating Margin (17,455) (25.98) 57,192 81.88 (74,647) (107.86)

2,201 29.13 2,103 27.55 98 1.58 Total Operating Expenses 22,074 32.85 35,398 50.68 13,324 (17.83) 4.9% 4.6% 0.3% Admin Ratio(%) 5.5% 8.3% 2.8%

(7,295) (96.52) (9,063) (118.72) 1,769 22.19 Income from Operations (39,528) (58.83) 21,794 31.20 (61,323) (90.03)

($7,295) (96.52) ($9,063) (118.72) $1,769 22.19 Net Surplus(Deficit) ($39,528) (58.83) $21,794 31.20 ($61,323) (90.03) -16.2% -19.9% 3.7% Margin(%) -9.9% 5.1% -15.0%

Note: MCLA SPD Financial Statements exclude members that have Medicare as their primary coverage. Shared risk reflects deficits that will be trued-up with total MCLA.

192 CMC Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 358 14 344 Current Membership 358 7,290 (6,932) 359 14 345 Member Months 373 14,580 (14,207)

Revenue $713 $37 $676 Capitation $750 $27,253 1,869.21 ($26,503) 713 37 676 Total Revenues 750 27,253 1,869.21 (26,503)

Healthcare Expenses 239 13 226 Capitation 252 13,877 951.78 13,625 196 0 196 Inpatient Claims 196 6,718 460.80 6,523 72 0 72 Outpatient Claims 72 3,786 259.64 3,714 67 2 64 Pharmacy 69 999 68.54 930 1,114 797 317 Medical Administrative Expenses 2,629 2,181 149.56 (448) 1,687 812 874 Total Healthcare Expenses 3,217 27,561 1,890.32 24,344

(973) (775) (198) Operating Margin (2,467) (308) (21.11) (2,160)

860 2,796 (1,936) Total Operating Expenses 4,182 1,475 101.14 (2,707)

(1,834) (3,571) 1,738 Income from Operations (6,649) (1,782) (122.25) (4,866)

($1,834) ($3,571) $1,738 Net Surplus(Deficit) ($6,649) ($1,782) (122.25) ($4,866)

193 L.A. Care Covered Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 18,877 14,317 4,560 Current Membership 18,877 44,000 (25,123) 20,725 16,130 4,595 Member Months 72,468 238,500 (166,032)

Revenue $9,410 454.03 $4,082 253.10 $5,327 200.93 Capitation $22,490 310.34 $67,663 283.70 ($45,173) 26.64 60.31 13 0.83 (7) (0.52) Premiums 55 0.77 0 - 55 0.77 9,416 454.34 4,096 253.93 5,320 200.41 Total Revenues 22,545 311.11 67,663 283.70 (45,118) 27.40

Healthcare Expenses 4,271 206.10 2,010 124.64 2,261 81.47 Capitation 10,369 143.09 24,649 103.35 14,280 (39.74) 34 1.63 36 2.22 (2) (0.58) Provider Incentives 147 2.03 1,333 5.59 1,186 3.56 (1,000) (48.27) 390 24.16 (1,390) (72.43) Shared Risk 30 0.41 0 - (30) (0.41) 440 21.23 342 21.19 98 0.04 Inpatient Claims 1,539 21.23 10,035 42.08 8,496 20.84 767 37.01 596 36.94 171 0.06 Outpatient Claims 2,682 37.01 17,595 73.77 14,913 36.76 247 11.93 187 11.60 60 0.33 Pharmacy 777 10.72 6,588 27.62 5,812 16.90 107 5.17 170 10.55 (63) (5.38) Medical Administrative Expenses 665 9.18 3,090 12.96 2,425 3.78 4,866 234.81 3,731 231.30 1,135 3.51 Total Healthcare Expenses 16,209 223.67 63,290 265.37 47,081 41.69 51.7% 91.1% -39.4% MCR(%) 71.9% 93.5% 21.6%

4,550 219.53 365 22.63 4,185 196.90 Operating Margin 6,336 87.43 4,373 18.34 1,963 69.10

1,179 56.91 1,028 63.75 151 (6.84) Total Operating Expenses 5,696 78.60 8,327 34.91 2,631 (43.68) 12.5% 25.1% -12.6% Admin Ratio(%) 25.3% 12.3% -13.0%

3,370 162.62 (663) (41.13) 4,034 203.74 Income from Operations 640 8.84 (3,954) (16.58) 4,594 25.41

(371) (17.89) (161) (10.00) (209) (7.89) Total Non-Operating Income (Expense) (888) (12.25) 0 - (888) (12.25)

$2,999 144.73 ($825) (51.12) $3,824 195.85 Net Surplus(Deficit) ($247) (3.41) ($3,954) (16.58) $3,706 13.16 31.9% -20.1% 52.0% Margin(%) -1.1% -5.8% 4.7%

Notes: L.A. Care Covered became effective as of January 2014. Due to the lack of historical data, estimates were prepared for various health care expenses. These estimates will be trued-up when more data becomes available.

194 Medicare Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 7,974 7,758 216 Current Membership 7,974 7,413 561 7,966 7,814 152 Member Months 64,582 60,417 4,165

Revenue $7,291 915.29 $6,671 853.69 $620 61.60 Medicare Part C $57,335 887.78 $62,128 1,028.32 ($4,793) (140.54) 681 85.49 681 87.16 (0) (1.67) Medicare Part D 5,865 90.81 0 - 5,865 90.81 7,972 1,000.78 7,352 940.85 620 59.93 Total Revenues 63,199 978.59 62,128 1,028.32 1,071 (49.73)

Healthcare Expenses 2,887 362.38 2,652 339.42 234 22.96 Capitation 22,744 352.18 23,021 381.04 277 28.86 150 18.79 60 7.69 90 11.11 Provider Incentives 1,175 18.19 1,506 24.93 331 6.74 175 21.96 (535) (68.48) 710 90.44 Shared Risk 1,382 21.40 1,044 17.28 (338) (4.12) 3,673 461.11 3,325 425.52 348 35.59 Inpatient Claims 21,492 332.79 19,207 317.91 (2,285) (14.87) 940 117.95 1,012 129.52 (72) (11.57) Outpatient Claims 6,801 105.31 5,764 95.41 (1,037) (9.90) 1,140 143.05 512 65.48 628 77.58 Pharmacy 5,087 78.77 5,569 92.18 482 13.41 375 47.08 375 48.05 (0) (0.98) Medical Administrative Expenses 2,975 46.06 1,817 30.08 (1,157) (15.98) 9,339 1,172.31 7,401 947.19 1,937 225.12 Total Healthcare Expenses 61,656 954.70 57,930 958.83 (3,727) 4.13 117.1% 100.7% 16.5% MCR(%) 97.6% 93.2% -4.3%

(1,366) (171.54) (50) (6.34) (1,317) (165.20) Operating Margin 1,543 23.89 4,198 69.49 (2,655) (45.60)

471 59.07 (1,836) (234.93) 2,306 294.00 Total Operating Expenses 3,210 49.71 4,363 72.22 1,153 22.52 5.9% -25.0% 30.9% Admin Ratio(%) 5.1% 7.0% 1.9%

(1,837) (230.61) 1,786 228.59 (3,623) (459.20) Income from Operations (1,667) (25.82) (165) (2.73) (1,502) (23.08)

($1,837) (230.61) $1,786 228.59 ($3,623) (459.20) Net Surplus(Deficit) ($1,667) (25.82) ($165) (2.73) ($1,502) (23.08) -23.0% 24.3% -47.3% Margin(%) -2.6% -0.3% -2.4%

* Operating Expenses reflects shift of CMC related costs (CMC appears as a separate line of business in May, with initial membership)

195 PASC-SEIU Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 47,663 47,421 242 Current Membership 47,663 45,092 2,571 47,703 47,523 180 Member Months 408,569 398,628 9,941

Revenue $14,705 308.25 $14,623 307.71 $81 0.54 Capitation $125,892 308.13 $139,520 350.00 ($13,628) (41.87) 14,705 308.25 14,623 307.71 81 0.54 Total Revenues 125,892 308.13 139,520 350.00 (13,628) (41.87)

Healthcare Expenses 12,327 258.41 15,238 320.65 (2,911) (62.24) Capitation 107,661 263.51 121,247 304.16 13,585 40.65 69 1.44 307 6.46 (238) (5.02) Inpatient Claims 2,816 6.89 3,277 8.22 461 1.33 171 3.59 558 11.74 (387) (8.15) Outpatient Claims 4,104 10.04 2,663 6.68 (1,441) (3.36) 968 20.29 844 17.76 124 2.53 Pharmacy 6,768 16.57 5,358 13.44 (1,411) (3.13) 178 3.73 186 3.92 (8) (0.19) Medical Administrative Expenses 1,500 3.67 1,338 3.36 (162) (0.31) 13,712 287.45 17,133 360.53 (3,421) (73.08) Total Healthcare Expenses 122,849 300.68 133,882 335.86 11,033 35.18 93.3% 117.2% -23.9% MCR(%) 97.6% 96.0% -1.6%

992 20.80 (2,510) (52.82) 3,502 73.62 Operating Margin 3,043 7.45 5,638 14.14 (2,595) (6.70)

383 8.02 409 8.60 (26) (0.58) Total Operating Expenses 3,191 7.81 5,200 13.05 2,009 5.24 2.6% 2.8% -0.2% Admin Ratio(%) 2.5% 3.7% 1.2%

610 12.78 (2,919) (61.42) 3,529 74.20 Income from Operations (148) (0.36) 437 1.10 (586) (1.46)

0- 0 - 0 - Total Non-Operating Income (Expense) (1,052) (2.58) (1,844) (4.63) 792 2.05

$610 12.78 ($2,919) (61.42) $3,529 74.20 Net Surplus(Deficit) ($1,201) (2.94) ($1,407) (3.53) $206 0.59 4.1% -20.0% 24.1% Margin(%) -1.0% -1.0% 0.1%

196 Healthy Kids 0-5 Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 815 836 (21) Current Membership 815 1,141 (326) 822 835 (13) Member Months 8,385 10,269 (1,884)

Revenue $96 116.90 $98 116.92 ($2) (0.02) Capitation $981 116.96 $1,313 127.83 ($332) (10.88) 33.38 3 3.46 (0) (0.08) Premiums 29 3.42 32 3.09 (3) 0.33 99 120.27 101 120.38 (2) (0.10) Total Revenues 1,009 120.38 1,344 130.92 (335) (10.54)

Healthcare Expenses 27 32.50 28 32.98 (1) (0.48) Capitation 275 32.76 338 32.92 63 0.16 11.10 2 2.17 (1) (1.07) Provider Incentives 8 0.98 19 1.83 11 0.85 00.12 (1) (1.52) 1 1.64 Shared Risk (1) (0.10) 0 - 1 0.10 14 17.32 11 13.38 3 3.94 Inpatient Claims (4) (0.53) 259 25.24 264 25.77 10 12.34 9 10.86 1 1.49 Outpatient Claims 92 11.03 298 29.00 205 17.97 55.65 5 5.92 (0) (0.27) Pharmacy 50 5.94 76 7.36 26 1.42 33.49 3 3.74 (0) (0.25) Medical Administrative Expenses 28 3.29 20 2.00 (7) (1.29) 60 72.52 56 67.53 3 4.99 Total Healthcare Expenses 448 53.37 1,010 98.35 562 44.98 60.3% 56.1% 4.2% MCR(%) 44.3% 75.1% 30.8%

39 47.75 44 52.84 (5) (5.09) Operating Margin 562 67.01 334 32.57 227 34.44

10 11.80 13 15.42 (3) (3.62) Total Operating Expenses 109 13.04 154 14.97 44 1.93 9.8% 12.8% -3.0% Admin Ratio(%) 10.8% 11.4% 0.6%

30 35.95 31 37.42 (2) (1.47) Income from Operations 453 53.97 181 17.60 272 36.37

0- 0 - 0 - Total Non-Operating Income (Expense) 0 - 0 - - -

$30 35.95 $31 37.42 ($2) (1.47) Net Surplus(Deficit) $453 53.97 $181 17.60 $272 36.37 29.9% 31.1% -1.2% Margin(%) 44.8% 13.4% 31.4%

197 Community Programs Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 000 Current Membership 000 000 Member Months 000

Revenue $31 - $238 - ($206) - Grants/Others $829 - $0 - $829 - 0- 0 - 0 - Capitation 0 - 0 - 0 - 31 - 238 - (206) - Total Revenues 829 - 0 - 829 -

Healthcare Expenses 0- 0 - 0 - Medical Administrative Expenses (9) - 0 - 9 - 0- 0 - 0 - Total Healthcare Expenses (9) - 0 - 9 -

31 - 238 - (206) - Operating Margin 839 - 0 - 839 -

325 - 519 - (194) - Total Operating Expenses 3,289 - 5,371 - 2,082 -

(293) - (282) - (12) - Income from Operations (2,451) - (5,371) - 2,921 -

0- 0 - 0 - Total Non-Operating Income (Expense) (171) - (3,000) - 2,829 -

($293) ($282) ($12) Net Surplus(Deficit) ($2,622) ($8,371) $5,750

198 HITEC-LA Financial Statement ($ in thousands) June 2014 Current Prior Increase YTD YTD Fav Month Month (Decrease) Actual Budget Budget ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM) ($) (PMPM)

Membership 000 Current Membership 000 000 Member Months 000

Revenue $52 $141 ($89) Grants/Others $1,808 $2,195 ($386) 0 0 0 Capitation 0 0 0 52 141 (89) Total Revenues 1,808 2,195 (386)

Healthcare Expenses 0 0 0 Medical Administrative Expenses 0 0 0 0 0 0 Total Healthcare Expenses 0 0 0

52 141 (89) Operating Margin 1,808 2,195 (386)

100 116 (16) Total Operating Expenses 2,009 2,636 628

(47) 26 (73) Income from Operations (200) (442) 241

($47) $26 ($73) Net Surplus(Deficit) ($200) ($442) $241

199 Comparative Balance Sheet June 2014

(Dollars in thousands) Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 ASSETS

CURRENT ASSETS Total Current Assets 1,046,973 1,164,251 1,162,034 1,171,394 1,360,902 1,111,107 Capitalized Assets - net 20,234 20,771 21,393 22,675 25,002 26,169 NON-CURRENT ASSETS 11,269 11,284 11,280 11,291 11,330 10,338 TOTAL ASSETS 1,078,477 1,196,306 1,194,707 1,205,361 1,397,233 1,147,614

LIABILITIES AND FUND EQUITY

CURRENT LIABILITIES Total Current Liability 892,850 1,006,358 1,002,061 989,413 1,168,892 924,395 Long Term Liability 2,284 2,388 2,495 2,767 2,829 2,940 Total Liabilities 895,134 1,008,746 1,004,556 992,181 1,171,720 927,335

FUND EQUITY Invested in Capital Assets, net of related debt 20,234 20,771 21,393 22,675 25,002 26,169 Restricted Equity 302 302 302 302 302 302 Minimum Tangible Net Equity 45,403 45,403 53,090 53,090 53,090 61,935 Board Designated Funds 117,403 121,084 115,366 137,113 147,120 131,874 Retained Earnings (undesignated) 00000 0 Total Fund Equity 183,342 187,560 190,150 213,180 225,513 220,280

TOTAL LIABILITIES AND FUND EQUITY $1,078,477 $1,196,306 $1,194,707 $1,205,361 $1,397,233 $1,147,614

Solvency Ratios

Working Capital Ratio 1.17 1.16 1.16 1.18 1.16 1.20 Cash to Claims Ratio 1.00 1.20 1.17 0.71 0.76 0.59 Tangible Net Equity Ratio 4.04 4.13 3.58 4.02 4.25 3.56

200

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. FIN 107.0914

Committee: Finance & Budget Chairperson: Michael Rembis

Issue: Approval of the FY 2014-2015 Capital & Operating Budget.

Background: The Affordable Care Act brought significant growth to L.A. Care over the past fiscal year primarily related to Medi-Cal Expansion and the new Health Benefit Exchange product, L.A. Care Covered. The Coordinated Care Initiative with the pilot Cal MediConnect product and the expanded Medi-Cal benefits for long-term care, behavioral health care and social services gain momentum during fiscal year 2014-2015. This growth and momentum is reflected in the proposed fiscal year 2014-2015 Operating Budget with revenues of $6.6 billion which represents a 57 percent increase over fiscal year 2013-2014 revenue. The proposed budget surplus is $66.0 million or 1.0 percent of revenue.

Budget Impact: The proposed budget reflects a surplus of $66.0 million which represents a 1.0 percent margin on revenues of $6.6 billion.

Motion: To approve the proposed Operating and Capital Budget for FY 2014- 2015, as submitted.

201 .

DATE: September 5, 2014 TO: Board of Governors FROM: Timothy Reilly, Chief Financial Officer SUBJECT: Fiscal Year 2014-2015 Operating Budget

The Affordable Care Act (ACA) brought significant growth to L.A. Care over the past fiscal year primarily related to Medi-Cal Expansion and the new Health Benefit Exchange product, L.A. Care Covered. The Coordinated Care Initiative with the pilot Cal MediConnect product and the expanded Medi-Cal benefits for long-term care, behavioral health care and social services gain momentum during fiscal year 2014-2015. This growth and momentum is reflected in the proposed fiscal year 2014-2015 Operating Budget with revenues of $6.6 billion which represents a 66.3 percent increase over fiscal year 2013-2014 forecasted revenue of $4.0 billion. Per the direction of the Finance and Budget Committee, the proposed budget surplus is $66.0 million or 1.0 percent of revenue. Staff met with Health Services and Operations to identify areas for additional budget savings. Contracting goals and healthcare cost reductions were identified and incorporated into the budget.

Key fiscal year 2014-2015 budget assumptions include: • Membership growth of 17.4 percent to reach 1,816,000 members by September 2015 from 1,546,000 at the close of the 2013-2014 FY. The growth is largely attributed to the launch of new products and benefits including: Medi-Cal Expansion, the Coordinated Care Initiative, Cal MediConnect, and L.A. Care Covered. • Cal MediConnect (CMC) starts April 2014 with passive enrollment beginning in January 2015. • Coordinated Care Initiative (CCI) is in full effect as of July 2014. • D-SNP members transition into CMC in January 2015. • Revenue grows to $6.6 billion in FY 2014-15. • Medi-Cal revenue assumes a 3% DHCS rate increase between July and September 2015. • Health care costs are based on current trends or actuarial estimates for Medi-Cal Expansion, CCI, CMC and L.A. Care Covered. • Provider incentives are based on a flat per member per month (pmpm) and have been expanded to include CMC, Medicare D-SNP and L.A. Care Covered. • ACA 1202 (paying primary care physicians at Medicare rates) is budgeted through December 2014. • Healthy Kids (0-5) funding ends June 30, 2015.

202 L.A. Care membership continues to grow and is projected to reach 1,816,000 by September 2015. This represents an increase of 17.4 percent or 270,000 members over the fiscal year. The direct lines of business have steadily grown and will approach 50 percent of total membership in FY 2015.

The trajectory of revenue growth is even more dramatic than membership growth and reflects the shift in membership mix from predominantly mothers and children under TANF to the more complex seniors and people with disabilities, dual eligible and Medicare populations. Fiscal year 2015 revenue also includes the full impact of ACA 1202 and additional CCI benefits for behavioral health, long term care, IHSS (in home services and supporrt) and HCBS (home and community based services).

203 Administrative expenses, still considered low by industry standards, are budgeted to be 3.8 percent of revenue. However, this ratio is dampened by the additional ACA 1202 revenue and CCI benefits, which require significantly lower incremental administrative support. If we segregate these benefits and focus only on the direct lines of business, the administrative ratio is 7.0 percent of revenue. A comparison of cost ratios for selected Health Plans and L.A. Care, based on 2013 DMHC annual filing information, is shown below:

Administrative Cost Ratio LA Care versus Selected Health Plan Groups Administrative Health Plan Groups Cost Ratio

County Organized Health Systems 5.1% Local Initiatives without LA Care 6.5% Selected Commercial without Kaiser: (ABC, HN, Molina, Care1st)* 10.2% Statewide without Kaiser 9.4% Local Initiative Health Authority for L.A. County 4.2% Source: DMHC 2013 Annual Filing

L.A. Care continues to improve the fund equity position which helps to ensure the financial stability of the organization. The projected budget surplus brings the end-of-year fund equity to $287 million. Included in fund equity is the state’s required reserve known as tangible net equity (TNE). The required TNE is projected to be $114 million. Health plans with reserves that are within 130 percent of the state’s TNE requirement may be subject to a financial review by the state. L.A. Care’s proposed balance sheet includes TNE at $148 million which is well above the state requirement.

A high degree of uncertainty related to new products, benefits, ACA and final rates exists. This uncertainty impacts a significant portion of the overall budget. The budget anticipates potential savings to be flexed and redeployed as needs are identified. An area that is currently being evaluated is staffing and salaries; in conjunction with HR Strategy. Temporary staffing has been an important tool for transition of systems and rapid growth; however we intend to spend less on temporary assistance over the upcoming fiscal year. The temporary staff budget will be flexed as more is known about competitive and appropriate pay scales and right-sizing staffing levels as the organization moves into a more stable mode with the completion of system conversions and full integration of new products and benefits.

204

OPERATING AND CAPITAL BUDGET FISCAL YEAR 2014/2015

DRAFT As of August 28, 2014

Board of Governors September 4, 2014

205 Table of Contents

I. EXECUTIVE SUMMARY...... 3

- Environmental Overview ...... 3

- Goals and Objectives ...... 4

- Operating Assumptions ...... 7

- Combined Operations ...... 9

- Membership ...... 10

- Revenue ...... 11

- Cost of Health Care ...... 12

- Administrative Expenses ...... 16

- Staffing and Total Cost of Labor ...... 17

- Advertising Strategy ...... 18

- Community Health Improvement Programs ...... 19

- Capital Expenditures ...... 23

II. FINANCIAL STATEMENTS ...... 24

III. APPENDIX ...... 28

- Appendix 1 – Membership ...... 28

- Appendix 2 – Capital Expenditures and Other Projects ...... 29

- Appendix 3 – Staffing ...... 35

- Appendix 4 – Vendors with Recurring Purchases ...... 36

206 EXECUTIVE SUMMARY

Environmental Overview Economic conditions in California and Los Angeles County continue to improve. The 2014 Budget Act pays down the State debt and establishes a rainy day fund. The budget accounts for the significant growth in Medi-Cal through Medi-Cal Expansion. While the budget maintains the 10 percent rate reduction to Medi-Cal providers, there is also language for managed care rate increases of $187.2 million. There are other Medi-Cal changes that are not yet fully worked out that will affect L.A. Care, such as the proposal to provide Covered California coverage to pregnant women from 100 to 208 percent of the Federal Poverty Level (currently eligible for limited scope Medi-Cal). In addition, there are discussions about the handling of high cost Hepatitis C medication for Medi-Cal managed care recipients.

Last year brought significant changes to L.A. Care with the Affordable Care Act implementation. L.A. Care received 165,000 new Medi-Cal members on January 1, 2014 that had previously been enrolled in Healthy Way LA, Los Angeles County’s Low Income Health Program. Medi-Cal growth will continue in 2014 as the State and County process the many Medi-Cal applications submitted during the Covered California open enrollment period. The State reports that 900,000 applications are backlogged, and County DPSS reports receiving more than 200,000 applications for the period of October 1 to December 31, 2013, and they will receive more for the period from January 1 to March, 31, 2014. Although some of these will be found to be ineligible or duplicate applications, a substantial number will likely enroll in L.A. Care over the coming months. In addition, California is enabling CalFresh (food stamp) recipients to enroll in Medi-Cal through Express Lane Eligibility. In Los Angeles, an estimated 120,000 childless adults and children on CalFresh received an Express Lane Enrollment notice in February 2014 informing them of their Medi-Cal eligibility and how to enroll. The CalFresh Express Lane program has been given a federal waiver to extend its ability to enroll eligible beneficiaries in Medi-Cal without further paperwork.

Another success of last year was the launch of L.A. Care’s first commercial product, L.A. Care Covered. L.A. Care Covered had 38,000 members enroll, which represents 9.5 percent market share among Los Angeles County plans, though a lower number may end up effectuated. This exceeds L.A. Care’s projections for membership and market share. Approximately 80 percent of members selected the bronze plan, most likely because L.A. Care was the lowest priced bronze plan in the Los Angeles market. L.A. Care recently submitted its Qualified Health Plan application for 2015. Determining 2015 rates was a challenge for all plans since 2014 utilization has just begun to be reported. The 2015 budget year will give plans the experience to determine utilization among L.A. Care Covered members to better assess pricing for the future.

The Coordinated Care Initiative and Cal MediConnect represent a challenge for L.A Care in the upcoming budget year. L.A. Care began receiving voluntary Cal MediConnect enrollment in April 2014, and received significant membership in July when dually eligible members with L.A. Care for the Medi-Cal benefit (the “crosswalk” population) enrolled and later, when passive enrollment begins (estimated for January 2015). Also included in the Coordinated Care Initiative is Managed Long Term Care Services and Supports (MLTSS), which transitioned these services into Medi-Cal managed care as of April 1, 2014. L.A. Care will provide the Long-Term Care benefit to its DSNP members. MLTSS provides L.A. Care an opportunity to apply lessons learned from past experience enrolling new populations into Medi-Cal managed care, such as the SPDs. Similar to some safety net providers that were not accustomed to operating in a managed care environment, Skilled Nursing Facilities are new to managed care and will require L.A. Care’s support.

207 Goals and Objectives

L.A. Care Strategic Priorities 2015-2017

Goal 1: Improve medical care by increasing quality and the responsiveness of care networks.

Objectives:

1.1. By next review, maintain NCQA accreditation for Medi-Cal. • For 2015-2017, maintain 100 percent on Standards review through ongoing monitoring & assessment of compliance with the Standards. • Implement Quality Improvement activities to achieve statistically significant improvement in HEDIS scores in the following measures: o 2015: Avoidance of antibiotic treatment in adults with acute bronchitis o 2015: CDC HbA1c Testing Total o 2016: Chlamydia screening in women o 2016: Use of appropriate medications for people with Asthma o 2017: CDC retinal eye exam total o 2017: Use of spirometry testing in the assessment and diagnosis of COPD

1.2. By September 30, 2015, achieve or maintain a Medicare STARS rating of 3.5 for Part C and 3.0 for Part D.

1.3. By March 31, 2015, develop an improved process to evaluate provider compliance with encounter reporting and by September 30, 2016, implement sanctions for providers with reporting levels below an acceptable threshold. Recommended encounter thresholds are: • Medi-Cal –TANF- 4 encounters PMPY • SPD – 6 encounters PMPY • SNP – 8 encounters PMPY No sanctions for the first year, but consider a corrective action plan with rigorous requirements.

1.4. By March 31, 2015, develop a deliberate network strategy by product line to increase control over quality and cost; develop specialized physician networks for certain high-cost medical conditions.

1.5. By September 30, 2015, implement a leveraged purchasing strategy that incentivizes high quality and lower cost care across product lines, providers, and plan partners, to maximize L.A. Care’s purchasing power.

Goal 2: Improve member and provider satisfaction with L.A. Care.

Objectives:

2.1. By September 30, 2015, achieve a score of 85.3 percent on the SNP CAHPS indicator “Overall Rating of Health Plan.”

208 2.2. By September 30, 2015, achieve an increase of 2 percentage points for each provider type on the Provider Satisfaction Survey indicator “Overall Satisfaction with L.A. Care,” which represents significant improvement per provider type.

2.3. By September 30, 2015, reduce avoidable Medi-Cal disenrollment by 0.05 percent by assessing reasons for disenrollment and employing strategies to address the drivers of disenrollment.

2.4. By September 30, 2015, improve members’ and providers’ ability to obtain information and receive communications from L.A. Care through enhanced member and provider portals, mobile applications, and other means of electronic communication.

2.5. By March 31, 2015, coordinate the departments that interact with members/providers and streamline and tailor member/provider communications to increase effectiveness.

Goal 3: Implement an operational excellence strategy to excel at the full range of product lines offered by L.A. Care.

Objectives:

3.1. By September 30, 2015 and continuing through September 30, 2017, perform organization-wide risk assessments and mitigate compliance vulnerabilities identified in our State and Federal programs.

3.2. By December 31, 2014, improve accuracy of claims payments within the QNXT system to achieve overall processing accuracy of 98.5 percent with a corresponding decrease in interest payments of 20 percent from interest payments seen in MHC.

3.3. By September 30, 2015, implement a regular review process for balanced scorecard and product-line specific dashboard reports, and develop an escalation process when metrics fall below a targeted range.

3.4. By March 30, 2015, improve the use of data by establishing shared, accountable ownership of enterprise data through a Data Governance Council comprised of Data Owners and assigned Data Stewards for each data domain.

3.5. By September 30, 2017, design and deploy an enterprise-wide data warehouse solution that is robust and adaptable to address both current and future L.A. Care business information needs.

3.6. By December 2014 and continuing through September 30, 2017, ensure that turnover among staff employed at L.A. Care for at least one year remains below the industry standard (currently 15.2 percent) and monitor the turnover rate among employees with less than one year to ensure that it remains consistent with industry standards for new employees.

209 Goal 4: Improve financial sustainability of direct product lines.

Objectives:

4.1. Maintain an MCLA medical cost ratio of 94 percent through September 30, 2015, and achieve an MCLA medical cost ratio of 93 percent by September 30, 2017.

4.2. By December 31, 2014, establish financial and performance objectives related to financial sustainability of direct product lines and achieve objectives by September 30, 2015.

4.3. By March 30, 2015, develop a conceptual framework for an alternate contracting model for certain hospitals and PPGs to better align risk and cost reduction opportunities, and implement model by September 30, 2016.

4.4. By March 31, 2015, develop an enterprise-wide delegation strategy to ensure a consistent and simplified approach across all providers and product lines and improve L.A. Care’s oversight of delegation compliance.

4.5. By September 30, 2015, evaluate alternate care delivery models, such as expanded scope of practice for non-physician clinicians.

Goal 5: Ensure access to care for low income and vulnerable populations through supporting the safety net and demonstrating value of the Local Initiative under the Medi-Cal Two-Plan model.

Objectives: 5.1. By September 30, 2015, provide community clinic and County providers with training, technical assistance and other support to enable both HCLA and the County to achieve an improvement of 5 percent relative to current scores on HEDIS auto-assignment measures.

5.2. By September 30, 2015, implement at least one significant pilot project with safety net providers and a second by September 30 2016 to improve health status and/or increase quality and lower cost of care for L.A. Care members.

5.3. By March 31, 2015 and continuing through 2017, educate internal and external stakeholders and actively promote the value of the Two-Plan Model and the Local Initiative in meeting local community and safety net needs.

5.4. By March 31, 2015 and continuing through 2017, develop a more proactive and comprehensive advocacy strategy to preserve the Two-Plan Model, including Board legislative advocacy days in Sacramento and identifying and cultivating legislative champions.

210 Operating Assumptions

The proposed Operating Budget for Fiscal Year 2014-2015 outlines the financial resources and personnel needed to meet L.A. Care’s significant growth and strategic objectives for the coming year. The primary focus of the budget will be to sustain the continuity of existing business while incorporating anticipated growth, building infrastructure, launching new products and successfully navigating the complexities of the Coordinated Care Initiative.

A summary of proposed objectives and operating assumptions are as follows: • Growth of 17.4 percent to reach 1,816,000 members at September 2015. • Cal MediConnect starts April 2014 with passive enrollment beginning in January 2015. • Coordinated Care Initiative is in full effect as of July 2014. • D-SNP members transition into Cal MediConnect in January 2015. • Revenue grows to $6.6 billion in fiscal year 2014-2015. • Medi-Cal revenue assumes an annual 3 percent DHCS rate increase. • Health care costs are based on current trends or actuarial estimates. • Provider incentives are based on a flat pmpm and have been expanded to include CMC, Medicare D-SNP and L.A. Care Covered. • ACA 1202 (paying physicians at Medicare rate) is budgeted through December 2014. • Healthy Kids (0-5) funding and program offering ends June 30, 2015.

Budget Presentation

The proposed operating budget combines L.A. Care’s on-going baseline operating costs with new programs and products, ramping infrastructure expenses to support regulatory compliance and membership growth as well as incremental costs associated with strategic projects. For presentation purposes, the proposed budget has been segmented into seven separate categories: Plan Partners, Direct Lines of Business, Community Programs, Cal MediConnect, PASC-SEIU, L.A. Care Covered (Health Benefits Exchange) and Other.

Plan Partners budget consists of all of the operating costs required to support the Medi-Cal line of business delivered through the contracted Plan Partner health care networks.

Direct Lines of Business encompasses all of the operating costs associated with L.A. Care’s directly contracted care networks that support L.A. Care’s Direct Medi-Cal product (MCLA), Medicare SNP (assumes December 31, 2014 discontinuation), L.A. Care Covered and the Healthy Kids 0-5 Program.

Community Programs include all direct funding and L.A. Care administrative costs required to fulfill the Board of Governors’ approved initiatives and community support. Funding for the Community Programs will be drawn from L.A. Care’s existing financial reserves. This element of the annual operating budget earmarks the funding level of L.A. Care’s financial reserves, which are anticipated to be disbursed in this fiscal year. HITEC-LA is included in Community Programs and the project will phase-out in April 2015.

211 New! Cal MediConnect is the CCI pilot program developed in conjunction with California’s Department of Health Care Services to integrate medical care, long-term care, behavioral health care and social services for people eligible for both Medicare and Medi-Cal. L.A. County is one of the selected counties for the pilot. L.A. Care received initial membership in May 2014.

PASC-SEIU program provides administrative services for the health care of in home supportive services workers in Los Angeles County. Among the administrative services provided are: claims processing, member services, and information technology services.

L.A. Care Covered represents L.A. Care members that join the Health Benefit Exchange Qualified Health Plan (QHP) which offers all metal coverage levels (Platinum, Gold, Silver, and Bronze) and a Catastrophic Plan. L.A. Care Covered started in January 2014.

Other includes depreciation, non-operating income and expenses which encompass gross premium taxes, investments and interest.

212 Combined Operations

Combined operations are budgeted to produce a net operating surplus of $66 million which includes $10.9 million in support of community programs. Cal MediConnect launches in April 2014 with passive enrollment beginning in January 2015, the Coordinated Care Initiative in full effect as of July 2014 and D-SNP members transition into Cal MediConnect in January 2015.

Consolidated Statement of Operations Fiscal Year 2014/2015 (dollars in millions)

Cal Plan Direct Community L.A. Care MediConnect PASC-SEIU Other**** Total Partners* Services** Programs*** Covered (CMC) Revenue $2,451.4 $3,187.5 $1.3 $694.2 $182.1 $123.2 $6,639.7 Cost of Health Care 2,351.4 2,985.1 - 686.7 177.3 111.1 6,311.7 MCR 95.9% 93.7% n/a 98.9% 97.4% 90.1% 95.1% Operating Margin 100.0 202.4 1.3 7.5 4.8 12.1 - 328.0 Administrative Expense 56.3 138.7 7.2 23.3 5.0 14.8 7.0 252.3 Administrative Ratio 2.3% 4.4% n/a 3.4% 2.7% 12.0% 3.8% Gain / (Loss) from Operations 43.7 63.7 (5.9) (15.8) (0.2) (2.7) (7.0) 75.7

Community Investments (5.0) (5.0) Managed Care Tax, net - (4.9) (4.9) Investments & Interest Income (net) 0.2 0.2 Revenue over (under) Expenses $43.7 $63.7 ($10.9) ($15.8) ($0.2) ($7.6) ($6.8) $66.0 Margin 1.8% 2.0% n/a -2.3% -0.1% -6.1% 1.0%

* Includes Medi-Cal ** Includes MCLA, Medicare SNP, and Healthy Kids 0 - 5 *** Includes Community Programs and HITEC-LA **** Includes Depreciation, Gross Premium Tax, and Investments & Interest

Core Operations

Statement of Core Operations Fiscal Year 2014/2015 (dollars in millions)

Cal Healthy Kids L.A. Care Plan Partners MCLA Medicare MediConnect PASC-SEIU Total (0-5) Covered (CMC) Revenue $2,451.4 $3,160.9 $25.3 $1.3 $694.2 $182.1 $123.2 $6,638.4 Cost of Health Care 2,351.4 2,959.8 24.2 1.2 686.7 177.3 111.1 6,311.6 Operating Margin 100.0 201.1 1.1 0.1 7.5 4.8 12.1 326.8 Administrative Expense 56.3 136.1 2.6 0.0 23.3 5.0 14.8 238.2

Gain / (Loss) from Operations $43.7 $65.0 ($1.5) $0.1 ($15.8) ($0.2) ($2.7) $88.6

213 Membership

Overall, the projected membership growth between fiscal year 2014 and fiscal year 2015 is expected to be 270,000 members or 17.4 percent with member months growing by 3,938,000 or 23.6 percent. Combined line of business membership is projected to be 1,816,000 at September 30, 2015. Direct lines of business represented approximately 20 percent of total membership in fiscal year 2011 and have steadily grown to reach 50 percent of total membership in fiscal year 2015.

Membership by Fiscal Year (in thousands)

Membership Change Member Months Change 2014 2015 Members Percent 2014 2015 Members Percent Medi-Cal Plan Partners 816 911 95 11.6% 9,453 10,545 1,092 11.6% L.A. Care 634 771 137 21.6% 6,384 8,627 2,243 35.1% Total Medi-Cal 1,450 1,682 232 16.0% 15,837 19,172 3,335 21.1% Cal MediConnect 7 35 28 404.3% 20 295 275 1342.5% Medicare SNP 8 - (8) -100.0% 89 26 (63) -70.8% Healthy Kids 0-5 1 - (1) -100.0% 11 7 (4) -33.5% PASC-SEIU 49 50 1 1.3% 554 591 37 6.7% L.A. Care Covered (Exchange) 31 49 18 57.9% 157 515 358 228.5% Total 1,546 1,816 270 17.4% 16,668 20,606 3,938 23.6%

214 Revenue

Medi-Cal Capitation Rates The assumed revenue for FY 2014-2015 is based on rates provided by the California Department of Health Care Services (DHCS). The rates represent a 3 percent increase from the prior year. These rates include MCO taxes, SB 335 and SB 208 funds, and a supplemental increase for implementing the ACA Medicare payment level increase for Medicaid primary care physicians (PCPs). The rates are only for the first nine months (Oct-June) of the fiscal year. DHCS is moving to a July through June rate year. The budget assumes that the rates for the last three months of our fiscal year will be 3 percent higher than the first 9 months and includes Medi-Cal Long Term Services and Support (MLTSS) revenue. Medi-Cal Expansion rates are assumed to be lower than the current run rate.

Cal MediConnect The revenue for this pilot program is based on rates received from DHCS and the Centers for Medicare and Medicaid Services (CMS).

Medicare Medicare revenue is based on the current revenue rate; budget assumes program discontinues after December 31, 2014.

Healthy Kids (ages 0-5) Healthy Kids revenue rate increased $47.82 per member per month to cover increase in provider capitation and provider incentives expense.

PASC-SEIU PASC- SEIU revenue is based on the current run rate.

L.A. Care Covered L.A. Care Covered rates are based on the Covered California approved rates.

215 Cost of Health Care

Medi-Cal Plan Partners The delegated contract relationships with the three Plan Partners, Anthem, Care 1st and Kaiser, were renegotiated in fiscal year 2011 and include risk adjusted capitation rates and a separate quality score investment program. The plan-specific capitation rates are risk-adjusted where actuarially appropriate. Also consistent with DHCS policy, capitation rates for the Seniors and People with Disabilities (SPD) category will be adjusted by the proportion of new to continuing SPD members enrolled. We will follow the same process this year. Kaiser rates reflect a maximum of 2 percent withheld from the net DHCS rate paid to L.A. Care, except for the TLIC or “Child” rating category which has zero withhold, based on the “three-way agreement” negotiated between L.A. Care, Kaiser, and DHCS.

L.A. Care restructured the Plan Partner incentive program for measurement year 2014 (payment year 2015). The new program combines the previous HEDIS and LA P4P incentives into one unified program that operates on a calendar year basis. The program is designed to align quality goals among L.A. Care and its subcontracted health plans and target specific performance measures that impact member auto assignment, health outcomes, and patient satisfaction. Plan Partners are eligible for an annual per member per month financial incentive for meeting eligibility and performance criteria. Kaiser is excluded from this program.

L.A. Care will continue working closely with Plan Partners in FY 2014-2015 on implementation of new Medi-Cal benefits including managed long term supports and services (MLTSS) and the new expanded behavioral health benefit. In addition, L.A. Care will continue implementing the provisions under Section 1202 of the Affordable Care Act, titled Primary Care Provider Payment Increase, in collaboration with the Plan Partners. This provision provides a rate increase to Medicare rates for calendar year 2013 and 2014 for specific primary care services provided by eligible physicians.

Direct Lines of Business L.A. Care’s direct lines of business consist of Medi-Cal (MCLA), Medicare SNP, L.A. Care Covered and the Healthy Kids program 0-5 years. The health care budget for these lines of business is based on our experience over the last two years with the exception of L.A. Care Covered which is based on current experience and actuarial estimates.

Consistent with a maturing health care delivery network, the utilization growth and the consumption of health care services has become more complex. L.A. Care’s management team remains focused on utilization management processes, provider contracting and claims payment management. The fundamental goal is to assure that L.A. Care’s members have access to an appropriate health care provider at the most cost effective venue.

216 Provider Incentives L.A. Care Quality Score Investments (Provider Incentive Programs) L.A. Care’s provider incentives are an essential part of L.A. Care’s interventions to maximize clinical quality and member satisfaction. In addition to rewarding performance and improvement on critical clinical and utilization measures, these programs provide a business case for provider investment in quality improvement, and use industry standard metrics, such as HEDIS clinical measures, to promote accountability for quality. L.A. Care’s provider-level incentives are designed to advance L.A. Care’s collaboration with key business partners, and to align the quality and improvement goals of Plan Partners, PPGs, and providers.

Funding (1), (2), (3) Provider Incentive Budget (000's in thousands) Plan Partners $14,100 PPG 12,445 Physician 29,712 Member 4,754 Total $61,012

Funding Provider Incentive Budget By LOB (000's in thousands) Plan Partners (2) $34,411 MCLA (1) 18,421 SNP 592 Cal MediConnect 4,245 Community Benefit 816 Healthy Kids 735 PASC-SEIU 10 L.A. Care Covered 2,599 Total $61,828 Notes: 1. Assume no provider incentives for the Targeted Low-Income Children Program Members (these are Healthy Families Program Members that transitioned into the Medi-Cal Program during 2013). 2. Assume no provider incentives for Kaiser Plan Partner Medi-Cal Members 3. The Provider Incentive Budget excludes Community Benefit incentives ($816,000).

Plan Partner Quality Score Investments (Incentives) The Plan Partner Incentive Program has been re-designed to combine two previous plan-level incentives into one. In the streamlined program’s clinical quality domain, eligible plans are rewarded for defined improvement in core HEDIS auto-assignment measures. The incentive also emphasizes improvements in encounter data submission by PPGs.

217 PPG Quality Score Investments (Incentives) LA P4P (Pay-for-Performance for PPGs) measures, reports, and rewards PPG performance in multiple domains that affect quality of care, including clinical quality, utilization, and member satisfaction. In addition to rewarding performance and driving quality improvement, LA P4P promotes meaningful improvement in encounter data submission. The program now requires PPGs to meet a minimum rate of encounter data submission to qualify for incentive payments, and scales performance-based payments as encounter data submission rates increase.

Physician Quality Score Investments (Incentives) The Physician Pay-for-Performance (P4P) Program provides financial rewards to providers and community clinics for outstanding performance and year-over-year improvement on multiple HEDIS measures. The program is closely aligned with incentives available to PPGs.

L.A. Care also operates a provider incentive in support of completing Medicare Annual Wellness Exams, with the goal of maximizing Hierarchical Condition Category (HCC) coding and HEDIS/STAR attainment. Additionally, L.A. Care’s member incentives advance L.A. Care’s priorities related to member experience, health education, and receipt of important medical services.

218 L.A. Care Health Plan 2014/15 General Administrative Budget Cross-Walk excludes depreciation

(A) (B) (C=A+B) FYE 9/2014 FYE 9/2015 dollars in thousands Projected Additions/ Pending Expense Programs Budget

Net Increase in Base Line Operations $232,740 $54,567 $287,307 New Programs/ Additions to Forecast

Projects Clinical Care Advance (CCA) 2,000 Core System Project Operationalize 3,000 Data Masking / Robust Test Environment 500 EDI Uplift (Phase 1) 500 Encounters Uplift (Phase 1) 500 Hi-Tech Initiatives Support 800 ICD-10 Remediation 3,500 IT Development & Software Management Control Tools 500 Medical Management System Enhancements 2,000 Member Portal Redesign (Phase 1) & Share of Costs 2,400 Oracle Legacy Database Optimization / Update 10g - 11g 800 PM-160 Electronic Workflow 300 Provider Data Management 2,500 QNXT Enhancements 1,500 Internet Redesign 70

Total New Administrative Costs $232,740 $75,437 $308,177

219 Administrative Expenses

Comparative Administrative Cost – Fiscal Year 2014 vs. Fiscal Year 2015 Fiscal year 2014 administrative costs included ramp-up expenses for significant membership growth particularly related to the Coordinated Care Initiative, Cal MediConnect Pilot and Medi-Cal Expansion. Fiscal year 2015 will continue to expand the programs which were launched in fiscal year 2014. The Fiscal year 2015 administrative budget considers base run-rates, staffing levels in support of membership, infrastructure support, new and existing projects, anticipated contract changes and programs essential to remain compliant.

The following is a summary of the forecast and budget between the fiscal years.

Administrative Expenses including Medical Administration excludes depreciation

FY 2013/14 FY 2014/15 Forecast Budget (dollars in thousands) $ PMPM $ PMPM FTE's (at year end) 1,275 1,800

Staffing $110,222 $5.95 139,158 $7.16 Contracting 46,270 2.50 97,510 5.01 Advertising 4,219 0.23 8,394 0.43 Suplies and Others 40,063 2.16 63,115 3.25 Total Administrative Expense $200,774 $10.84 $308,177 $15.85 Administrative Ratio (excluding Med Admin) 5.5% 5.1%

220 Staffing and Total Cost of Labor

L.A. Care’s forecasted full time equivalent (FTE) staffing is 1,275 positions at the end of fiscal year 2014. During fiscal year 2015, the budget provides for an additional 525 FTEs, raising the total FTE count to 1,800 by the end of fiscal year 2015. The additional FTEs are in support of growth and the ongoing changes related to the Coordinated Care Initiative, Cal MediConnect Pilot, Medi-Cal Expansion and L.A. Care Covered. These new positions will be added throughout the year as membership thresholds are attained or as new systems become operational. Salaries and Benefits, budgeted at $121.0 million for fiscal year 2015, includes merit increases budgeted at 3.25 percent.

In an effort to focus employees on organizational goals and objectives, L.A. Care will reward some employees up to 5 percent of Salaries and Benefits in incentives based on criteria established in its Organizational Incentive Program. The incentive program is not a guaranteed bonus for employees, but rather a reward for excellent performance, either at the organizational or individual level. Incentive compensation earned by an employee is paid as a lump sum and does not become a part of the employee’s base pay rate.

FTE History excluding HITEC-LA staff FTEs FTEs per Ramp Up (at year end) 000 Members Factor FY 2011 (Actual) 536 0.57 9% FY 2012 (Actual) 703 0.66 8% FY 2013 (Actual) 913 0.76 24% FY 2014 (Budget) 1747 1.10 27% FY 2015 (Budget) 1800 1.06 6%

Ramp up Factor = Position remains open until it is filled, for example, 25% is about 3 months.

221 Advertising Strategy Fiscal year 2013-14 saw the launch of L.A. Care’s first commercial product line, the expansion of Medi-Cal to the adult population, the sun setting of the Medicare Advantage Special Needs Plan (DSNP) to make way for Cal MediConnect (CMC) and the Coordinated Care Initiative (CCI). Current members and newly eligible consumers may overlook L.A. Care as a viable option when selecting a health plan as a result of the limited number of products that have historically been available. It is very timely for the organization to consider the re-visioning of L.A. Care’s brand messaging to more fully reflect the products and services that we are now offering.

For more than 16 years, L.A. Care has provided affordable, quality and culturally-competent health care to Los Angeles County’s most vulnerable populations. L.A. Care has accumulated experience, cultivated relationships and implemented lessons learned that today, make L.A. Care a model for managed care. While this fact is widely known and accepted within the State and County, it is not widely recognized by consumers that have not had access to L.A. Care due to the eligibility requirements for Medi-Cal, Healthy Families and DSNP. As a result of the Affordable Care Act, L.A. Care will need to educate and inform our current membership and L.A. County residents about the person-centered services and products that we have to offer through our direct lines of business. Advertising/Branding for L.A. Care Covered L.A. Care Covered was a build from the bottom up product initiative that required a very short project management and advertising timeline. For the 2015 enrollment cycle, Sales and Marketing will collaborate with Commercial Group Operations and our agency, Maricich Communications to develop a plan to broaden consumer awareness for L.A. Care Covered, retain current members and grow enrollment. Current branding and creative assets will be utilized to allocate the bulk of the budget towards consumer awareness, educations and lead generation. The campaign was very cost effective and provided the organization with a good foundation to build upon for the 2015 enrollment period slated for November 15 – February 15. The average cost per new enrollment was approximately $89.00. Advertising/Branding for L.A. Care (Corporate, Health Plans and Family Resource Centers) Staff is recommending a refresh of the organization’s look, tone and feel; our corporate identity should continue to adapt and change to reflect consistent growth and organizational/service line development for all of our products. Enhancement of the L.A. Care brand is critical, as is the development and execution of sales and marketing strategies and tactics where top-of-mind awareness is seamlessly woven throughout the branding and presentations associated with our direct lines of business. In each effort, L.A. Care’s participation in Medi-Cal Expansion, Covered California and Cal MediConnect will need to focus on messaging specific to the product and the positioning of L.A. Care as the best choice for providing their health plan benefits.

An investment in new creative is recommended to fully reflect the organization that we are today. The objective will be to build brand awareness and continue to support the positioning of L.A. Care as a health plan - uniquely mission-driven and exclusively invested in the health and well-being of Los Angeles County residents. L.A. Care has been and is committed to being a vital part of the fabric of the L.A. County consumer driven health care market.

The marketing and advertising of the L.A. Care brand and products will require budget support to build an ongoing relationship with our members, providers, stakeholders and employees. To compete in the changing and evolving L.A. County market, a sustained advertising program will support the building of consumer awareness and brand loyalty for L.A. Care.

Beyond our products are our unique Family Resource Centers that have operated in the Lynwood and Inglewood areas that are now expanding. The third site was opened in March, 2014 and a fourth site is scheduled to open in Pacoima. Four sites provide an opportunity to leverage the community marketing potential to further these mission critical health resource sites. The development of a well thought out and integrated advertising plan will be incorporated into the branding and messaging to educate newly eligible Medi-Cal adults, current MCLA members and prospective members for our direct lines of business. 18

222 Community Health Improvement Programs

L.A. Care has historically committed a portion of its financial reserves to investment in activities that promote health and disease prevention in the broader community. Over the past 16 years, L.A. Care has committed over $155.0 million to increase quality and access to health care in the Los Angeles community. Past funding commitments include $95.7 million to the Healthy Kids (6-18) program, over $50.3 million to the Community Health Investment Fund, including the safety net, and over $9.0 million to the Los Angeles County Department of Health Services, Department of Public Health, and Rancho Los Amigos National Rehabilitation Center.

The proposed Community Health Improvement Program budget for fiscal year 2014-15 allocates $10.9 million of L.A. Care’s financial reserves for selected projects to be funded throughout the fiscal year. Community Health Improvement Programs include the Community Health Improvement Fund (CHIF), HITEC-LA, and Community Programs (which includes the Family Resource Centers, eConsult, Star Partner & Star Physician Programs, Community Benefits Program, Promotoras and sponsorships).

Statement of Community Health Improvement Programs Fiscal Year 2014/2015 (dollars in millions)

CHIF HITEC-LA Community Total Programs * Member Premium/Other Revenue$ - $ 1.3 $ - $ 1.3 Cost of Health Care - - - - Operating Margin - 1.3 - 1.3 Administrative Expense - 1.5 5.8 7.2 Shared Services - - - - Gain/(Loss) from Operations - (0.1) (5.8) (5.9) Community Investments (5.0) (5.0) Revenue over (under) Expenses $ (5.0) $ (0.1) $ (5.8) $ (10.9)

* Community Programs include eConsult, FRCs, Star Partner/Physician Program, Community Benefits Program, Promotoras, and Sponsorships

Funding FY 2014/2015 Community Health Improvement Programs (dollars in thousands) Community Health Investment 5,000 HITEC-LA & HCCN Grant 148 eConsult 1,119 Family Resource Centers 2,861 Star Partners Program & Star Physician for Safety Net Clinics 650 Community Benefits Program 259 Promotoras/Health Promoter Program 112 Sponsorships 750 Total $10,899

223 Community Health Investment $5 Million CHIF was established to improve access and quality of care by filling gaps and supporting infrastructure to benefit the underserved and the safety net that serves them. The goals of the community health investment fund include:

The goals of the strategic plan for community health investment include: Maintain and improve access to quality health care services for underserved communities in Los Angeles County Enable L.A. Care and the community to jointly address community-wide health issues Strengthen the health care safety net in Los Angeles County Enhance L.A. Care’s value to the community

CHIF Grants Each year, the CHIF grant-making budget is divided between funds for predetermined initiatives and for those in response to external requests. Due to budgetary constraints, all grants were suspended for fiscal year 2012-13. Grants were resumed at the $5 million level for fiscal year 2013-14 and are being requested for fiscal year 2014-15.

HITEC-LA $148,389 HITEC-LA is the exclusive Health Information Technology Regional Extension Center for L.A. County, formed to help 3,000 of the county’s priority primary care providers (PPCPs) reach meaningful use on certified electronic health records (EHRs) by April 2014. The program started in 2010 when L.A. Care was awarded a $15.6 million federal grant from the U.S. Department of Health and Human Services through the Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009. L.A. Care supplied a 10 percent match to the federal grant. Due to positive programmatic results achieved by HITEC-LA in the first two years, the federal grant was increased to $16.9 million in 2012 with a corresponding match by L.A. Care. HITEC-LA continues to accomplish its program objectives. As of May 2014, HITEC-LA passed 86 percent of its goal of helping 3,000 primary care providers reach meaningful use. As a result of its strong performance, HITEC-LA was awarded a no-cost extension from the Office of the National Coordinator of Health IT to continue until April 2015. The program’s commitment to delivering high quality service has resulted in a high level of satisfaction among the solo providers, small practices, and clinics it works with.

Health Center Controlled Network (HCCN) Grant In December 2012, the Health Resources and Services Administration awarded Community Clinic Association of Los Angeles (CCALAC) the L.A. Regional Health Center Controlled Network (HCCN) grant for $1.8 million over three years to support adoption and meaningful use Stage 2 of certified electronic health record (EHR) technology and technology-enabled quality improvement initiatives in health centers. HITEC-LA was selected as a Service Partner for CCALAC to provide L.A. County Federally Qualified Health Centers (FQHCs) with education and onsite technical assistance to implement certified EHRs. The L.A. Regional HCCN supports 27 collaborating health centers with 183 locations throughout the county, employing over 730 health care providers and serving almost 700,000 patients each year.

224 Community Programs eConsult $1.1 Million eConsult is a web-based platform that allows for primary care provider-to-specialist conversations aimed at speeding access to specialty care and improving care coordination. The Safety Net eConsult program is an initiative of L.A. Care reflecting its ongoing commitment to advancing health and health care using the latest in care coordination and communication technologies. The program is the largest scale implementation of primary care provider-to-specialist e-consultation anywhere in the nation. This effort to provide more efficient care coordination for low-income and vulnerable populations throughout Los Angeles County is a result of the collaboration between the Los Angeles County Department of Health Services (DHS), MedPoint Management, the CCALAC and Health Care L.A. Independent Physicians Association, with funding and project management provided by L.A. Care, the lead agency for the program.

Family Resource Centers $2.9 Million The Family Resource Centers are aimed at addressing health disparities by creating a single point of service where the community can turn to for help with health education and assistance with navigating the health care delivery system and available programs. Dedicated L.A. Care staff and contracted health education vendors provide a number of activities for community residents including health education, disease prevention and promotion of self- management tools, education on establishing and or maintaining health coverage. Two Family Resource Centers (FRCs) have successfully been launched in Lynwood and Inglewood with almost 139,000 visits to date. Since the opening of the first Center in November 2007, the project has been successful in delivering well-integrated health education resources and services that address important health topics such as asthma, diabetes, and obesity. The third Family Resource Center is expected to open in the San Fernando Valley in fiscal year 2014-2015. A fourth Family Resource Center is currently in discussion with Los Angeles County Wellness Center, a partnership of First district Supervisor Gloria Molina and the California Endowment. A placeholder budget has been set for fiscal year 2014-2015.

Star Partners and Physician Programs for Safety Net Clinics $650,000 The Star Partners’ Program was developed in April 2005 as a marketing and outreach project to improve the community’s awareness of the Safety Net Clinic’s availability and provide the clinics with support to promote enrollment of all eligible individuals into appropriate programs. The program is designed to increase the clinics’ commitment to improving outreach and service to the patients they serve by making available to clinics co-branded promotional materials, public relations opportunities, special consideration of sponsorship requests, technology grant opportunities and customer service, basic managed care fundamentals and cultural sensitivity trainings.

The Star Physician Program is modeled after the success of the Star Partner Program. The program is designed to improve health care access and quality services to our members as well as increase physician participation in L.A. Care programs designed to improve provider understanding of L.A. Care and managed care. The Star Physician program was launched in April 2011 to L.A. Care’s top 50 primary care physicians who meet specific baseline criteria. Under the current program guidelines, Star Physicians may be eligible for co-branded promotional materials, publicized acknowledgement, public relations opportunities and a practice support incentive.

225 Community Benefits Program Administration $259,000 The Community Benefit Program's department staff is responsible for managing all aspects of L.A. Care’s CHIF grant making activities. Every year L.A. Care commits a portion of its revenues to community benefit activities. Staff researches gaps in healthcare, especially for vulnerable, uninsured individuals. Program initiatives are developed and announced to the community. Proposals are reviewed by staff and external experts. Grantee management includes review and support of grantee programs to assure that all funds are appropriately used. In addition to L.A. Care-developed initiatives, staff reviews proposals which are submitted for targeted needs. Ad-hoc proposals that meet our mission and the themes developed for funding in the Board-approved Community Investment Strategy are presented to Leadership, Executive Committee and finally the Board of Governors for funding approval.

Health Promoters/Promotoras Program $112,000 Health promoters continue their community outreach and education efforts by building relationships with community based organizations in their neighborhoods to offer healthcare reform and health disparities education. From October 2012 to May 2013, health promoters educated over 1,600 community members through community workshops, events, and conferences. The health promoters program continues to evolve to meet the needs of the community, including the development of a health promoter theater troupe to provide health care reform education in an innovative and informative way. The health promoters program began collaborating with key stakeholders in the Health Happens Here campaign and with Telemundo 52 in reaching the Spanish speaking population. Through promotional videos and vignettes, the program invites the public to community events where the health promoter theater troupe showcase a 12-15 minute educational theater and puppet show on health care reform. In addition to the educational theater, health promoters continue hosting resource tables at community health events to disseminate health information. During FY 2012-2013, a new pilot program was created within the Active Steps Program (16-week nutrition and physical activity classes) to enhance the program by increasing health promoter involvement. Health promoters continue to provide monthly updates on health care reform to approximately 300 RCAC members, co-teach with health educators on various health topics, and collaborate with the Family Resource Centers in educating the community on healthy lifestyles.

Sponsorships $750,000 The community sponsorship program supports strategically selected events in target communities.

226

Capital Expenditures

The new projects include leasehold improvements and expansion in support of organizational growth and projects to upgrade systems and enhance the infrastructure. Ongoing projects include capital equipment purchases, CORE System implementation as well as ICD-10 System Remediation.

Capital Expenditures Summary

Project Purpose Capital Call Recording Modernization (Call Center) New $1,025,000 Cisco Enterprise Call Manager Upgrade New 1,350,000 Claims Auditing Tool New 1,000,000 CRM Tool (Phase I) M.O.R.E. initiative New 500,000 Data Center Equipment Expansion & Upgrades New 1,385,000 Data Masking/ Robust Test Environment New 500,000 EDI Uplift (Phase I) New 500,000 Encounters Uplift (Phase I) New 500,000 Enterprise Workflow System New 1,800,000 Enterprise Resource Planning Solution: Finance/HR New 2,000,000 Fraud / Waste / Abuse Detection (FWA) New 1,200,000 HI-TECH Initiatives Support New 200,000 Intranet Redesign Project New 200,000 Interactive Voice Response (IVR) System Modernization New 1,600,000 Leasehold Improvements New 15,000,000 Member Portal Redesign (Phase I) New 2,500,000 Network Modernization New 1,660,000 Oracle Legacy Database Optimization / Update 10g - 11g New 300,000 Payspan (EFT/ERA Mandate) New 500,000 Provider Portal Redesign (Phase I) New 2,500,000 Enterprise Data Warehouse (EDW) Ongoing 2,000,000 Enterprise Documents Mgmt/Imaging/Claims OCR Ongoing 1,672,000 IT Development & Software Mgmt Control Tools Ongoing 300,000 Medicare Appeals and Grievances Project Ongoing 800,000 Optum Insight Transaction Routing & Testing Portal Ongoing 118,000 Capital Equipment Purchases Ongoing 3,000,000 Total Capital Budget $44,110,000

227 FINANCIAL STATEMENTS

L. A. Care Health Plan Balance Sheet Fiscal Year 2014 - 2015 dollars in thousands

Projected as of Budget as of September 30, 2014 September 30, 2015 Combined Balance Sheet Current Assets Cash & cash equivalents $802,959 $857,078 Investments, at fair value 269,000 275,000 Other current assets 9,390 10,390 Total current assets 1,081,349 1,142,468 Capital Assets, net 27,000 32,000 Non-current Assets 11,000 11,000 Total Assets $1,119,349 $1,185,468 Current Liabilities A/P and accrued liabilities $58,000 $60,000 Subcapitation payable 647,056 635,000 Provider incentives 33,000 30,000 Other accrued medical expenses 155,500 170,000 Grants payable 3,000 2,000 Total current liabilities 896,556 897,000

Non-Current Liabilities 1,700 1,400 Total Liabilities 898,256 898,400 Fund Equity Invested in Capital Assets 27,000 32,000 Restricted 200 100 Board Designated Funds 118,893 106,554 Minimum TNE 75,000 148,414 Total Fund Equity 221,093 287,068 Total Liabilities and Fund Equity $1,119,349 $1,185,468

228 L.A. Care Health Plan Comparative Statement of Operations Fiscal Year 2013/14 vs. Fiscal Year 2014/15 dollars in thousands

FY 2013/14 FY 2013/14 FY 2014/15 Budget Forecast Budget Membership 1,593,882 1,546,288 1,815,725 Member Months 17,131,830 16,668,276 20,605,897 Revenue Capitation $4,089,654 $3,875,695 $6,504,860 Maternity Kick 142,019 112,950 133,508 Other 2,926 3,060 1,336 Total Revenue 4,234,599 3,991,705 6,639,704 Cost of Health Care Capitation 2,579,787 2,482,514 2,997,562 Provider Incentives & Shared Risk 45,751 101,174 135,795 Inpatient & Outpatient 735,640 680,770 1,112,660 Pharmacy 294,045 285,388 395,457 Long Term Care 97,387 75,811 663,251 Home & Community Based Svcs 188,289 62,951 907,710 Medical Administrative Expenses 63,444 76,612 99,207 Total Cost of Health Care 4,004,342 3,765,221 6,311,642 MCR 94.6% 94.3% 95.1% Operating Margin 230,257 226,484 328,062 752 Total operating expense 235,390 176,561 252,410 Administrative Ratio 5.6% 4.4% 3.8%

Net Income (Loss) from Operations (5,134) 49,924 75,652 Non-Operating Income (Expense) Provision for Community Investments (5,000) (171) (5,000) Gross Premium Tax, net (1,843) (5,123) (4,852) Interest Income - net 375 521 175

Revenues over (under) Expenses ($11,602) $45,150 $65,975 Margin -0.3% 1.1% 1.0%

Note: Skilled Nursing Facility costs were included in the inpatient & outpatient expense line in Fiscal Year 2013-14 Budget. The Fiscal Year 2013-14 forecast is based on actual financials as of FYTD June 30, 2014.

229 L. A. Care Health Plan Statement of Cash Flows Fiscal Year 2014-2015 dollars in thousands

Projected for the FYE Budget for the FYE September 30, 2014 September 30, 2015 Combined Statement of Cash Flow Operating activities

Excess operating revenues (under) expenses $45,150 $65,975 Add: Depreciation/Amortization 4,244 7,000 (Increase) Decrease in: Other current assets 350,871 (1,000) Non-current Assets 198 - Increase (Decrease) in: Accounts payable 18,976 2,000 Subcapitation payable (200,389) (12,056) Provider incentives (169) (3,000) Other accrued medical expenses 20,311 14,500 Grants payable 1,805 (1,000) Non-current liabilities (211) (300) Cash (used) provided by operating activities 240,786 72,119 Investing activities Sell (purchase) of investments (109,373) (6,000) capital assets (investment) (18,206) (12,000) Cash (used) provided by investing activities (127,579) (18,000) Net increase (decr.) in unrestricted cash & equivalents 113,207 54,119 Unrestricted cash & equivalents - beginning of period 689,752 802,959 Unrestricted cash & equivalents - end of period $802,959 $857,078

230 L. A. Care Health Plan Required Tangible Net Equity Calculation Fiscal Year 2014-2015 dollars in thousands

Budget as of September 30, 2015

Tangible Net Equity (TNE) Calculation

Healthcare expenses:

1. 8% of first 150 million of $12,000 annualized health care expenses, except those paid on a capitated or managed hospital basis

2. 4 % of the annualized health 60,900 care expenses, except those paid on a capitated or managed hospital basis

3. 4 % of the annualized hospital 41,265 expenditures paid on a managed hospital basis

Calculated TNE based on healthcare expenses 114,164

Required TNE (at 130%) 148,414

Fund equity 287,068

Excess equity over required TNE $138,654

231

APPENDIX

Appendix 1 – Membership

MEMBERSHIP BY LINE OF BUSINESS Fiscal year 2014/2015

Cal Plan PASC-SEIU LA Care MCLA Medicare HK (0 - 5) Total MediConnect Partner Workers Covered Month

Oct-14 7,255 827,976 647,255 8,542 798 48,828 35,377 1,576,031 Nov-14 7,478 835,802 658,758 8,684 798 48,903 37,177 1,597,600 Dec-14 7,701 843,628 670,261 8,826 798 48,978 38,977 1,619,169 Jan-15 20,102 866,428 698,113 - 798 49,053 40,177 1,674,671 Feb-15 23,142 874,254 709,616 - 798 49,128 41,377 1,698,315 Mar-15 26,182 882,080 721,119 - 798 49,203 42,577 1,721,959 Apr-15 29,222 888,906 731,422 - 798 49,278 43,777 1,743,403 May-15 32,262 895,732 741,725 - 798 49,353 44,977 1,764,847 Jun-15 35,300 902,561 752,031 - 798 49,428 46,177 1,786,295 Jul-15 35,300 907,443 760,390 - - 49,503 47,377 1,800,013 Aug-15 35,300 909,168 765,662 - - 49,578 48,161 1,807,869 Sep-15 35,300 910,893 770,934 - - 49,653 48,945 1,815,725 Total 294,544 10,544,871 8,627,286 26,052 7,182 590,886 515,076 20,605,897

232 Appendix 2 – Capital Expenditures and Other Projects

New Programs this year include leasehold improvements to accommodate the projected FTE growth in support of increasing membership for programs like Medi-Cal Expansion and Cal MediConnect. Several initiatives in support of the new programs (including the Exchange) require access to on-line processes. A large portion of the capital expenditures is related to computer systems and related expenses.

L.A. Care Health Plan Proposed Projects for Fiscal year 2014/2015 Capital Professional Programs Expense Fees Other Total New Programs Call Recording Modernization (Call Center) 1,025,000 - - 1,025,000 Cisco Enterprise Call Manager Upgrade 1,350,000 - - 1,350,000 Claims Auditing Tool 1,000,000 - - 1,000,000 CRM Tool (Phase I) M.O.R.E. initiative 500,000 - - 500,000 Data Center Equipment Expansion & Upgrades 1,385,000 - - 1,385,000 Data Masking/ Robust Test Environment 500,000 500,000 - 1,000,000 EDI Uplift (Phase I) 500,000 500,000 - 1,000,000 Encounters Uplift (Phase I) 500,000 500,000 - 1,000,000 Enterprise Workflow System 1,800,000 - - 1,800,000 Enterprise Resource Planning Solution: Finance/HR 2,000,000 - - 2,000,000 Fraud / Waste / Abuse Detection (FWA) 1,200,000 - - 1,200,000 HI-TECH Initiatives Support 200,000 550,000 250,000 1,000,000 Intranet Redesign Project 200,000 70,000 270,000 Interactive Voice Response (IVR) System Modernization 1,600,000 - - 1,600,000 Leasehold Improvements 15,000,000 - - 15,000,000 Medical Management System Enhancements - 1,500,000 500,000 2,000,000 Member Portal Redesign (Phase I) & Share of Costs 2,500,000 2,400,000 - 4,900,000 Network Modernization 1,660,000 - - 1,660,000 Oracle Legacy Database Optimization / Update 10g - 11g 300,000 700,000 100,000 1,100,000 Payspan (EFT/ERA Mandate) 500,000 - - 500,000 Provider Data Management - 2,500,000 - 2,500,000 Provider Portal Redesign (Phase I) 2,500,000 - - 2,500,000 QNXT Enhancements - 1,500,000 - 1,500,000 Total New Programs 36,220,000 10,650,000 920,000 47,790,000

Ongoing Programs Clinical Care Advanced System (CCA) / Coordinated Care Initiative (CCI) - 1,500,000 500,000 2,000,000 Core System Project - 2,500,000 500,000 3,000,000 Enterprise Data Warehouse (EDW) 2,000,000 - - 2,000,000 Enterprise Documents Mgmt/Imaging/Claims OCR 1,672,000 - - 1,672,000 ICD-10 Systems Remediation - 3,450,000 50,000 3,500,000 IT Development & Software Mgmt Control Tools 300,000 500,000 - 800,000 Medicare Appeals and Grievances Project 800,000 - - 800,000 Optum Insight Transaction Routing & Testing Portal 118,000 - - 118,000 PM-160 Electronic Workflow Project - 250,000 50,000 300,000 Capital Equipment Purchases 3,000,000 - - 3,000,000

Total Ongoing Programs 7,890,000 8,200,000 1,100,000 17,190,000

Total Programs 44,110,000 18,850,000 2,020,000 64,980,000

233 New Projects

Call Recording Modernization (Call Center): $1,025,000 L.A. Care needs to replace the existing call recording platform to stay in compliance and monitor/record calls properly. The existing software has become unstable due to the increased demand associated with L.A. Care staff and membership growth. The current platform does not work with any upgraded versions of the Cisco Call Manager telephone system and gives constant errors in regards to screen captures; cross recordings and multiple recordings in one session. It also does not provide speech analytics or workforce management functionality which has now become a necessity due to the staff growth. The budget for the new system includes professional fees, capital expenses, and consulting costs totaling $1,025,000.

Cisco Enterprise Call Manager Upgrade: $1,350,000 The project will upgrade the existing Cisco Call Manager software (UCCX 8.5) to adequately support the increased volume of calls. The Cisco UCCX 8.5 version only allows for up to 300 agents per server while Enterprise allows for up to 6,000 agents. The Enterprise edition also allows for more advanced reporting, call queuing, and skills/group development. With the rapid growth of L.A. Care, the telephone system needs to be upgraded to the Enterprise version to increase functionality and adequately support the call volume across the company. This upgrade budget includes professional fees, capital expenses, and consulting costs totaling $1,350,000.

Claims Auditing Tool: $1,000,000 Automation of the claims auditing function will ensure that all audits, including staff audits, interest audits, focused audits, and high dollar audits are reliably conducted with full reporting and audit trails available. The expected outcomes include increases in productivity, quality as well as improvements in the ability to report on audit results. Total cost of $1,000,000 is a capital expense based on an average price of $0.25 per member per month for the implementation and customization of the application.

CRM Tool (Phase I) M.O.R.E. Initiative: $500,000 With a need to improve the member experience and entrance into a market that is focused on improving customer relations. This new project will focus on increasing call center response times, first call resolution, and increased speed. The CRM tool is a cost effective and reliable method over the intensely manual efforts relied upon today. Capital expenses are budgeted at $500,000 for Phase I.

Data Center Equipment Expansion & Upgrades: $1,385,000 L.A. Care needs to expand the Data Center resources to keep up with increases in staffing and membership growth associated with the deployment of new lines of business. This project will directly support this growth and allow for future expansion as our member base increases, and the demands on the information systems increase. The budget includes professional fees, capital expenses and consulting costs totaling $1,385,000.

Data Masking/Robust Test Environment: $1,000,000 Currently L.A. Care utilizes production data for testing which exposes LA Care to be non-compliant with the HIPAA rule. Data masking will provide robust security for keeping members PHI safe. Total expenses are budgeted at $500,000 for capital expenses and $500,000 for consulting costs for six months.

EDI Uplift (Phase I): $1,000,000 There has been an enormous increase in demand for EDI resources and support over the last year. The increase in demand has come from multiple fronts including the expansion of our membership into new lines of business, the establishment of new data exchange relationships through new vendor contracts, and the transition and migration to a new core system. There is a need to evaluate our existing infrastructure and processes to ensure we are set up to best handle future demand on EDI resources. Capital expenses are budgeted at $500,000 and professional fees are $500,000.

234 Encounters Uplift (Phase I): $1,000,000 Encounter data processing and reporting are critical components of L.A. Care’s short and long-term viability as a plan. The business needs around encounter data are broad. Business functions impacted include revenue determination, quality of care measurement, and the ability to understand cost of care trends. This project will determine and design the most efficient technological infrastructure to support this growing need. Capital expenses are budgeted at $500,000 for hardware and storage, while professional fees for six months are budgeted at $500,000.

Enterprise Workflow System: $1,800,000 L.A. Care’s business had increased significantly. The rapid growth had challenged our operational capability. If the company is unable to respond to this rapid growth, competitors and partners will soon challenge the company in the areas where L.A Care is normally superior. This project will purchase or develop a system that will enhance productivity by automating processes and communications resulting into members, providers, and employee satisfaction. Budget estimates are capital costs of $1,800,000 for 600 user licenses at a cost of three thousand dollars per unit.

Enterprise Resource Planning (ERP) Solution: Finance/HR: $2,000,000 The ERP is designed to implement a complete set of financial systems (General ledger, accounts payable, accounts receivable, asset management, analytics, payroll interface, budgeting, forecasting, financial reporting, project tracking and seamless workflow) to replace the existing, disparate and incompatible software currently used to fulfill these missions. The estimated capital cost of $2,000,000 will deliver a complete set of financial systems with seamless workflow to eliminate the need for work around efforts and ongoing costly interventions by outside consulting for extraction, transformation and loading of data. The Financial Enterprise Resource Planning Solution is a complement to Human Resource’s request for a replacement of Payroll Interface/HR Perspective and the new FTE time and attendance tracking system. All costs for the project are related to capital software consulting.

Fraud/Waste/Abuse Detection (FWA): $1,200,000 L.A. Care’s fraud and abuse program as it relates to provider claims is limited and is largely dependent upon observations by staff to identify potential fraud and abuse issues. The project will create a new data mart to monitor and report on fraud, waste, and abuse. The project estimated cost is $1,200,000 capital cost for hardware and consulting fees.

HI‐TECH Initiatives Support: $1,000,000 A steady stream of service request is being initiated that requires work on behalf of the HI-TECH department. These primarily relate to building interfaces to extract and send medical data to governing bodies. There are also requests for the extraction of data to authenticate member eligibility and provider group assignments. Some request require the provision of a network for secure data sharing for pharmacy history, as well as data exchange for storing, receiving, and sending member documents via a web-enhanced service. The estimated budget is $200,000 for capital expenses and $800,000 for consulting and professional fees.

Intranet Redesign Project: $270,000 As L.A. Care grows in head count and complexity in the next few years, it is critical that employees have a “one- stop connection point” to the organization, its goals and deliverables. L.A. Care’s intranet is a major channel of communication for employees, but it needs better navigation, more content pages, and better interactive tools to increase employee use, sharing of information, and commitment to the corporate culture. The intranet redesign project total capital expenses are $200,000 and $70,000 for related labor costs.

Interactive Voice Response System (IVR) Modernization: $1,600,000 This project will modernize IVR application for improved navigation and usability in direct support of the call center, and provide a positive experience for our member base. This will include an infrastructure technology

235 upgrade, as well as, a complete application upgrade and added functionality to meet our increased demand for services. The budget includes professional fees, capital expenses and consulting costs totaling $1,600,000.

Leasehold Improvements: $15,000,000 During fiscal year 2014-2015, L.A. Care plans to lease additional office space. The project will involve the planning, design and construction of tenant improvements to leased office space, and the purchase of certain furniture and fixtures. The work involved includes the 5th floor of the Garland building as well as the 1st floor Member Reception area. Build-outs in the corporate building will include work on 2 additional floors and re- builds for new offices and furniture in support of company growth.

Medical Management System Enhancements: $2,000,000 L.A. Care will be overhauling certain operations in medical management to improve efficiencies by providing additional disease management programs, automating hospital admissions cases, providing advanced member stratification and enhancing authorization and delegated authorization processes. Total project cost is $1,500,000 for consulting costs and $500,000 for operating expenses.

Member Portal Redesign (Phase I) and Share of Costs: $4,900,000 The main objective of this project is to establish an updated and more robust and secure member portal that meets HIPAA requirements and provides seamless functionality and self-service tools to members. It is also imperative to update security on the site to meet all compliance regulations as it pertains to HIPAA and PHI. The entire infrastructure and technology stack needs to be re-architected to provide a more reliable and robust portal for members. Total capital expenses with professional services are budgeted at $4,900,000.

Network Modernization: $1,660,000 In order to transition to a network infrastructure that’s more capable of meeting current and future business requirements. This project will upgrade and replace aging network equipment with modern systems and support. L.A Care’s network equipment is currently outdated; equipment on 3rd, 4th, 5th, 7th, 8th, 9th, 10th, 11th, 12th, 18th intermediate distribution frame rooms have reached their EOL (end of life) cycle. Given that this equipment is at EOF the vendor will stop marketing, selling or maintaining this equipment. The network equipment is critical, because it connects all L.A care staff to our business applications and phone systems. Total budget for consulting, capital, and professional expenses is $1,660,000.

Oracle Legacy Database Optimization/Update 10g‐11g: $1,100,000 The project’s primary objective is to build a foundational technology platform that’s in one accord with the other strategic initiatives driving innovation and growth while allowing the flexibility to meet new competitive challenges and regulatory compliance requirements. The secondary project objective is to establish a strategic initiative to introduce continuous improvement measures to our Oracle Platform in order to increase security; privacy of our member data; optimize performance and ensure platform stability. Total budget for consulting, capital, and professional expenses is $1,100,000.

Payspan (EFT/ERA Mandate): $500,000 L.A. Care and all other payers must provide the ability to pay providers electronically as well as issue remittance advice (RA) electronically via the x12 v5010 835 transaction. This is being required of all HIPAA covered entities. L.A. Care has selected a vendor, PaySpan, for this business process outsourcing activity and the project is underway. Additional phases to include certification will be required by January 2015. Total budgeted capital expenses are $500,000.

Provider Data Management: $2,500,000 The in-house Provider Data Management (PDM) application is currently the Source of Record (SOR) for providers in the legacy world, MHC. A synchronization process has been established that synchronizes these providers in support of the lines of businesses housed there. There are currently approximately 25 in house

236 applications used today that are integrated to the PDM back end data source that will need to be reintegrated Total budgeted costs includes capital expenses and consulting costs amounting to $2,500,000.

Provider Portal Redesign (Phase I): $2,500,000 The main objective of this project is to establish an updated and more robust and secure provider portal that meets HIPAA requirements and provides seamless functionality and self-service tools to our providers. It is also imperative to update security on the site to meet all compliance regulations as it pertains to HIPAA and PHI. The entire infrastructure and technology stack needs to be re-architected to provide a more reliable and robust portal for our providers. Total costs of $2,500,000 inclusive of capital costs and consulting fees is to conduct research in order to resolve any current issues and provide a robust environment for both member and provider portals in the future.

QNXT Enhancements: $1,500,000 A steady stream of service requests is being initiated that requires work in QNXT beyond it’s out of the box functionality. This is considered custom development that is outside of the scope of the Core System Project (CSP). These efforts are predominantly business process improvements, workflow and efficiencies. All budgeted costs of $1,500,000 are related to consulting fees.

Prior Year’s Projects

Clinical Care Advanced System (CCA) / Coordinated Care Initiative (CCI): $2,000,000 The Clinical Care Advanced system (CCA) will provide better Utilization Management (UM), Disease Management (DM) and Case Management (CM) functionality. The CCI portion of this project will establish systems and processes to support the new Cal MediConnect plan (aka Duals), as well as moving Medi-Cal FFS to managed care and the LTSS as a benefit for both Medi-Cal and Cal MediConnect. The new system will offer better integration with the core claims system (QNXT) and is ICD-10 compliant. The anticipated total cost of $2,000,000 includes consulting costs and annual operating costs.

Core System Modernization: $3,000,000 The L.A. Care Core System Project will augment current functionality while providing a state-of-the-art, fully integrated, web-based system and infrastructure that will effectively enable and support L.A. Care’s mission of providing access to quality health care for Los Angeles County’s vulnerable and low-income communities and residents. The anticipated total cost of $3,000,000 includes operating costs (non-Trizetto) for consulting fees.

Enterprise Data & Analytics Capability (EDAC): $2,000,000 This project will create a new data warehouse and analytics roadmap, implement the necessary IT infrastructure, and begin deploying the highest priority data marts to business users to ensure consistent adoption of best data governance and management practices. The final result will be enhanced data accuracy, reporting and analytics with great acceptance of information across the organization and improved cost efficiencies for data management. The anticipated total project cost of $2,000,000 includes hardware, software, and consulting fees.

Enterprise Document Management (EDM)/Imaging/Claims OCR: $1,672,000 L.A. Care currently utilizes a vendor, GTESS, for certain mailroom functions, scanning functions, image indexing and retrieval and optical character recognition (OCR) services. However, GTESS services do not allow L.A. Care to meet all regulatory requirements (namely, 28 CCR 1300.77.4, 28 CCR 1300.71(a)(6), and CA Health and Safety Code 1371.38(b)). Therefore, L.A. Care is in need of an overall document management and imaging platform. The anticipated total cost of $1,672,000 includes consulting fees and capital costs.

ICD‐10: $3,500,000 ICD-10 (coding) compliance is required by October 1, 2015. The impact of the changes is significant to existing business processes, and coordination with other key projects such as Core System is necessary. Although the Core System is ICD-10 ready, proper configuration is needed. It is expected that medical policy, contract 33

237 assessment, and code mapping/analysis will be done through consulting services. Total consulting fees are $3,450,000 and $50,000 is for the annual support and maintenance.

IT Development & System Mgmt Control Tools: $800,000 This project will conduct a gap analysis of current project intake process, including review/ enhancement of project artifacts for define/design/deliver SDLC methodology approach and hold staff training (mini- workshop) for key technical staff to ensure consistent adoption and implementation of standard documentation templates and project management best practices. The goal of this project is to (1) enhance project workflow and standard project documentation; (2) improve Information Technology project management practices; and (3) produce consistent auditable project documentation. The anticipated total costs are $800,000, which includes consulting expenses and software costs.

Medicare Grievances and Appeals: $800,000 A new Grievances and Appeals (G&A) application is needed to collect, process, track, and report Medi-Cal and Medicare complaints from L.A. Care Health Plan members and providers. As a result of the Centers for Medicare & Medicaid Services (CMS) audit findings, the application will support current and expected growth of the Medicare membership, and our Grievance and Appeals process. $800,000 is budgeted for capital expenses.

Optum Insight Transaction Routing & Testing Portal: $118,000 L.A. Care will be switching from a clearinghouse model for the receipt of HIPAA-related transaction data sets from its partners to accepting direct submissions of encounter data from our providers. Accepting direct submissions would significantly increase the number of trading partners with whom we exchange data. This means more staff-time devoted to testing activities. The portal will allow L.A. Care partners to self-test against HIPAA’s & L.A. Care’s data exchange requirements. This would reduce the amount of time that L.A. Care’s EDI staff spends hand-holding trading partners through the testing process. The anticipated total cost of $118,000 includes capital, set-up, and licensing costs.

PM‐160 Electronic Workflow Project: $300,000 L.A. Care needs to enhance the systematic and electronic processes to increase the amount of health assessments provided from our providers via the PM-160 form to maximize the data within for the purpose of, but not limited to, the increase of our Healthcare Effectiveness Data and Information Set (HEDIS) scores. The total anticipated cost of $250,000 is for professional fees and an additional $50,000 for operating expenses.

Capital Equipment Purchases: $3,000,000 This is the ongoing capital budget for the organization. Specific purchases are for computer equipment, computer software, and related computer applications and processes that are capitalized.

238 Appendix 3 – Staffing

Chart below depicting existing staff, currently recruiting, 2014-2015 positions requested and the staff distribution by service area

Ma na ge d Executive & Me di c a l Care Admin Information Sub Ma na ge me nt Operations Strategies Technology Finance Total HITEC - LA Total Acctual Staff at July 27, 2014 376 527 114 101 90 1,208 11 1,219

2014 - 2015 New Positions Membershi p Growt h ( Rat i o-dri ven) * 128 179 - - - 307 - 307 Transfer - Internal Auditor (1) 1 - - - Transfer - CCI Council 3 (3) - - - Transfer - Community Outreach and Events 17 (17) - - - Transfer - HITEC-LA Program terminates 4-2015 - (11) (11) Infrastructure support 95 45 38 42 65 285 - 285 Total Additions 2014 - 2015 223 244 17 42 66 592 (11) 581

Budgeted Staff 2014-2015 599 771 131 143 156 1,800 - 1,800

*Note: Ratio-driven medical staff adjusted as membership is revised. Budget assumes greater usage of temporary staff in FY14-15 and the temporary staffing budget has been increased accordingly, which could add up to 100 additional FTEs as needed following a stringent review and approval by the Leadership Group. With the start of new products, functionality may shift between service areas while maintaining stability in the organizational totals. Total Approved for FY13-14 = 1747.

239 Appendix 4 – Vendors with Recurring Purchases

Policies AFS-006 and AFS-007 are currently being revised. Below is a list of vendors who have recurring purchases from multiple departments that equate to large cumulative dollar amounts over a fiscal year. The forecasted cumulative dollar amounts for each vendor are shown below.

Vendor Service FY 13-14 FY 14-15 Office Depot Office Supplies $300,000 $300,000 Commotion Promotions Promotional Items 325,000 500,000 Insight Computers and Supplies 450,000 900,000 Zones Computers and Supplies 450,000 900,000 CDW Computers and Supplies 450,000 900,000 SHI Computers and Supplies 450,000 900,000 DST MHC Support 750,000 750,000 CR Print Printing 500,000 800,000 Luxor Printing 175,000 175,000 Omega Printing 700,000 800,000 Clear Image Printing 350,000 800,000 Starlink Printing 200,000 200,000 Moore Wallace Mail House 3,000,000 4,000,000 Advantage Mailing Mail House 200,000 300,000 Act1 Temp Labor 5,000,000 5,000,000 All’s Well Temp Labor 1,500,000 1,500,000 Robert Half Temp Labor 500,000 500,000 Ultimate Staffing (CHP) Temp Labor 2,300,000 1,500,000 ATI Temp Labor 750,000 750,000 K-Force Temp Labor 3,500,000 4,000,000 Gourmet Coffee Break Room Supplies 175,000 225,000 US Postal (Including mail house use) Postage 2,500,000 3,000,000 Halo Branded Solutions Promotional Items New Preferred Vendor 500,000 1 Color Printing Printing New Preferred Vendor 200,000 PC Connections Computers and Supplies New Preferred Vendor 900,000 Eplus Computers and Supplies New Preferred Vendor 900,000 Equis Staffing Temp Labor New Preferred Vendor 1,000,000 HRCS Temp Labor New Preferred Vendor 250,000 Tentek Temp Labor New Preferred Vendor 300,000 Randstad Temp Labor New Preferred Vendor 750,000 Aerotek Temp Labor New Preferred Vendor 250,000

Although policies are being revised, current Policy AFS-006 Section 1.2 defines authorization limits as the total dollar commitment and any subsequent commitments or amendments occurring within the last 12 months. Because of the frequent use of these vendors by multiple departments, we are requesting the approval of these vendors up to the estimated usage for fiscal year 2014/2015. These vendors may change over the fiscal year due to vendor consolidation. Any addition of new vendors will be authorized per updated AFS-006 and AFS-007.

240 L.A. Care Health Plan Preliminary as of 8/25/14

Budget FY 14/15 Medi-Cal Medicare CCI - Duals

MCLA CCI (Non CMC) CCI (Non CMC) Healthy Kids L.A. Care Community % of Plan Partners SNP CMC PASC-SEIU Corporate Total HITEC-LA Grand Total (Consolidated) SubHP Direct (0-5) Covered Programs revenue dollars in thousands

Ending Membership 846,518 691,433 0 64,375 79,501 35,300 0 49,653 48,945 0 0 1,815,725 1,815,725 Member Months 9,950,067 7,879,359 26,052 594,804 747,927 294,544 7,182 590,886 515,076 0 0 20,605,897 20,605,897

Revenue Capitation $1,877,573 2,465,198 $25,270 $490,538 $645,525 $694,209 $1,256$ 182,058 123,233 $ - $ - $6,504,860$ - $6,504,860 Maternity Kick 83,257 50,227 ------133,484 - 133,484 Member Premium - 0 - - - - 25 - - - - 25 - 25 HITEC-LA Revenue - 0 ------1,336 1,336 Total Revenue 1,960,830 2,515,425 25,270 490,538 645,525 694,209 1,280 182,058 123,233 - - 6,638,368 1,336 6,639,704 100.0%

Healthcare Expenses Capitation - PCP 1,536,727 602,291 9,898 78,004 16,606 95,857 240 70,906 64,102 - - 2,474,631 - 2,474,631 37.3% Capitation - Hospital - 236,957 - - - 113,135 - 85,114 - - - 435,207 - 435,207 6.6% Maternity Kick 76,382 11,343 ------87,725 - 87,725 1.3% Provider Incentives 31,972 16,611 592 2,439 1,810 4,245 735 10 2,599 - - 61,012 - 61,012 0.9% Shared Risk - 67,181 ------7,603 - - 74,783 - 74,783 1.1% Inpatient Claims - 483,274 7,748 - 12,266 112,837 50 4,432 10,945 - - 631,553 - 631,553 9.5% Outpatient Claims - 344,115 2,364 - 63,477 46,929 122 5,023 19,078 - - 481,107 - 481,107 7.2% Pharmacy - 279,885 2,214 - 16,123 82,587 47 9,728 4,873 - - 395,457 - 395,457 6.0% Long Term Care 91,965 103,906 - 171,217 207,075 89,088 - - - - - 663,251 - 663,251 10.0% Home & Community Based Svcs 119,639 146,502 - 227,147 298,813 115,319 - - 290 - - 907,710 - 907,710 13.7% Other Medical Expense/Adjustments ------(1,296) - - (1,296) - (1,296) 0.0% Medical Administrative Expense 13,589 45,016 1,350 2,331 6,518 26,697 18 2,117 2,868 - - 100,503 - 100,503 1.5% Total Healthcare Expenses 1,870,273 2,337,080 24,167 481,137 622,688 686,694 1,211 177,329 111,062 - - 6,311,642 - 6,311,642 95.1% MCR 95.4% 92.9% 95.6% 98.1% 96.5% 98.9% 94.6% 97.4% 90.1% 95.1% 95.1% Gross Margin 90,557 178,344 1,104 9,401 22,837 7,515 69 4,729 12,171 - - 326,726 1,336 328,062 4.9%

Operating Expenses Salaries & Benefits (includes vacancy factor) 25,502 58,937 377 5,514 12,391 11,431 21 2,665 2,213 1,330 - 120,383 674 121,057 1.8% Temporary Labor and Recruiting 2,317 13,352 17 466 879 657 2 225 187 - - 18,101 - 18,101 0.3% Professional Fees 9,425 20,018 156 1,897 3,574 2,984 7 917 761 1,200 - 40,938 802 41,741 0.6% Purchased Services 3,122 19,302 2,480 2,433 10,701 11,847 8 1,052 3,675 1,148 - 55,769 - 55,769 0.8% Advertising and Promotions 1,845 3,863 13 371 699 523 1 179 149 750 - 8,394 - 8,394 0.1% Business Fees & Insurance 4,459 9,340 32 897 1,691 1,264 3 434 8,576 - - 26,697 - 26,697 0.4% Occupancy & Leases 3,480 7,287 25 700 1,320 986 3 338 281 806 - 15,226 - 15,226 0.2% Supplies & other 4,967 10,431 51 999 1,884 1,459 4 483 401 506 - 21,184 7 21,192 0.3% Medical Admin (10,048) (35,729) (582) (2,022) (3,810) (7,818) (10) (1,336) (1,412) - - (62,767) - (62,767) -0.9% Depreciation & Contingency ------7,000 7,000 - 7,000 0.1% Allocated Operating Expenses 45,069 106,801 2,570 11,256 29,328 23,332 40 4,957 14,832 5,740 7,000 250,926 1,484 252,410 3.8% Administrative Ratio 2.3% 4.2% 10.2% 2.3% 4.5% 3.4% 3.1% 2.7% 12.0% 0.0% 0.0% 3.8% 111.1% 3.8% 3.8%

Income from Operations $45,488 $71,543 ($1,466) ($1,855) ($6,491) ($15,818) $30 ($228) ($2,662) ($5,740) ($7,000) $75,800 ($148) $75,652 1.1% $45,069 $120,920 $2,570 $11,256 $29,328 $23,332 $40 $4,957 $14,832 $5,740 $7,000 $250,926 $1,484 $252,410 Non-Operating Income/Expense Provision for Community Grant - (5,000) (5,000) (5,000) -0.1% Gross Premium Tax Revenue - - 239,877 239,877 239,877 3.6% Gross Premium Tax Expense - (4,852) (239,877) (244,729) (244,729) -3.7% Other Income (Expense) - - - - 0.0% Interest Income, net - 175 175 175 0.0% Total Non-Operating Income/Expense ------(4,852) (5,000) 175 (9,677) - ($9,677) -0.1%

Revenue Over(Under) Expenditures $45,488 $71,543 ($1,466) ($1,855) ($6,491) ($15,818) $30 ($228) ($7,514) ($10,740) ($6,825) $66,123 ($148) $65,975 1.0%

Changes made since July 2014 F&B Meeting: 1. Updated membership projections per Membership Team and latest actual membership data. 2.Updated rates based on the latest information available from DHCS and actuarial estimates. 3. Updated budget to include Gross Premium Taxes

241

September 4, 2014

TO: Board of Governors

FROM : Jonathan Freedman, Chief of Strategy, Regulatory, and External Affairs

SUBJECT: 3rd Quarter FY 2013-14 Prequalified Consulting and Staffing Vendor Report

This memorandum summarizes the status of the prequalified consulting and staffing vendor program (PQV) that was approved by the Board at the September 11, 2013 meeting. Seven vendors were approved to enter into a Master Services Agreement to provide consulting and staffing services. The requested $500,000 to contract with each vendor indicated a “not to exceed” amount, not an obligation for expenditure.

Five vendors were selected for six new projects and three amendments were made to existing projects in the last quarter ending June 30, 2014. Two new vendors were approved to be added to the PQV at the June 5, 2014 Board Meeting. Master Services Agreements are in the process of being drafted for the new vendors.

In the second fiscal quarter of 2014, the $500,000 contract with Gorman Health Group (GHG) was exhausted. At the May 2014 Board meeting, an additional $500,000 was approved for CMS audit remediation related contracts with GHG, for a total allowable expenditure amount of $1,000,000. As remediation for the March 2014 CMS Audit ramped up in the third fiscal quarter, the newly approved funds were 100% committed to these activities.

During this same quarter, new contracts with Optimity Advisors increased spending with this vendor to a total of $287,400, exceeding the halfway threshold. Pursuant to Motion FIN 101.0913, this was communicated to the Finance & Budget Committee Chair.

Below is the balance for each prequalified vendor, followed by a year-to-date synopsis of the program.

BALANCE Cambria Solutions (Cambria) $332,000.00 Clearstone Solutions (Clearstone) $500,000.00 Gorman Health Group (GHG) $0.00 Harwich Group (Harwich) $500,000.00 Health Management Associates (HMA) $401,000.00 Health Value Solutions (HVS) $259,520.00 Optimity Advisors (Optimity) $212,600.00

242

PREQUALIFIED VENDOR APPROVED PROJECTS Requesting Vendor Approval Date Department Amount Project Provider Network L.A. Care Covered™ Provider HVS 11/5/2013 Operations $10,480.00 Manual First Implementation and support for a new Quarter Regulatory Affairs & compliance monitoring application GHG *11/12/2013 Compliance $54,775.00 (Online Monitoring Tool) Cal MediConnect (CM) HVS 12/3/2013 Medicare Operations $100,000.00 implementation activities Business Process Development of a training program for Cambria 12/12/2013 Improvement / Claims $80,000.00 the Claims Department Development of a Stars ratings work GHG 1/28/2014 Medicare Operations $8,866.00 plan Assessment of Grievances & Appeals HVS 1/28/2014 Grievances & Appeals $30,000.00 program Second 2/13/2014 Regulatory Affairs & CMS audit support Quarter GHG **3/20/2014 Compliance $336,359.00 Amended to add remediation activities Provider Network Project Manager for provider network Optimity 2/18/2014 Outreach $115,000 development Analysis for Medicare claims GHG ***3/20/2014 Claims $100,000 improvement Develop strategies of care for CMC HMA 3/28/2014 Medi-Cal Operations $99,000.00 population Project management support to evaluate Coordinated Care Initiative Optimity 4/8/2014 Medi-Cal Operations $86,000.00 share of cost

Develop and assist with the daily operations of the Pharmacy Department and make GHG 4/29/2014 Pharmacy $400,000.00 recommendations for improvement Third Quarter Regulatory Affairs & CMS audit support for continued GHG **AMENDMENT Compliance $43,000.00 remediation activities

Project management for the new Optimity 5/12/2014 Claims $ 86,400.00 Provider Dispute Resolution system Project management for new clinical Cambria 5/20/2014 Medical Management $ 88,000.00 software (Clinical CareAdvance) Support D-SNP and Duals compliance HVS 5/20/2014 Medicare Operations $100,000.00 program Administrative support for Online Regulatory Affairs & Monitoring Tool, compliance GHG *AMENDMENT Compliance $ 12,000.00 application

GHG ***AMENDMENT Claims $ 45,000.00 Medicare claims processing support Asterisks identify the original approved projects that were amended.

3rd Quarter FY 2013-14 Prequalified Consulting and Staffing Vendor Report 2

243 244 245 246 247

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. COM 101.0914

Committee: Compliance & Quality Chairperson: G. Michael Roybal, MD, MPH

Issue: Revised Member Services Policy MS-003 (Member Assignment and Selection Process).

Background: Primary changes that were made to Member Services Policy MS-003: 1) Inclusion of assignment language and related definitions for the PASC-SEIU, L.A. Care Covered, Medi-Medi and Cal MediConnect members 2) Assignment of members to Child Health and Disability Prevention (CHDP) certified General Practitioners and Internal Medicine providers. 3) Assignment of Seniors and Persons with Disabilities (SPD) program members. 4) Assignment of Medi-Cal Temporary Assistance to Needy Families (TANF) members to L.A. Care Medi-Cal Direct (MCLA) because Community Health Plan (CHP) was closed to new member enrollment on October 1, 2011. 5) Assignment of Medi-Cal SPD and TANF members to Department of Health Services (DHS) facilities. 6) Deletion of timeline listed in section 1.5. 7) Deletion of section 5.3, reference to retired policy CR-002 (Plan Partner Child Health and Disability Prevention Program (CHDP). 8) Assignment of Medi-Cal members with Community-Based Adult Services (CBAS) benefits. 9) Expansion of language related to prior affiliation to include contracted clinics, facilities, and Participating Provider Groups (PPGs). 10) Removal of specific auto-assignment percentages that are not related to newly eligible, childless adult Medi-Cal members.

Budget Impact: None

Motion: To approve the revision of Member Services Policy MS-003 (Member Assignment and Selection Process), as attached.

248

1.0 POLICY:

1.1 L.A. Care Health Plan (“L.A. Care”) members have the ability to select an available Primary Care Provider (PCP)/clinic, Participating Physician Group (PPG), and/or Plan Partner/ Subcontractor Health Plan (Choice of Plan Partner available to Medi-Cal Members only)of their choice and will be assigned to such as set forth in this Policy and Procedure.

1.2 L.A. Care and the Plan Partners/Subcontractor Health Plan s shallwill adhere to established guidelines which ensure that members are assigned to PCPs/clinics or other practitioners whothat have documented training and experience are properly credentialed and necessary tocapable of manageing member’s’ the unique healthcare needs. of the members. and to ensure that PCPs in L.A. Care’s, and the and the Plan Partners’, and Subcontractor Health Plan s networks shall ensure that PCP’s/clinics in their respective networks adhere to theseapplicable guidelines for properly managing members.

1.3 L. A. Care will assign members to PCPs/clinics based on member choice, language, age, and gender, provider practitioner capacity status, and practitioner provider category designation as set forth in this policy.

1.4 L.A. Care’s goal is to have all General Practice and, Internal Medicine, and OB/GYN pPractitioners be CHDP [i.e., the Child Health and Disability Prevention] certified for member assignment or choice for members ages 0 to 16. L.A. Care believes that CHDP certification is an additional measure which supports quality. and that ourL.A. Care’s Plan Partners, Subcontractor Health Plan s, and Participating Provider Groups (PPGs) have an opportunity when contracting with new physicians and existing providers to encourage CHDP certification.

249 1.5 Effective three (3) months after the implementation of this policy, In accordance with the goal set forth above, L.A. Care shallwill close panels for all types of member assignment to General Practitioners who are not CHDP certified for to see members ages 0 to 16. L.A. Care will also close panels for all types of member assignment to Internal Medicine pPractitioners who are not CDHP certified for members ages 14 to 16. unless such practicionerspractitioners they are CHDP certified. Note: This Section 1.5. will not be applied to Internal Medicine and Ob/Gyns panels member assignment will not be affected for members ages 16 and above.

1.6 The only exception that L.A. Care may make for the CHDP certification requirement set forth in Section 1.5. of this policy will be for CHDP member assignment to General Practitioners of members ages 0 to- 16. Any such exceptions will be reviewed on a case by case basis by L.A. Care’s Chief Medical Officer or designee and presented to the Credentialing Committee for action. If an exception is granted, the General Practitioner’s panel willremainwill remain open for member assignment.

1.6.1 All requests for an exception will include, but will not be limited to the consideration of the practitioner’s board certification status, facility site review compliance, relevant training and experience, and L.A. Care’s geographic or business need. Exception requests from General Practice physicians must include a CV, evidence of denial for CHDP certification, and denial of an appeal of that decision.

1.6.2 The decision of L.A. Care’s Credentialing Committee or designee regarding whether to grant an exception will be final. Notice of the Credentialing Committee’s decision will be forwarded by the Credentialing Department to Plan Partners, Subcontractor Health Plan s, or PPGs, following the Committee’s decision., by the Credentialing Department. L.A. Care’s Credentialing Committee is currently accepting exception requests. Requests for exceptions should be forwarded in writing to the attention of the Credentialing Department as indicated below:

L.A. Care Health Plan Credentialing Department 10555 W. Seventh St., TenthFifth Floor1055 W. 7th St, 19th Floor Los Angeles, CA 900173 Tel: (213) 694-1250, ext. 4958 Fax: (213) 623-8987

1.7 L.A. Care will maintain edits in its information systems to ensure consistent PCP/clinic provider category designation in the network and appropriate assignment of members to appropriate PCPs/clinics.

1.21.8 L.A. Care Regulatory Affairs and Compliance (RAC) staff will monitor compliance with this policy and related member assignment and selection policies through the review of member assignment reports on an annual basis (or other timeframe, as determined by the Board) to verify appropriateness of the member assignment and selection process and

250 identify areas of improvement in the process. Results of the review will be reported to Member Services’ management staff.

1.3 L. A. Care will assign members to PCPs based on member choice, language, age, and gender, practitioner capacity status and practitioner category designation.

1.4 L.A. Care will maintain edits in its information systems to ensure consistent PCP/practitioner category designation in the network and appropriate assignment of members to appropriate PCPs.

L.A. Care Regulatory and Affairs and Compliance (RAC) staff will monitor compliance with this policy and related member assignment and selection policies through the review of member assignment reports on a quarterlyan annual basis (or other timeframe, as setdetermined by the Board) to verify appropriateness of the member assignment and selection process and identify areas of improvement in the process. Results of the review will be reported to Member Services’ management staff. 1.5 The only exception that L.A. Care may make s exceptions to the CHDP certification requirement set forth in Section 1.5. of this policy will be for CHDP member assignment to General Practitioners of members ages 0 to-16. Any such Eexceptions will be reviewed on a case by case basis by L.A. Care’s Chief Medical Officer or designee and presented to the Credentialing Committee for action. If an exception is granted, the General Practitioner’s panel shall remain open for member assignment.

All requests for an exception will include, but will not be limited to the consideration of the practitioner’s board certification status, facility site review compliance, relevant training and experience, and L.A. Care’s geographic or business need. Exception requests from General Practice and Internal Medicine physicians must include a CV, evidence of denial for CHDP certification, and denial of an appeal of that decision.

The decision of L.A. Care’s Credentialing Committee or designee regarding whether to grant an exception will be final. Notice of the Credentialing Committee’s decision will be forwarded by the Credentialing Department to Plan Partners or PPGs, following the Committee’s decision. by the Credentialing Department. L.A. Care’s Credentialing Committee is currently accepting exception requests. Requests for Eexceptions should be forwarded in writing to the attention of the Credentialing Department as indicated below:

L.A. Care Health Plan Credentialing Department 555 W. Fifth Floor1055 W. 7th St, 19th Floor Los Angeles, CA 900173 Tel: (213) 694-1250, ext. 4958 Fax: (213) 623-8987

2.0 DEFINITIONS:

251

Whenever a word or term appears capitalized in this Policy and Procedure, the reader should refer to the “Definitions” below.

2.1 Assignment Process refers to L.A. Care’s process for verifying the selection of Choice members and for assigning No-Choice and Partial Choice members. Thise Assignment Process includes the following processes:

2.1.1 Member Choice Process is the process by which L.A. Care’s automated system verifies:

PCP/clinic and Plan Partner selections of a Choice Medi-Cal members. 2.1.1.1 PCP/clinic and Subcontractor Health Plan selections of Choice Cal MediConnect members. 2.1.1.2 PCP/clinic and PPG selections of Choice Healthy Kids, Healthy Families and, Healthy Kids, In-Home Supportive Services (IHSS) PASC-SEIU, Cal MediConnect, and L.A. Care Covered™ members.

2.1.2 Partial Choice Process is the process by which L.A. Care’s automated system assigns a:

2.1.2.1 Medi-Cal member based on the selection of a PCP/clinic or Plan Partner. 2.1.2.2 Healthy FamiliesPASC-SEIU, Cal MediConnect, and L.A. Care Covered™ member based on the selection of a PCP/clinic or PPG. 2.1.2.3 Healthy Kids members based on selection of a PCP/clinic or PPG. rFor Healthy Kids, records for selection and assignment of PCPs/clinics or PPGs are processed manually by the L.A. Care Membership Retention and Processes (MRPInformation) UnitstaffEnrollment Center staff.Cal MediConnect members based on the selection of a PCP/clinic or Subcontractor Health Plan . 2.1.2.3 IHSS member based on selection of a PCP or PPG.

2.1.3 Auto-Assignment Process is the process by which L.A. Care’s automated system assigns a:

2.1.3.1 No-Choice Medi-Cal member with no family link or previous history with L. A. Care or one of L.A. Care’s contracted clinics, facilities, or PCPs/clinics (based on information provided to L.A. Care to help ensure continuity of care for the member) to a PCP/clinic and Plan Partner. 2.1.3.2 No-Choice Healthy FamiliesPASC-SEIU, Cal MediConnect, and L.A. Care Covered™ members with no family link or previous history with L.A. Care or one of L.A. Care’s contracted clinics, facilities, or PCPs/clinics (based on information provided to L.A. Care to help ensure continuity of care for the member) to a PCP/clinic and PPG. No-Choice Healthy Kids members with no family link or previous history with L.A. Care or one of L.A. Care’s contracted clinics, facilities, or PCPs/clinics. (For Healthy Kids, records are processed manually by

252 the L.A. Care Enrollment Center staffMRPMembership Information staff).. No-Choice Cal MediConnect members with no family link or previous history with L.A. Care or one of L.A. Care’s contracted clinics, facilities, or PCPs/clinics (based on information provided to L.A. Care to help ensure continuity of care for the member) to a PCP/clinic and Subcontractor Health Plan. 2.1.3.3

2.1.4 Family Link/Reinstatement Process is the process by which L.A. Care’s automated system assigns a member, based on the assignment of other active members of the same family (i.e., family link) or the member’s previous history with L.A. Care or information received by L.A. Care from a contracted clinic, facility, Plan Partner, Subcontractor Health Plan or PCP/clinic (i.e., reinstatement) in order to help ensure continuity of care for the member. The most current selection of a PCP/clinic, Plan Partner, Subcontractor Health Plan , or PPG by a Partial Choice member will supersede any previous assignment that was done based on a family link or reinstatement. The Family Link/Reinstatement Process will assign a:

2.1.4.1 No-Choice Medi-Cal member to a PCP/clinic, and Plan Partner., or a Partial Choice Medi-Cal Member to a PCP or Plan Partner. 2.1.4.2 No-Choice Healthy FamiliesPASC-SEIU, Cal MediConnect, and L.A. Care Covered ™ member to a PCP/clinic and PPG, based on the assignment of other active members of the family. 2.1.4.3 No-Choice Healthy Kids records are processed manually by the L.A. Care Enrollment Center staffMembership Information RP Unitstaff to a PCP/clinic and PPG.No-Choice Cal MediConnect members to a PCP/clinic and Subcontractor Health Plan , or a Partial-Choice Cal MediConnect member to a PCP/clinic or Subcontractor Health Plan . 2.1.4.3 No-Choice IHSS member to a PCP and PPG, based on the assignment of other active members of the family.

2.1.5 Manual Assignment Process is the process used for members that remain unassigned after the running of the automated system. Auto-Assignnent process. automated system in which Any remaining unassigned member will bey manually assigned by the L.A. Care Membership Information staff manually assigns as follows:

2.1.5.1 No-Choice or a Partial Choice Medi-Cal member to a PCP/clinic and, and Plan Partner. 2.1.5.2 No-Choice or a Partial Choice Healthy FamiliesPASC-SEIU, Cal MediConnect, and L.A. Care Covered™ member to a PCP/clinic and PPG. 2.1.5.3 No-Choice or Partial Choice Healthy Kids members are manually assigned by Enrollment Center staffMRP the L.A. Care UnitMembership Information staff to a PCP/clinic and PPG when the applications are processed.No-Choice or a Partial Cchoice Cal MediConnect member to a PCP/clinic and Subcontractor Health Plan .Plan.

253 2.1.5.3 No-Choice or Partial Choice IHSS member to a PCP and PPG.

2.2 Board refers, for purposes of this policy, to L.A. Care’s Board of Governors.

2.3 Cal MediConnect is a program to integrate medical care, long-term care,m behavioral health care and social services under a health plan for people who are dually eligible for both Medi-Cal and Medicare. The program aims to create a seamless service delivery experience for dual beneficiaries, with the ultimate goals of improved care quality, better health and a more efficient delivery system.

2.3 Capacity Status refers to whether a PCP/clinic, Plan Partner, Subcontractor Health Plan orPlan or PPG is open to receive assignment and/or enrollment of members. Note: MHC The Core System maintains panel size at the provider level and at the line of business level. For member assignments, the provider level will be used to determine appropriate assignments; therefore, in MHCthe Core System, panel size at the line of business level is set to equal the panel size at the provider level. 2.4

2.42.5 Choice Members means:

2.4.12.5.1 Medi-Cal member enrollment records received by L.A. Care that have both an available Plan Partner and an available PCP/clinic selection. 2.5.2 Healthy Kids, Healthy Families and, Healthy Kidsand PASC-SEIUIHSS, Cal MediConnect, and L.A. Care Covered™ enrollment records received by L. A. Care that have both an available PCP/clinic and PPG selection. Cal MediConnect member enrollment records received by L.A. Care that have both an available Subcontractor Health Plan andPlan and an available PCP/clinic selection.

2.52.6 Clinic refers, for purposes of this policy, to a federally qualified health center (“FQHC”) as defined in Section 1905(a)(2)(C) of the Social Security Act, or other facility as defined in Section 40501 of Title 22 California Code of Regulations or Section 14088(b)(1) of Welfare & Institution Code that includes, but is not limited to, Los Angeles County/Department of Health Services (LAC/DHS) clinics, community clinics, rural health clinics and Indian Hhealth Sservice facilities.

2.7 Community-Based Adult Services (“CBAS”) refers to an outpatient, facility-based service program that delivers skilled nursing care, social services, therapies, personal care, family/caregiver training and support, nutrition services, transportation, and other services as defined in the California Bridge to Reform Waiver 11_W00193/9, Special Terms and Conditions, Paragraph 91, to eligible mMembers who meet applicable eligibility criteria. Duals refers to members who have both Medi-Cal and Medicare benefits (including Medicare Part A, Part B, Part C, and/or Part D). Medicare is the main health insurance that pays for medical services, such as doctor visits, hospital stays, and laboratory work.

254 Medi-Cal pays for services that Medicare does not cover, such as CBAS, long-term stays in nursing homes, non-emergency medical transportation, and some copayments and other charges that Medicare would otherwise collect from the members.

2.8 Core System is a fully functional managed health care system with several basic operations associated with the various areas of membership, including, but not limited to eligibility, Plan Partner/Subcontractor Health Plan /PPG and PCP/clinic assignment, and member demographic information.

2.62.9 Health Care Options (“HCO”) is an entity contracted with the Department of Health Care Services (“DHCS”) to enroll Medi-Cal beneficiaries with participating managed care health plans. is a branch within the Department of Health Care Services whose role it is to assure access to health care through an enrollment broker cContractor. The enrollment contractor provides information to Medi-Cal recipients about managed care plans. This allows them to make informed choices about their Medi-Cal benefits.

In-Home Supportive Services (“IHSS”) refers to the program for homecare workers whothat are employed by the Personal Assistance Services Council (“PASC”) to provide services to individuals who are disabled (including children) and seniors.

2.10 Healthy Way LA (HWLA) refers to the county run Low Income Health Program (LIHP) for uninsured adults 19 to 64 years old under 133% the Federal Poverty Level (FPL) with legal residency status.

2.11 L.A. Care Covered™ is L.A. Care’s line of business for California’s health insurance exchange marketplace.

2.7 Managed Risk Medical Insurance Board (“MRMIB”) is the California state agency that administers the Healthy Families program and facilitates the enrollment of beneficiaries with participating managed care health plans.

2.12 Medi-Medi Members refers to members who have both Medi-Cal and Medicare benefits (including Medicare Part A, Part B, Part C, and/or Part D, but excludes membersexcludes members enrolled in the Cal MediConnect line of business). Medicare is the main health insurance that pays for medical services, such as doctor visits, hospital stays, and laboratory work. Medi-Cal pays for services that Medicare does not cover, such as CBAS, long-term stays in nursing homes, non-emergency medical transportation, and some copayments and other charges that Medicare would otherwise collect from the members.

2.82.13 Member Choice means:

2.8.1 Medi-Cal members who select both an available PCP and an available Plan Partner of his/hertheir choice. 2.13.1 Medi-Cal members who select both an available PCP/clinic and an available Plan Partner of their choice. Healthy Kids, Healthy Families or, Healthy Kids, and PASC-SEIUIHSS, Cal MediConnect, and L.A. Care Covered™ members who select both an available PCP/clinic and an available PPG of his/hertheir choice.

255 2.8.22.13.2 Cal MediConnect members who select both an available PCP/clinic and an available Subcontractor Health Plan ofPlan of their choice.

2.9 MHC is a fully functional managed health care system with several basic operations associated with the various areas of membership, including, but not limited to eligibility, Plan Partner/PPG and PCP assignment, and member demographic information.

2.102.14 No-Choice Members (also referred to as “Default Members”) means:

2.10.12.14.1 Medi-Cal members whose enrollment records received by L.A. Care that do not have either Plan Partner or PCP/clinic selection information. 2.14.2 Healthy Kids, Healthy Families and, Healthy Kids, IHSSPASC-SEIU, Cal MediConnect, and L.A. Care Covered™ members whose enrollment records received by L. A. Care that do not have either a PPG or PCP/clinic selection information. Cal MediConnect member enrollment records received by L.A. Care that do not have either Subcontractor Health Plan orPlan or PCP/clinic selection information.

2.15 Nurse Practitioner (NP) refers to a registered nurse who possesses additional preparation and skills in physical diagnosis, psychosocial assessment, and management of health and illness needs in primary health care. is a non-physician medical practitioner who provides primary care services to members.

2.112.16 Partial Choice Members means:

2.11.12.16.1 Medi-Cal members whose enrollment records received by L.A. Care that either have an available Plan Partner selection but no PCP/clinic selection information, or an available PCP/clinic selection but no Plan Partner selection information. 2.16.2 Healthy Kids, Healthy Families and , Healthy Kids, and PASC-SEIUIHSS, Cal MediConnect, and L.A. Care Covered™ members whose enrollment records received by L. A. Care that either have an available PPG but no PCP/clinic selection information, or an available PCP/clinic selection but no PPG selection information. 2.11.2 Cal MediConnect members whose enrollment records received by L.A. Care that either have an available Subcontractor Health Plan selection but no PCP/clinic selection information, or an available PCP/clinic selection but no Subcontractor Health Plan selection information

2.122.17 Participating Physician Groups (PPGs) refers, for the purposes of this policy, to provider groups that hold capitated risk or provider group fee-for-service contracts with a Plan Partner/Subcontractor Health Plan or L.A. Care to provide health care services to members.

256 2.18 Permission-to-Enroll (“PTE”) refers to the form and process that is used by L.A. Care and its contracted Plan Partners/Subcontractor Health Plan s, medical groups, clinics, facilities, and PCPs/clinics to facilitate assignment of members to closed or otherwise restricted providers in order to help facilitate continuity of care, etc. for the members.

2.19 Personal Assistance Services Council-Service Employees International Union Plan refers to the program for homecare workers who are employed by the Personal Assistance Services Council (“PASC”) to provide services to individuals who are disabled (including children) and seniors.

2.20 Plan Partner refers to a Plan or any other health care service plan licensed under the Knox- Keene Act, which has entered into a service agreement with L.A. Care to provide or arrange for health care services to Medi-Cal members, and to perform other duties and responsibilities as set forth in the Plan Partner Services Agreement with L.A. Care.

2.132.21 Primary Care Provider (PCP) refers to a doctor who has a current, unrestricted license as a physician and surgeon in California, whose area of medical practice is one of the five (5) practitioner categories designated by the Department of Health Care Services (“DHCS”) and the Knox Keene Act as a primary care specialty, and who is contracted in the L.A. Care Health Plan or in the Plan Partner/Subcontractor Health Plan network as a PCP or a clinic facility responsible for coordinating, supervising, and providing primary health care services to a member including, but not limited to, initiating specialty care referrals and maintaining continuity of care. The five (5) practitioner categories are General Practitioner, Internal Medicine Provider, Pediatrician, Obstetrician/Gynecologist (“Ob/Gyn”), and Family Practitioner.

2.142.22 Safety Net Provider refers, for purposes of this policy, to a federally qualified health center (“FQHC”) as defined in Section 1905(a)(2)(C) of the Social Security Act, or other facility as defined in Section 40501 of Title 22 California Code of Regulations that includes, but is not limited to, Los Angeles County clinics, community clinics, rural health clinics and Indian health service facilities.

2.23 Seniors and People with Disabilities (SPD) are person(s) 65 years or older and/or individual(s) meeting one of the following criteria: he or she has a physical or mental impairment that substantially limits one or more of his/her major life activities; he or she has a record of such an impairment; he or she is regarded as having such an impairment.

2.24 Site Level refers to a specific location, product line, and Plan Partner/Subcontractor Health Plan /PPG contract arrangement for each PCP/clinic.

Subcontractor Health Plan is a plan or any other health care service plan licensed under the Knox-Keene Act, which has entered into a service agreement with L.A. Care to provider or arrange for health care services to Cal MediConnect members, and to perform other duties and responsibilities as set forth in the Subcontractor services agreement with L.A. Care.

2.25 Temporary Assistance for Needy Families (TANF), refers to the block grant program that provides states, territories, and tribes federal funding to cover benefits, administrative expenses, and services targeted to needy individuals each year.

257

3.0 PROCEDURE/S:

3.1 Members have an opportunity to select a PCP/clinic and Plan Partner/Subcontractor Health Plan or PPG of their choice at the time of enrollment or to request a change of assignment based on information provided to them by the enrollment contractors (HCO or MRMIB) or L. A. Care.

3.1.1 For new members, L.A. Care’s automated system will verify the availability of the PCP/clinic and Plan Partner selection of Choice Medi-Cal members (including those with CBAS benefits), PCP/clinic and Subcontractor Health Plan selection of Choice Cal MediConnect members, and the availability of the PCP/clinic and PPG selection of Choice Healthy Kids, Healthy Families and Healthy KidsPASC- SEIUIHSS, Cal MediConnect, and L.A. Care Covered™ members.. 3.1.23.1.1 3.1.1.1 If a Choice Member’s selection is not available, the member will be assigned through the Partial Choice Process. 3.1.1.2 Medi-Cal SPDs Members who request assignment to a specialist will be assigned to the specialist if the provider is listed as a PCP in the L.A. Care and Plan Partner/Subcontractor Health Plan networks. Otherwise, the member will be assigned to a PCP/clinic that is affiliated with the requested specialist, where possible. 3.1.1.3 DualsMedi-Medi's (including those with CBAS benefits) will not be assigned to a PCP/clinic or PPG unless they are enrolled in both the L.A. Care Medicare Advantage (HMO SNP) and L.A. Care Medi-Cal Direct programs. 3.1.1.4 DualsMedi-Medi’s (including those with CBAS benefits) whothat are enrolled in a Plan Partner’s Medicare Advantage (HMO SNP) program will be assigned to that Plan Partner but will not be assigned to a Medi- Cal PCP/clinic or PPG. Cal MediConnect members who opt-out of the pilot will remain assigned to a Subcontractor Health Plan , unless the member requests a change of the Subcontractor Health Plan .. These members will not be assigned to a PCP/clinic or PPG unless they are optopting back into the pilot.

3.1.2 Members may request a change of PCP/clinic and/or PPG for any reason and at any time. To change PCP/clinics and/or PPG, a Medi-Cal member (including those with CBAS benefits) must contact his/her Plan Partner’s’s Member Services Department;. . A Healthy Kids, Healthy Families andor, Healthy Kids, or PASC- SEIUIHSS, Cal MediConnect, or L.A. Care Covered™ members must contact L. A. Care’s Member Services Department. A Cal MediConnect member must contact his/her Subcontractor Health Plan ’s Member Services Department 3.1.2.1 A DualsMed-Medi's who areisare not enrolled in the L.A. Care’s or a Plan Partner’s Medicare Advantage (HMO SNP) program will be

258 informedstructed to see his/hertheir Medicare provider for primary care services.

3.1.3 Members may request a change of Plan Partner/Subcontractor Health Plan or PPG for any reason and at any time. To change Plan Partners/Subcontractor Health Plan or to change Plan Partner/Subcontractor Health Plan and PPGs, members must contact L.A. Care’s Member Services Department. To change PPG but not Plan Partner/Subcontractor Health Plan , members must contact their Plan Partner/Subcontractor Health Plan ’s Member Services Department. 3.1.3.1 A Medi-Medi’s Dual who areis not enrolled in the L.A. Care or a Plan Partner’s Medicare Advantage (HMO SNP) program will be instructedinformed to see his/hertheir Medicare provider for primary care services.

3.2 No-Choice and Partial Choice Members will be assigned through the Assignment Process based on the following factors including but not limited to:

3.2.1 Family link and reinstatement (for continuity of care purposes).

3.2.1.1 Members who have been previously enrolled with L.A. Care within the last twelve (12) months will be assigned to their previous PCP/clinic if that PCP/clinic is still available for assignment. [(Exception: Any Aapplicable Plan Partner/Subcontractor Health Plan enrollment restrictions and Medi-Medi'Duals (including those with CBAS benefits) who are not enrolled in both the L.A. Care Medicare Advantage (HMO SNP) and L.A. Care Medi-Cal Direct programs)]. 3.2.1.1.1 Members who have previously obtained services from and/or have approval for assignment to one of L.A. Care’s contracted clinics, facilities, or PCPs (based on an approved Permission-to- Enroll form provided to L.A. Care by the clinic, facility, or PCP) will be assigned to that clinic, facility, or PCP to help ensure continuity of care for the member. 3.2.1.2 Members with greater than a 12-month break in coverage with L.A. Care and a family link will be assigned based on the assignment of other active members of the family. [(Exception: Any Aapplicable Plan Partner enrollment restrictions and DualMedi-Medi's (including those with CBAS benefits) who are not enrolled in both the L.A. Care Medicare Advantage (HMO SNP) and L.A. Care Medi-Cal Direct programs)]. 3.2.1.3 Members with greater than a 12-month break in coverage with L.A. Care and no family link will be assigned based on the aAuto- aAssignment pProcess. [ (Exception: Any Aapplicable Plan Partner enrollment restrictions and DualMedi-Medi's (including those with CBAS benefits) who are not enrolled in both the L.A. Care Medicare Advantage (HMO SNP) and L.A. Care Medi-Cal Direct programs)].

3.2.2 Safety Net Provider status of PCP/clinic.

259

3.2.3 The particular needs of the individual member as follows:.

3.2.3.1 Member assignment will use the Site Level to determine appropriate assignments. In the Core System, the minimum age is set to 0 and the maximum age is set to 150 at the provider level. The Core System maintains age range requirements at the provider level and Site Level. 3.2.3.2 Child members (between the ages of birth to 16 years) will be assigned to a Pediatrician or Family Practitioner. Internal Medicine Practitioners may be assigned members 14 years of age and above only if CHDP certified. General Practitioners will be assigned members ages 0 to 16 only if CHDP certified. The assignments set forth in this Section are subject to any exceptions made pursuant to Section 1.8. above. Children will be assigned to the same Plan Partner or PPG as their active family-linked parent, guardian, or other family member. Adults (ages 17 and older) will be assigned preferentially to Family Practitioners, General Practitioners, or Internal Medicine Providers. 3.2.3.3 Members will be assigned preferentially to a PCP/clinic that speaks or has staff that speaks the primary language spoken by the member. 3.2.3.4 Members will be assigned preferentially to a PCP/clinic within thirty (30) minutes or a ten (10) mile radius of their residence. If there is not an available PCP/clinic located within thirty (30) minutes or ten (10) miles of the member’s residence, the member will be assigned to the next closest available PCP/clinic.

Member assignment will use the sSite lLevel to determine appropriate assignments. In MHC, the minimum age is set to 0 and the maximum age is set to 150 at the provider level. MHC maintains age range requirements at the provider level and sSite lLevel.

3.2.3.2Subject to any exceptions made pursuant to Section 1.8., above, CCchildren members (between the ages of birth to 16 years) will be assigned to a Pediatrician, General Practitioner, or Family Practitioner. Internal Medicine pPractitioners may be assigned members 14 years of age and above only if CHDP certified. General PracticPractitioners and OB/GYN practitioners will be assigned members ages 0-16 only if CHDP certified. The assignments set forth in this Section are subject to any exceptions made pursuant to Section 1.8., above. Children will be assigned to the same Plan Partner, Subcontractor Health Plan , or PPG as their active family-linked parent, guardian, or other family member. 3.2.2.1 3.2.3.3 Adults (ages 17 and older) will be assigned preferentially to Family Practitioners, General Practitioners, or Internal Medicine Providers.

3.2.3.4 Members will be assigned preferentially to a PCP/clinic that speaks or has staff that speaks the primary language spoken by the member.

3.2.3.5 Members will be assigned preferentially to a PCP/clinic within thirty (30) minutes or a ten (10) mile radius of their residence. If there is not an available PCP/clinic

260 located within thirty (30) minutes or ten (10) miles of the member’s residence, the member will be assigned to the next closest available PCP/clinic.

3.2 No-Choice Cal MediConnect and L.A. Care Covered Covered™ Members with no family link or reinstatement will be randomly assigned (or as otherwise determined by the Board) to PPGs through the Auto-Assignment Process. 3.2.3 Passively enrolled Cal MediConnect Members will also be randomly assigned (or as otherwise determined by the Board) to PPGs through the Auto- Assignment Process.

3.3 No less than seventy-five percent (75%) of No-Choice Medi-Cal TANF Members with no family link or reinstatement (or an amount as otherwise set by the Board) will be assigned to Community Health Plan (“CHP”), contingent upon CHP being open to receive assignment of Medi-Cal membersbased on percentages or amount determined by the Board. 3.323.1 Of the eighty-seven percentage ()or amount of No-Choice Medi-Cal TANF mMembers assigned to L.A. Care Direct Medi-Cal, an amount of these members (as otherwise determined by the Boardm) will be assigned to Los Angeles County DHS providers through L. A. Care Direct Medi-Cal, contingent upon the providers being open to receive assignment of TANF Members and applicable enrollment restrictions.

3.4 No less than seventy-five percent (75%) of No-Choice Medi-Cal SPD Members with no family link or reinstatement and for whom L.A. Care has not received assignment information based on a valid national provider identifier (NPI) (or an amount as otherwise set by the Board) will be assigned to L. A. Care Direct Medi-Cal based on a percentage or amount determined by the Board. Available fee-for-service utilization data will be used for member assignment in accordance with the procedures outlined in this policy. 3.4.43.1 Assignment to Los Angeles County DHCS providers, will be contingent upon the providers being open to receive assignment of SPDs and applicable enrollment restrictions. Available fee-for-service utilization data will be used for member assignment in accordance with the procedures outlined in this policy.

Approximately twenty-five (25%) of No-Choice L.A. Care Healthy Families mMembers (or an amount as otherwise set by the Board) will be assigned to Los Angeles County DHS providers, contingent upon the providers being open to receive assignment of L.A. Care Healthy Families Members and applicable enrollment restrictions. 3.5 Approximately seventy-five percent (75%) of newly eligible, childless adult Medi-Cal Nno-Cchoice members will be assigned to Los Angeles County DHS providers for years 2014 to -2016.

3.6 Approximately fifty percent (50%) of newly eligible, childless adult Medi-Cal Nno- Cchoice members will be assigned to Los Angeles County DHS providers for years 2017 to -2019.

3.7 Partial Choice Medi-Cal members will be randomly assigned to Plan Partners through the Assignment Process unless otherwise determined by the Board. Partial-Choice

261 Healthy Kids, Cal MediConnect, and L.A. Care Covered™ members will be randomly assigned to PPGs through the Assignment Process unless otherwise determined by the Board. Partial-Choice PASC-SEIU members will be primarily assigned to Los Angeles County DHS providers, contingent upon the providers being open to receive assignment of the members and applicable enrollment restrictions. Partial Choice Cal MediConnect members will be randomly assigned to Subcontractor Health Plans through the assignment process unless otherwise determined by the Board.

3.8 Partial Choice members who have selected an available Plan Partner or PPG but not a PCP/clinic will be assigned to that Plan Partner or PPG.

3.9 Assignment of Medi-Cal members may also be made to Plan Partners according to Section 3.05(e) – Enrollment Targets of the Services Agreement between L.A. Care and the Plan Partners.

3.10 A member will not be allowed to select or be assigned to a PCP/clinic, Plan Partner, or PPG that is in an unapproved service area (i.e., outside of Los Angeles County).

3.7 Partial Choice Medi-Cal members will be randomly assigned to Plan Partners through the Assignment Process unless otherwise determined by the Board. . Partial-Choice Healthy Kids, Healthy Families and Healthy Kidsand L.A. Care Covered™ members will be randomly assigned to PPGs through the Assignment Process unless otherwise determined by the Board.PASC-SEIUC Partial Choice Cal MediConnect members will be randomly assigned to Subcontractor Health Plans through the assignment process unless otherwise determined by the Board.

3.8 Partial Choice members who have selected an available Plan Partner/ Subcontractor Health Plan or PPG but not a PCP/clinic will be assigned to that Plan Partner/ Subcontractor Health Plan or PPG.

Assignment of Medi-Cal members may also be made to Plan Partners according to Section 3.05(e) – Enrollment Targets of the Services Agreement between L.A. Care and the Plan Partners. Assignment of Cal MediConnect members may also be made to Subcontractor Health Plan s according to the Enrollment Targets of the Services Agreement between L.A. Care and the Subcontractor Health Plans.

3.9 A member willshall not be allowed to select or be assigned to a PCP/clinic, Plan Partner, Subcontractor Health Plan , or PPG that is in an unapproved service area (ie., outside of Los Angeles County).

3.10 A member shall not be allowed to select or be assigned to a PCP whose age and/or gender parameters conflict with the age and/or gender of the member unless the PCP meets the approved criteria specified in L.A. Care Policy CR002 - “Plan Partner Child Health and Disability Prevention Program (CHDP).”

3.11 Plan Partners shall re-assign to appropriate PCPs all members assigned to PCPs whose age and/or gender parameters conflict with that of the members unless the

262 PCP meets the approved criteria specified in L.A. Care Policy CR002 - “Plan Partner Child Health and Disability Prevention Program (CHDP).”

3.12 L.A. Care reserves the right to re-assign members to an appropriate PCP in the Plan Partner’s provider network if the Plan Partner fails to take such action within thirty (30) days of a member selecting or being assigned to a PCP with inappropriate age and/or gender parameters unless the PCP meets the approved criteria specified in L.A. Care Policy CR002 - “Plan Partner Child Health and Disability Prevention Program (CHDP).”

4.0 AUTHORITY:

4.1 Section 1905(a)(2)(C) of the Social Security Act

Section 3.05(e) – Enrollment Targets of the Services Agreement between L.A. Care and the Plan Partners. 4.2 Section 40501 of Title 22 - California Code of Regulations

4.3 Section 53885 of Title 22 – California Code of Regulations

4.4 Section 53890(a) of Title 22 – California Code of Regulations

Sections VI and VII of the Community Based Adult Services (CBAS) Contract Amendment. 4.1 Covered California Qualified Health Plan Contract for 2014. 4.2 Department of Health Care Services Plan Agreement Number 04-36063 A08, Attachment 13, Section 7.

4.54.3 Department of Health Care Services (DHCS) Medi-Cal Managed Care Department (MMCD) Policy Letter 98-12.

4.6 Section 3.05(e) – Enrollment Targets of the Services Agreement between L.A. Care and the Plan Partners.

4.4 4.4 L.A. Care’s Board of Governors’ Approved Motion – EXE101.1102 “Automatic Assignment Proposal”.

4.5 Section 1905(a)(2)(C) of the Social Security Act

4.6 Section 3.05(e) – Enrollment Targets of the Services Agreement between L.A. Care and the Plan Partners.

4.7 Section 40501 of Title 22 - California Code of Regulations

4.8 Section 53885 of Title 22 – California Code of Regulations

4.9 Section 53890(a) of Title 22 – California Code of Regulations

263 4.74.10 Sections VI and VII of the Community Based Adult Services (CBAS) Contract Amendment.Sections VI and VII of the Community Based Adult Services (CBAS) Contract Amendment.

264 5.0 REFERENCE:

5.1 L.A. Care Policy and Procedure PO 2819 – “Month-Eend Enrollment Processing”

5.2 L.A. Care Policy and Procedure PNO-004 – “Provider Network Changes - Member Assignment and Choice”

5.3 L.A. Care Policy CR002 - “Plan Partner Child Health and Disability Prevention Program (CHDP).”

5.4 L.A. Care Procedure PR 4011 – “ Plan Partner Transfer Requests By Members”

5.55.3 Master Provider Database Technical Bulletin

5.65.4 L. A. Care Requirements Specifications Reports for Membership Auto-Assignment

Accountability Matrix

Responsible Department(s) Policy Section # Information Systems 1.76 Credentialing Dept. 1.68.2 Regulatory Affairs and Compliance 1.8 (RA&C)

265

ELECTRONICALLY APPROVED BY THE FOLLOWING

Regulatory Affairs & Officer Director Compliance Name John Wallace Maribel Ferrer DeniseSteve Krivit Corley Executive Services Member Services Regulatory Affairs & Department Compliance Chief of StaffChief Senior Director of Compliance Officer Operating Officer Medicare and Member Title and Medicare Services

IF APPLICABLE

Board of Governors Motion Number: 102.0314

266

Policy History Policy or Next or Annual Date Department Section Comment(s) Review # DateAnnual Review 6/10/08 Member MS-003 Replacing Policies 6/10/09 Services 4004 and 4008 4/16/09 Member MS-003 Sub-Section under Services 2.13.1-2.13.5 were removed 09/0810/20/2011 Member MS-003 Policy was 09/08/10/20/2012 Services updated to reflect changes in the systematic processing of member assignments based on changes in the CHDP certification policy,; added language related to the assignment of Seniors and People with Disabilities to comply with new DHCS contract language, and updated to reflect closure of CHP to new Medi-Cal members effective 10/1/11. 01/03/2012 Member MS-003 Policy was 01/03/2013 Services updated to iInclude reference to Plan Partner as recommended by Anthem Blue Cross during the Plan Partner review process. 01/30/2013 Member MS-003 Policy was 01/30/2014 Services updated to remove

267 Policy History time frame reference in section 1.5,. delete section 5.3 reference to retired policy CR- 002 “Plan Partner Child Health and Disability Prevention Program (CHDP);,” include language related to auto-assignment of Healthy Families members, assignment of dualMedi-Medi's and PASC-SEIU IHSS members, as well as members with CBAS benefits and prior affiliation with L.A. Care contracted clinics, facilities, or PPGs and reflect updates to the “Approval” section. 120/1104/2013 Member MS-003 Policy was 120/1104/2014 Services updated to remove Healthy Families and add L.A. Care Covered™, Cal MediConnect and the Medi-Cal expansion. 03/07/2014 Member MS-003 Policy was 03/07/2014 Services updated to remove references to Subcontracting Plans and specific auto-assignment

268 Policy History percentages not related to newly eligible, childless adult Medi-Cal members.

269 270 271 272 273 274 275 276 277

Board of Governors MOTION SUMMARY

Date: September 4, 2014 Motion No. GOV 101.0914

Committee: Governance Chairperson: Alexander K. Li, M.D.

Issue: Nominate a member of the Board of Governors

Background: L.A. Care will, for the first time, nominate a member to its own Board for a seat representing health plan or health insurance expertise. This change was approved at the February 11, 2014 meeting of the Los Angeles County Board of Supervisors. The Governance Committee received a nomination for the seat currently occupied by Member Zelman; the new Board Member appointed to this seat will serve the remainder of Dr. Zelman’s current term (until October 31, 2016). Dr. Zelman was nominated by the California Association of Health Plans (CAHP) and has remained in this seat because CAHP declined to continue to be the nominating entity for this seat.

The process for a nomination was carried out by an ad hoc Board Nominating Committee which reviewed applications and interviewed several candidates in July. The ad hoc Nominating Committee selected Hector de la Torre to be considered as a candidate for nomination to the L.A. Care Board of Governors. His resume is included with this memo. Mr. De La Torre has served in the California legislature, and has held other elected and non-elected positions in local and federal government. He currently serves as Executive Director of the Transamerica Center for Health Studies, a nonprofit focused on improving health outcomes and maximizing health insurance value and protection. A preliminary review does not disclose any significant conflicts of interest.

The Governance Committee approved this motion to be considered by the Board of Governors. If Mr. De La Torre is nominated, staff will then ask the Board of Supervisors to consider appointing him to the L.A. Care Board.

Budget Impact: None.

Motion: To approve the nomination of Hector De La Torre to the L.A. Care Board of Governors to serve the remainder of a term ending October 31, 2016, and to direct staff to forward his nomination to the LA County Board of Supervisors for appointment.

278

1150 S. Olive Street (213) 741-5503 Los Angeles, CA 90015 [email protected]

Hector De La Torre

Experience 2013 – Present Executive Director, Transamerica Center for Health Studies

Created and manage TCHS, a nonprofit focused on empowering consumers and employers to achieve the best value and protection from their health coverage, as well as the best outcomes in their personal health and wellness. Managed resources include health care coverage marketplace/public policy/legal analysis, original research and national surveys, website and social media presence, and media relations.

2011 – 2013 Vice President, Free Conferencing Corporation

Manage and develop communications and marketing strategies for the largest independent, privately held phone conferencing company in the United States, with a presence in 34 countries on every continent. Oversee telecommunications issues with federal and state regulatory agencies.

2011 – Present Member, California Air Resources Board

One of 11 board members overseeing the regulatory agency for air quality issues in California, implementing the Federal Clean Air Act and related state laws. These regulatory actions include vehicle emissions, greenhouse gas emissions, health effects of pollution, and other air quality protections. Appointed by Governor Brown and confirmed by the California State Senate.

2004 – 2010 Member, California State Assembly

Chaired Budget Subcommittee on Health and Human Services, Rules Committee, and Committee on Accountability and Administrative Review. Authored over 30 laws, including measures to restrict health insurance rescission and to assist physicians in underserved communities. Created new oversight committee for state agencies.

2001 – 2004 Administrator, Los Angeles Superior Court

Managed government relations for the 58-court system (the largest trial court in California), including interactions with state, county and local government entities.

1996 – 2001 Manager, Southern California Edison

Developed and implemented ethnic media and marketing strategy, overseeing multimillion-dollar budget for a Fortune 500 company throughout multi-county service territory. Served as primary Spanish spokesperson for SCE during the energy crisis.

1997 – 2004 City Councilmember/Mayor, South Gate, CA

As one of 5 council members, directed and oversaw management for a city government of over 300 employees and a budget over $100 million. Led the city out of a period of significant turmoil and corruption.

279 1995 – 1996 Assistant/Chief of Staff, U.S. Department of Labor

Implemented initiatives for executive management team and Deputy Secretary of Labor (the functioning Chief Operating Officer), including implementation of performance measures, regulatory policy, enforcement and day-to-day administration of over 6,000 employees and multiple agencies nationwide.

1992 – 1995 Legislative Assistant/Director, U.S. Congress

Managed various policy issues for two members of Congress, including health care, energy and telecommunications for a member of a committee with jurisdiction over those issues, progressing from Legislative Aide to Legislative Director.

1989 – 1991 Teacher, Los Angeles Unified School District

Taught middle school American History and English as a Second Language in an underserved community in South Los Angeles. Representative on budget committee.

Related 2011 – Present Trustee, Occidental College Experience 2010 Candidate, California Insurance Commissioner

2004 – 2010 Member, California Cultural and Historical Endowment

2005 – 2010 Member, Border Legislators Conference

2006 – 2010 Co-Chair, Council on State Governments’ International Relations Committee

2000 – 2004 Appointed Member, Los Angeles and San Gabriel Rivers & Mountains Conservancy

1999 – 2004 Member/Chairperson, I-710 Corridor Committee

1998 – 2004 Member/Vice Chair, Gateway Cities Council of Governments

1998 – 2001 Appointed Member, California Task Force on Court Facilities

Education 1991 – 1994 Graduate Studies, International Affairs Emphases on Latin America and Economic Development Elliot School of International Relations Washington, DC

1985 – 1989 B.A., Diplomacy and World Affairs Minor in English Earned Distinction on Senior Comprehensive Thesis Occidental College Los Angeles, CA

280 281 282 283 284 285 286 287 288 289 290 291 292 293 Board of Governors Executive Community Advisory Committee Meeting Minutes – June 11, 2014 L.A. Care Health Plan, 1055 West 7th Street, Los Angeles, CA 90017 ECAC Members RCAC Members/Public L.A. Care Board of Governors/Staff María Adela Guadarrama, RCAC 1 Chair, Antonia Rodas, RCAC 1 Hilda Pérez, Consumer Member, Board of Governors Carlos Aguirre, RCAC 2 Chair Roberto Santos, RCAC 3 Ozzie López, Member Advocate, Board of Governors Cynthia Conteas-Wood, RCAC 3 Chair Mirna González, RCAC 4 Howard A. Kahn, Chief Executive Officer Hercilia Salvatierra, RCAC 4 Chair Lourdes Servín, RCAC 5 Barbara Cook, Senior Advisor, Human Resources María Guadalupe Méndez, RCAC 5 Chair Maribel Villa, RCAC 6 John Wallace, Chief Operating Officer Mary Romero, RCAC 6 Chair Andria McFerson, RCAC 6 Torhon Barnes, Manager, Consumer Affairs, BHS Department Dalia Cadena, RCAC 7 Chair Ana Patricia Uribe, RCAC 7 Idalia Chitica, Community Outreach Lead Field Specialist CO&E Ana Romo, RCAC 8 Chair María I. Tamayo, RCAC 8 Kristina Chung, Community Outreach Field Specialist, CO&E Cristina Deh- Lee, RCAC 9 Chair María Cruz, RCAC 9 Auleria Eakins, Community Outreach Manager CO&E Aida Aguilar, RCAC 10 Chair , ECAC Julia Alvarado, RCAC 10 Oliver Fauria, Temp, CO&E Chair Linda Resendez, RCAC 11 Mary Franz, Senior Executive Director, HITEC-L.A. Elda Sevilla, RCAC 11 Chair Laura Garcia, Health Promoter Liaison CO&E Silvia Poz, At Large Member, ECAC Vice Felicia Gray, Community Outreach Liaison CO&E Chair Patricia Aguirre, Public Hilda Herrera, Community Outreach Liaison CO&E Demetria Saffore, At Large Member Tzeli Triantafillon, ViiV Judy Hsieh Bigman, Resource Specialist, CO&E Healthcare, Public Devina Kuo, Health Promoter Program Manager CO&E * Excused Absent ** Absent Susan Ma, CCI Field Specialist, CO&E *** Via teleconference Suzie Matsuda, Director, BHS Department Eduardo Kogan, Interpreter Linda Merkens, Manager, Board Services Shelly Hash, Interpreter Frank Meza, Community Outreach Field Specialist, CO&E Ali Modaressi, Director, of Electronic Health Records (HER) Technology HITEC-L.A. Hieu Nguyen, Manager of Strategic Initiatives, BHS Department Cheyenne Pierce, CCI Field Specialist, CO&E Peter Prampetch, Community Outreach & Engagement Analyst, CO&E Jose Ricardo Rivas, Community Outreach Liaison CO&E Laura Rodriguez, CCI Liaison, CO&E Mike Shook, Director, Quality and Improvement Hilda Stuart, Committee Liaison, Board Services Prity Thanki, Local Government Advisor, Government Affairs Joel Torrez, Medicare Subcontractor Specialist, Cal MediConnect Operations Paola Valdivia, Special Projects Manager Martin Vicente, Community Outreach Field Specialist CO&E

294

APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER CALL TO ORDER Aida Aguilar, ECAC Chair, called the meeting to order at 10:10 a.m.

L.A. CARE SENIOR Howard A. Kahn, Chief Executive Officer, reported: STAFF REPORT · Both RCAC elected Board representatives have been working diligently in either the Chief Executive Officer Search or the Nominating ad-hoc Committees. · Barbara Cook, Senior Advisor will be retiring from L.A. Care at the end of August 2014. Mr. Kahn noted that Ms. Cook has successfully managed L.A. Care’s most rapid growth period in staffing. He further noted that Ms. Cook graciously accepted the additional assignment to oversee the CO&E Department, and along with staff and ECAC she helped lead ECAC and RCACs to a meaningful transformation. Mr. Kahn commended Ms. Cook for her commitment and for exceeding expectations with her work at L.A. Care, CO&E and the RCACs. · Ms. Cook has allowed ample notice to ensure a smooth transition. The CO& E Department will be repositioned within the L.A. Care structure to be closer to the members and populations served by the ECAC and RCACs.

APPROVAL OF Chairperson Aguilar informed the Committee that Agenda items IV (D) Health Services report and Approved MEETING AGENDA VII (A) will not be discussed. The agenda was unanimously approved as amended. unanimously as amended. 12AYES (Aguilar, Aguirre, Cadena, Conteas- Wood, Deh-Lee, Guadarrama, Méndez, Poz, Romo, Saffore, Salvatierra, and Sevilla.)

APPROVAL OF (Ms. Romero joined the meeting) Approved MEETING MINUTES The May 14, 2014 meeting minutes were approved as presented. unanimously as

presented. 13 AYES (Aguilar, Aguirre, Cadena, Conteas-Wood, Deh- Lee, Guadarrama, Méndez, Poz, Romero, Romo, Saffore, Salvatierra, and Sevilla.)

Executive Community Advisory Committee June 11, 2014 295 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER STANDING ITEMS ECAC CHAIRPERSON Chairperson Aguilar presented the following motions: Motion ECA 100 was REPORT Approved Motion ECA 100.0714: To approve the following candidate(s) to the Regional Community unanimously Aida Aguilar, Chair Advisory Committees (RCAC) as reviewed by the Executive Community Advisory Committee 13 AYES (ECAC) during the June 11, 2014 ECAC meeting.

Motion ECA 100 will Name RCAC # Type of Member be forwarded to the

next Board of Antelope Valley RCAC 1 Advocate Governors meeting Partners for Health on July 10. County of Los Angeles RCAC 1 Advocate Department of Public Health Area Health Office SPA 1 County of Los Angeles RCAC 2 Advocate Department of Public Health Area Health Office SPA 2 USC Hartford Center RCAC 6 Advocate of Excellence Parents with RCAC 7 Advocate Exceptional Kids Inc. Fiesta Educativa Inc. RCAC 10 Advocate

Board member Hilda Pérez asked if these new candidates will be included in the RCAC membership. Idalia Chitica, Lead Field Specialist informed the Committee that the Community Based Organization will be included in the membership.

Carlos Aguirre, RCAC 2 Chair, asked if these new advocates would have voting rights at elections. Ms. Chitica informed the Committee that advocates have voting rights at the RCAC level (Chair, Vice Chair elections, and annual work plan), but only consumer members and not advocates have voting rights when electing members to the Board of Governors.

Motion ECA A-0614 To recommend revisions to the ECAC/RCAC Operating Rules to include provisions that Motion ECA-A documentation of all ECAC/RCAC discussions including meetings, trainings, and was approved subcommittees sponsored by L.A. Care where issues that involve ECAC /RCAC members unanimously 10 are discussed outside of the official ECAC meeting. To present a written summary of AYES (Aguirre, Executive Community Advisory Committee June 11, 2014 296 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER meetings, trainings and subcommittee meetings at the next ECAC meeting. Cadena, Conteas- Wood, Deh-Lee, Cynthia Conteas Wood, RCAC 3 Chair, and Chairperson Aguilar asked Committee members if they Guadarrama, need further explanation on the proposed Motion ECA-A.0514. Ana Romo, RCAC 8 Chair, Dalia Méndez, Poz, Cadena, RCAC 7 Chair, and Board Member Pérez asked for clarification as to the purpose of the proposed motion. Ms. Conteas Wood informed the Committee that this motion recommends that Romo, Salvatierra, and Sevilla.) revisions be made to the ECAC/RCAC Operating Guidelines, and if approved, a written summary of all L.A. Care sponsored trainings, meetings, and ad-hoc Committees will be provided at the next 1 NAY: Saffore ECAC meeting to be consistent and for accountability purposes. 2 ABSTENTIONS:

Chairperson Aguilar noted that the information is already provided at meetings and trainings, and is Aguilar and Romero available upon request to those who are unable to attend. Chairperson Aguilar indicated that the approval of this motion would create additional administrative work, and encourage Committee Motion ECA-A.0614 members to ask questions and provide feedback. will be presented at the June 30, 2014 Cristina Deh-Lee, RCAC 9 Chair noted her agreement with the proposed revisions and indicated that Governance a written summary would help RCAC Chairs provide an accurate and consistent message across all Committee meeting. RCACs.

Auleria Eakins, Manager, CO&E, noted her disagreement with the motion’s language and further noted that staff already provides frequent updates and reports from trainings and subcommittee meetings. Ms. Eakins asked Committee members not to approve the motion as currently written and consider proposing to strengthen the current process. Ms. Eakins indicated that changing the RCAC/Operating Rules may not be necessary. In response to Ms. Eakins’ concern, Ms. Conteas Wood indicated that the revisions to the Operating Rules would serve to secure the current process in writing to make it equal and accountable for everyone.

BOARD MEMBER Ozzie López, Member Advocate Board Member, reported that the Board of Governors met on June 5 for REPORT an all-day retreat and business meeting. · The retreat included time for discussion of L.A. Care’s future and strategic planning with Burt Margolin, a former California Assembly member, and Jane Ogle, a former executive with California Department of Health Care Services. · The Board will discuss the strategic planning as part of the annual L.A. Care budget discussion. · The Board approved several motions, including ECA 100 RCAC Membership (attached is a list of motions approved.)

L.A. CARE SENIOR John Wallace, Chief Operating Officer, reported: STAFF REPORT Membership CONTINUED · Between May and June 2014, L.A. Care’s Medi-Cal enrollment increased by 15,335 members; Executive Community Advisory Committee June 11, 2014 297 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER 10,831 of those enrolled in L.A. Care’s Direct Medi-Cal line of business (MCLA). Current total Medi-Cal enrollment is 1,367,371 and 584,437 members are enrolled in MCLA. Most of this growth is attributable to the backlog in Medi-Cal applications. L.A. Care expects that membership will increase in the upcoming months as the backlog is relieved. Announcements · Maribel Ferrer, Senior Director Member and Medi-Cal Operations will oversee the CO&E department. Ms. Ferrer has noted her excitement to work with the CO&E Department and has expressed her eagerness to work and collaborate with ECAC and RCACs. · Ms. Ferrer could not attend today’s meeting due to a personal commitment.

Cal MediConnect (CMC)/ Coordinated Care Initiative(CCI) · L.A. Care has 15 members enrolled in CMC to-date. · L.A. Care expects to receive approximately 10,000 members to join CMC by July 2014. · L.A. Care is excited to work with CCI/CMC members, as it gives the health plan the opportunity to keep this population independent and at home for as long as possible. It also provides an opportunity to do interventions to keep them out of nursing homes.

L.A. Care Covered (LACC)/Covered California L.A. Care has submitted the 2015 bid to continue participating in LACC throughout 2015.

Follow up from last month’s ECAC meeting Mr. Wallace introduced Paola Valdivia, Project Manager to the COO. Ms. Valdivia conducted research to address the questions that were posed by the Committee in regards to access to Denti-Cal providers and benefits. Mr. Wallace noted that L.A. Care does not manage the Denti-Cal program but suggested this issue be considered as one of the legislative priorities for this Committee.

Ms. Valdivia reported: (A copy of the report can be requested through the CO&E Department.) · A provider list can be obtained by accessing the Denti-Cal website. The list is broken down by county and it is updated on a regular basis. Committee members were encouraged to visit the website www.denti-cal.ca.gov or call the toll free number (800) 322-6384 regularly for an updated list of Denti-Cal providers. · Partial dental benefits were restored on May 1, 2014 for the Medi-Cal program. Providers have access to the list of benefits that can be provided, such as initial exams, restorations, crowns, dentures etc. · Complaints and grievances can be done through Denti-Cal, Department of Managed Health Services (DMHC), Department of Health Services (DHS), and Dental Board if needed. · Documents provided at this meeting are a draft, to help Committee members answer some of the Executive Community Advisory Committee June 11, 2014 298 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER questions that were posed at the last meeting. Documents can be translated if Committee members find them useful. Chairperson Aguilar requested translation of materials to be shared with RCAC members.

Ms. Deh-Lee noted that these materials are useful and commended Ms. Valdivia for her hard work in putting it together for the Committee.

Mary Romero, RCAC 6 Chair, recommended that only the frequently asked questions (FAQs) sheet be translated as the provider listing is frequently updated. Ms. Romero indicated it would be best to refer people to the Denti-Cal website for an updated provider listing.

Board member Pérez asked if the Denti-Cal website is available in Spanish. Ms. Valdivia did not have the answer to this question, but noted that the FAQ sheet on the website is not as extensive, as the one provided at today’s meeting. Board member Pérez indicated that this could be part of the Committee’s legislative priorities to ask for a user friendly website with more languages and detail available.

BOARD MEMBER L.A. Care Leadership and Recruitment Activity REPORT Hilda Pérez, Consumer, Board Member reminded Committee members that she was appointed by the CONTINUED Board Chairperson to take part of the CEO search ad-hoc Committee, and invited Committee members to participate in a group activity to identify five characteristics they would like to see in the new Chief Executive Officer. Committee members were asked to gather feedback from RCAC members as well. Board member Pérez noted that there are continued discussions and more meetings scheduled with the CEO search ad-hoc Committee.

Staff will prepare and forward a summarized report of the feedback gathered during the activity to Board Member Pérez to share with the ad-hoc Committee and CEO recruitment firm.

HEALTH SERVICES A report was not provided. REPORT

LEGISLATIVE Prity Thanki, Local Government Advisor, reported: (A copy of the report can be requested through CO&E.)

UPDATES On May 13, 2014, Governor Brown released the “May Revise” which is an updated version of the Governor’s proposed 2014-15 January state budget. The following are May Revise components that are of significance to L.A. Care: 1. The May Revise does not propose any new funding restorations or major funding increases to the Health and Human Services Program, except for those originally included in the January proposal. 2. Last year, California adopted the optional Medi-Cal Expansion as part of the federal health care reform. Enrollment in the Medi-Cal program is projected to rise from 7.9 million to 11.5 million in 2014-15. Although the federal government will pay for Medi-Cal Expansion for the next few Executive Community Advisory Committee June 11, 2014 299 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER years, the budget projects that Medi-Cal costs will rise by $2.4 billion. 3. The budget includes a two-year pilot requiring most Medi-Cal beneficiaries to pay a $15.00 copayment for non-emergency use of the emergency program. The pilot does not affect persons eligible for Medi-Cal and Medicare (Dual Eligible), ADFC-Foster Care and American Indian/Alaskan Natives. This proposal requires federal approval. 4. The budget also provides full-scope Medi-Cal services for pregnant women with incomes under 109% of the Federal Poverty Level (FPL). Pregnant women with incomes between 109% and 208% FPL will transition to Covered California and the state will cover all out-of-pocket expenses beginning January 2015. For services not covered by Covered California, the enrollee will access services via Medi-Cal Fee-For-Service (FFS) program. 5. Beginning in January 2015, newly qualified immigrants will transition from State-only Medi-Cal to Covered California. The State will cover all out-of-pocket expenses. For services not covered by Covered California, the enrollee will receive services via Medi-Cal FFS. 6. The May Revise includes $2 million for a three-year pilot program in Los Angeles County, to expand pediatric vision screenings and services. The pilot would use mobile vision providers and contract with school districts to provide vision exams and eye glasses to children enrolled in Medi-Cal managed care plans. L.A. Care submitted a support letter on this pilot. 7. The budget continues to fund the CCI and CMC. Dual eligible people will be enrolled in managed care plans. Voluntary enrollment in L.A. County began in April 2014, and passive enrollment is scheduled to start in July 2014. Beginning in July, all Medi-Cal beneficiaries including dual eligible individuals will be required to enroll in a Medi-Cal managed care plan in order to receive long-term services and supports services (LTSS).

Governor Brown’s proposed revisions and the original budget from January require final approval from the State Assembly and the Senate. The Assembly and Senate Budget Committees have been holding hearings to discuss the budget. The Assembly and the Senate must approve an identical version of the budget thus they are engaging in a Conference Committee to clear any differences that may have arose during their respective hearings on the May Revise. By the end of June, both the Senate and the Assembly will pass a budget plan and send a package of bills for the Governor’s approval.

Board member Pérez asked if the budget will be approved by July 2014 and if it will be approved as proposed and if parts of the budget can be vetoed for example the proposed $15.00 copayment for non-emergency use of the emergency program. Ms. Thanki noted that both Houses will discuss the May Revise and will send their budget plan to the Governor. (Updated response: The State Constitution says that the Budget Bill must be passed by the Legislature no later than midnight, June 15, each year. If a budget is late, legislators lose their pay for each day past June 15th. Once the Governor gets the final budget from the Legislature, he has 12 working days to sign or veto the California state budget bills. The Governor can also “blue pencil” (reduce or Executive Community Advisory Committee June 11, 2014 300 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER eliminate) any item contained in the budget before signing it. The Legislature will still have the power to override his veto with a two-thirds vote in both houses. After being signed by the Governor, the budget typically goes into effect on July 1. The budget year runs from July 1 through June 30.) An update on the budget will be provided at the July ECAC meeting. In regards to the proposed $15.00 copay, Ms. Thanki indicated that it’s included in the budget but pending federal approval.

Board member Pérez asked if pregnant women who transition into Covered California due to their FPL will have to pay for their coverage, and if these women must be U.S citizens or legal residents in order to be transitioned to Covered California. Ms. Thanki noted that pregnant women with a legal immigration status who have incomes between 109% and 208% will qualify for Covered California.

Demetria Saffore, At-Large member, asked what will happen to people with disabilities who currently received Medi-Cal benefits through Medi-Cal FFS and require LTSS. Ms. Thanki noted that all Medi- Cal beneficiaries must enroll in a managed care plan by July 1, 2014 in order to continue receiving their LTSS services.

PUBLIC COMMENT Andria McFerson, RCAC 6 member, asked if a person has Medicare as their primary insurance but is also eligible for Medi-Cal benefits, must they choose a managed care plan, and if Medi-Cal becomes their primary insurance if they enroll in a managed care plan. Ms. Thanki indicated that dual eligible individuals must enroll in a Medi-Cal managed care plan if they wish to continue receiving LTSS services. Ms. McFerson noted receipt of a letter asking her to enroll in a managed care plan, and further noted that she is already enrolled in L.A. Care. Ms. Thanki informed the Committee that dual eligible members began receiving a letter from the DHCS in regards to the CCI. Ms. Thanki noted that the form is confusing and does not include a section to opt out for Medicare services. Ms. Thanki briefly explained how members could complete the form if they wish to opt out for Medicare services but suggested that a staff member from the CCI Department be invited to the meeting for further clarification. Ms. Eakins informed the Committee that a staff member will be invited to attend the next ECAC meeting.

On May 23, 2014, the Senate Appropriations Committee chose to hold SB 1005 (Lara)- which would provide affordable coverage for all of California’s remaining uninsured, including undocumented immigrants-from continuing on the legislative process. The Appropriations Committee decided to hold the bill to allow lawmakers the opportunity to determine funding. The bill has not been defeated but it’s now harder for the bill to advance because it will require a two-thirds vote from the Senate and the Assembly in order to pass. Currently federal health care reforms prohibit illegal immigrants from receiving subsidies for insurance or qualifying for Medi-Cal coverage. SB 1005 proposes to extend Medi-Cal benefits to undocumented immigrants by creating a separate health benefit exchange to assist in affording coverage. More information on SB1005 will be provided as it becomes available. Executive Community Advisory Committee June 11, 2014 301 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER

Board member López asked if there is an approximate length of time for the bill to be on hold. Ms. Thanki noted that a timeframe has not been identified, but will wait until the end of the summer for any updates on this bill. The bill is not dead or defeated yet, but on hold, allowing lawmakers an opportunity to figure out ways to get this program funded.

AT-LARGE MEMBER Silvia Poz and Demetria Saffore, At-Large Members, reported: UPDATE · Six RCAC candidates are proposed for approval in Motion ECA 100. (MEMBER · As of June, the CO&E Department received 22 interest cards from RCACs 3, 4, 5, 6, 7, and 9. A RECRUITMENT/CCI) total of 116 interest cards have been received to-date. Not all of the interest cards are processed due to lack of eligibility. New recruitment efforts include targeting specific product lines to ensure representation from all of L.A. Care’s product lines. · Since RCAC membership reopened, L.A. Care has welcomed 30 new members into the RCACs.

Chairperson Aguilar encouraged Committee members to continue recruiting regardless of the product line. Ms. Conteas Wood noted that some RCACs with low membership need the additional members regardless of the product line they are enrolled in, to help build support. Ms. Conteas Wood informed the Committee that RCAC 3 has five new members, and noted that L.A. Care will work with those RCACs with low membership in order to get the right membership that’s needed to support the RCAC.

· The CCI staff continues to attend different trainings to learn about CMC, and Medi-Cal LTSS throughout the county. (MLTSS) · On June 2, 2014, LA Care hosted its first CCI/CMC Community Leader Meeting in the Antelope Valley at the Chimbole Cultural Center. Representative Buck McKeon and Supervisor Michael Antonovich attended the event. This was an opportunity for community leaders to learn more about CCI and its impact on the consumers they serve. · The next community meeting for consumers in the Antelope Valley is scheduled on June 26, 2014. The meeting will be held at the Chimbole Cultural Center at 10:00 a.m. Interested individuals can call Cheyenne Pierce at (213) 694-1250 ext. 5247 for additional information. · Additional Community Leader and consumer meetings will be held in the upcoming months in the San Fernando Valley, South Los Angeles and Long Beach areas. Interested individuals can call the CCI Field Specialists for additional information.

Board member Pérez requested at the last meeting that the At-Large report be provided in writing. Request was acknowledged by staff thus she asked if this request would be granted at future ECAC meetings. Ms. Chitica informed the Committee that some reports are time sensitive and do not allow enough time for translation. Staff can make the English version available at today’s meeting.

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AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER MEMBER ISSUES Ms. Romo described a member issue raised at the RCAC 8 meeting on May 16, 2014. RCAC 8 · RCAC 8 members reported numerous complaints about private and community clinics in the RCAC 8 region not accepting new Medi-Cal patients. Committee members expressed concerns due to lack of access to care for those individuals that are eligible for Medi-Cal Expansion or Covered California. RCAC members decided that the issue be forwarded to ECAC to request assistance from the Interdisciplinary Committee for review and resolution. Ms. Romo noted that RCAC 8 members will survey community members in the area for validation, three RCAC volunteers were selected to further investigate this issue. Volunteers will disguise themselves as new members and will call various clinics pretending to be new members to try to schedule an appointment. Feedback from the three volunteers will be presented at the next meeting.

Ms. Conteas Wood asked if clinics have expressed the reasons why they are not accepting new members. Ms. Romo answered negatively and mentioned that volunteer members will pose that question when trying to schedule an appointment at the clinics.

Ms. Cook recommended that a brief update on this issue be provided later under the Interdisciplinary Team discussion on today’s Agenda.

Joel Torrez, Senior Medicare Operations Specialist addressed the Committee to provide more information on the blue envelope being sent by the DHCS to Medi-Cal/Medicare beneficiaries as previously mentioned during today’s legislative update. Mr. Torrez encouraged members who receive a blue envelope to call him at (213)694-1250 ext. 5743 or the L.A. Care Member Services line so that he can provide individual assistance to members that have questions or concerns. Mr. Torrez noted that the CMC/CCI is a new demonstration program, and the mailings have caused some confusion within the community as the choice enrollment form generated by the DHCS is not user friendly. L.A. Care provided recommendations on the form and the DHCS is currently doing trial runs on a new Health Care Options form. L.A. Care is not aware when and if the new form will be available to members but will notify this Committee as information becomes available. Mr. Torrez informed the Committee that some members may receive information in a blue envelope, those who receive the blue envelope could be eligible to enroll in CMC or Managed Long Term Services and Supports (MLTSS). Mr. Torrez will review the form included in the blue envelope at the next meeting.

Ms. Poz mentioned that the letter in the blue envelope states that if a member is receiving in home support services (IHSS) or mental services, they must enroll in a plan otherwise their benefits will stop. Mr. Torrez informed the Committee that benefits could be disrupted if a plan is not selected. He noted there are continuity of care provisions, and members have the right to continue seeing their primary care physicians as noted in those provisions. Mr. Torres noted that in order to receive MLTSS a person must enroll in a health plan for the coordination of services, or a plan would be selected for them. Members were informed that if they received a blue envelope, it is likely they are Executive Community Advisory Committee June 11, 2014 303 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER being required to take action.

COMMUNITY There were no updates. ENGAGEMENT

ECAC members

NEW BUSINESS HIT BLUE BUTTON Mary Franz, HITEC-LA Senior Executive Director, and Ali Modaressi, HITEC-LA Director of Electronic PRESENTATION Health Records (EHR) Technology, reported: (A copy of the presentation can be requested through the CO&E Department.) · Blue Button is a web based application that allows L.A. Care members to print their prescription history either on their own or at the primary care physician’s office to take to their doctor visits. Blue Button can be found on the L.A. Care website’s member portal. · Blue Button allows doctors to be informed of all the medications that their patient has been prescribed for the past 12 months. · L.A. Care received a federal government funded grant to build this application on behalf of its members. L.A. Care is one of the first and largest Medi-Cal plans in the country to do Blue Button.

· Blue Button is secure, and allows members to view, download or print their 12 month

prescription e-mail. L.A. Care will add-on secure e-mail, so that members can download their

history and e-mail to their doctor.

· To participate in Blue Button a member must register using their member I.D. number, last name and date of birth. An e-mail address is required to register as well as a password for security purposes. · Once members register, they are able to access their prescription history for the past 12 months. The list is initially sorted by drug name, fill date, quantity, prescribing provider and the pharmacy where the prescription was filled. · L.A. Care selected five practices for the Blue Button pilot. These clinics were selected as a result of an L.A. Care study that showed a high density of L.A. Care membership, with numerous medications that are prescribed by multiple providers. · L.A. Care will install kiosks at the five practices to help members access their prescription history while waiting to be seen by the doctor. · L.A. Care will do a marketing theme and will provide Blue Button pins to members participating in the pilot to make it easier for doctors and their staff to identify these patients. Other marketing collaterals will also be available at the doctors’ office for members to learn about the availability of the Blue Button feature in the L.A. Cares’ website member portal.

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Board member Pérez asked if members will know about Blue Button prior to going to their doctor visit and if any member attending the five doctor offices that are participating in the pilot will have access to Blue Button. Mr. Modaressi informed the Committee that Blue Button is available for L.A. Care members only and the five practices were selected as part of roll out of the pilot to test how the project will work out in the field. Ms. Franz noted that staff at the five doctor offices will notify L.A. Care members of Blue Button when an appointment is scheduled at their office. Mr. Modaressi informed the Committee that in addition, members will have access to marketing collaterals at the doctor’s office. Ms. Franz further noted that L.A. Care will also do a broader marketing campaign for all L.A. Care members.

Ms. Poz asked if the project has been launched. Mr. Modaressi informed the Committee that Blue Button launched in March and 180 members have registered for Blue Button thus far.

Chairperson Aguilar asked about the frequency in which the members’ prescription history is updated in Blue Button and if the names of the five clinics currently participating in Blue Button can be provided to the Committee. Mr. Modaressi informed the Committee that information is received on a weekly basis and there is a 10 day gap between the date when information is received and loaded. Members are notified that the latest medication they were prescribed may not be available on the list they print. Mr. Modaressi will provide the names of the five clinics at a future meeting.

Board member Pérez asked about privacy issues that a member may encounter if they download their prescription history at the kiosk. Mr. Modaressi informed the Committee that use of the kiosk will be limited, there will not be a printer in the waiting room to protect members’ privacy; instead the patients’ history will be printed in the back office. The member will wear their Blue Button pin to inform the nurses that they have printed their prescription history at the kiosk.

Hercilia Salvatierra, RCAC 4 Chair, asked if Blue Button will be available at all community clinics or just at the larger county clinics. Mr. Modaressi noted that the goal is to roll out to all clinics and provider offices where L.A. Care members are seeing. After this pilot, L.A. Care will be better informed on how to proceed with the roll out. Ms. Franz noted that L.A. Care set aside funds to create a Blue Button phone application in the future, once L.A. Care finds out through the pilot if access to Blue Button is valuable to the members.

Ms. Deh-Lee asked if a member can use Blue Button to refill a medication. Ms. Franz responded negatively.

INTERDISCIPLINARY Mike Shook, Director, Quality Improvement, reported: COMMITTEE · The Interdisciplinary Committee will focus on member issues that are brought forth by the RCACs. Executive Community Advisory Committee June 11, 2014 305 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER · The overall goal of the Committee is to ensure that members receive timely care as needed. · The Committee will have its first meeting on Wednesday, June 18. · The Committee will be comprised of L.A. Care staff from multiple departments within the organization that can help address members’ issues. · The Committee will meet at least on a monthly basis, to review all the issues that are brought forward by ECAC and the RCACs. Issues will be reviewed and handled, and ECAC will receive updates on the status of the issue at subsequent meetings. · The Committee will create a document to help ECAC and RCAC members gather important information about the issue being presented in order to assist the Interdisciplinary Committee address and resolve the issue. · The Committee will review the cases in a systematic manner, taking policies and procedures into account and will make the necessary changes to improve member experience while meeting business objectives.

Chairperson Aguilar asked if the Interdisciplinary Committee will conduct site visits to clinics that have complaints against them. Mr. Shook noted that it will depend on the issue.

Ms. Conteas Wood asked about the disciplines included in the Interdisciplinary Committee. Mr. Shook noted that the Interdisciplinary Committee will include a variety of matter experts from different Departments such as Case Management, Disease Management, Member Outreach Retention & Engagement (MORE), Grievances and Appeals, Community Outreach & Engagement (CO&E), Provider Network Operations (PNO), Pharmacy, and Medicare Operations. Mr. Shook informed the Committee that key players will be brought into the Interdisciplinary Committee as needed.

PUBLIC COMMENT: Ms. McFerson shared the story of her late friend Gizelle Ann Henry, and stressed the importance of the Interdisciplinary Committee and providing timely and appropriate care to all members.

Ms. Saffore shared a personal issue with the Committee. Ms. Cook and staff will discuss this issue with Ms. Saffore after the meeting.

Ms. Poz, referred to the member issue presented by RCAC 8 and asked if L.A. Care recommends that members conduct investigations. Mr. Shook noted that it is L.A. Care’s responsibility to conduct the necessary investigations. Ms. Cook further noted that L.A. Care does not recommend for members to conduct their own investigations, but added that L.A. Care encourages members to be alert and identify patterns when hearing constant stories or comments regarding a particular clinic or doctor. She asked that members bring information to L.A. Care’s attention for appropriate review and resolution.

Executive Community Advisory Committee June 11, 2014 306 APPROVED

AGENDA MOTIONS / MAJOR DISCUSSIONS ACTION TAKEN ITEM/PRESENTER Ms. Deh-Lee asked if consumers have the right to instruct a primary care physician to follow protocol. Ms. Cook noted that issues must be reported, handled and resolved by L.A. Care.

Chairperson Aguilar asked if L.A. Care conducts a survey at a providers’ office, will they focus on the services provided particularly to L.A. Care members or everyone who receives services at that clinic. Mr. Shook noted that L.A. Care has to focus on the issues that L.A. care members bring forth but it is expected that everyone should be treated equally regardless of the plan they are enrolled with. Chairperson Aguilar also asked if providers may decide to cancel their Medi-Cal contracts to avoid dealing with members’ complaints. Mr. Shook responded negatively.

Board member Pérez asked Mr. Shook how often he will be attending ECAC meetings. Ms. Cook noted that either Mr. Shook or a member of the Interdisciplinary Committee will attend all ECAC meetings. Mr. Shook added that the Committee will appoint the subject matter expert to attend the ECAC meeting and provide updates on the resolution of a particular issue as submitted by ECAC and the RCACs.

Ms. Eakins asked Mr. Shook to briefly comment on how the Interdisciplinary Committees’ work correlates with the efforts to improve Healthcare Effectiveness Data and Information Set (HEDIS) scores. Mr. Shook noted that the Interdisciplinary Committee will focus on improving member satisfaction and access to care thus helping improve current HEDIS scores.

OLD BUSINESS

BARBARA COOK This Agenda item was not discussed.

PUBLIC COMMENTS There were no public comments.

ADJOURNMENT Chairperson Aguilar adjourned the meeting at 12:50 p.m.

RESPECTFULLY SUBMITTED BY: APPROVED BY:

Hilda Stuart, Committee Liaison, Board Services ______Linda Merkens, Manager, Board Services Aida Aguilar, ECAC Chair Date ______

Executive Community Advisory Committee June 11, 2014 307 APPROVED Schedule of Meetings September 2014

Monday Tuesday Wednesday Thursday Friday Saturday Sunday 1 2 3 4 5 6 7

Board of Governors Meeting 2 pm (for approximately 2 hours)

8 9 10 11 12 13 14 ECAC 10 am (for approximately 2 hours)

15 16 17 18 19 20 21 CHCAC Compliance & Quality 8 am 2:30 pm (for approximately 2 hours) (for approximately 2 hours)

22 23 24 25 26 27 28 Finance & Budget TAC 1 pm 9 am (approximately 1-1/2 hours) (for approximately 2 hours) Executive Committee 2:30 pm (for approximately 2 hours) 29 30

For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 308 Prepared by mhbalones/printed on 08/29/14 Board of Governors & Public Advisory Committees 2014 Meeting Schedule / Member Listing 1055 W. 7th Street, 10th Floor, Los Angeles, CA 90017 Tel. (213) 694-1250 / Fax (213) 438-5728

MEETING DAY, TIME, MEETING & LOCATION DATES MEMBERS Board of 1st Thursday September 4 Thomas Horowitz, DO, Chairperson 2:00 PM October 2 Mark Gamble, Vice Chairperson Governors (for approximately 3 hours) November 6 Michael Rembis, FACHE, Treasurer General Meeting 1055 W. 7th Street, December 4 Louise McCarthy, Secretary 10th Floor, Los Angeles, Jann Hamilton Lee CA 90017 Thomas S. Klitzner, MD, PhD, Alexander K. Li, MD Ozzie Lopez Honorable Gloria Molina Hilda Perez G. Michael Roybal, MD, MPH Sheryl Spiller Walter A. Zelman, PhD

Staff Contact: Howard A. Kahn, Chief Executive Officer, x4102 Linda Merkens, Manager, Board Services, x4050

For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 309 BOARD OF GOVERNORS & PUBLIC ADVISORY COMMITTEES 2014 MEETING SCHEDULE / MEMBER LISTING

Board of Governors - Standing Committees

MEETING DAY, TIME, MEETING & LOCATION DATES 2014 MEMBERS Executive Committee 4th Wednesday of the month September 24 Thomas Horowitz, DO, Chairperson 2:30 PM October 22 Mark Gamble (for approximately 2 hours) November 19* Michael Rembis 1055 W. 7th Street, No meeting in Louise McCarthy 10th Floor, Los Angeles, December G. Michael Roybal, MD, MPH CA 90017 Alexander K. Li, MD

**moved due to holidays Staff Contact: Linda Merkens, Manager, Board Services,x4050

Compliance & 3rd Thursday every 2 months September 18 G. Michael Roybal, MD, MPH, Chairperson Quality Committee 2:30 PM November 20 Jann Hamilton Lee (for approximately 2 hours) No meeting in Alexander Li, MD December Honorable Gloria Molina 1055 W. 7th Street, Hilda Perez 10th Floor, Los Angeles, CA 90017 Staff Contact: Malou Balones

Committee Liaison, Board Services, x 4183

Finance & Budget 4th Wednesday of the month September 24 Michael A. Rembis, FACHE, Chairperson Committee 1:00 PM October 22 Jann Hamilton Lee (for approximately 2 hours) November 19* Thomas Horowitz, DO No meeting in Ozzie Lopez 1055 W. 7th Street, December Louise McCarthy

10th Floor, Los Angeles, Staff Contact: CA 90017 Hilda Stuart *moved due to holidays Committee Liaison, Board Services, x 4184

Governance MEETS AS NEEDED Alexander K. Li, MD, Chairperson Committee 1055 W. 7th Street, Mark Gamble 10th Floor, Los Angeles, Ozzie Lopez CA 90017 Hilda Perez Sheryl Spiller Walter A. Zelman, PhD

Staff Contact: Malou Balones Committee Liaison, Board Services/x 4183

Service Agreement MEETS AS NEEDED Chairperson to be elected Committee 1055 W. 7th Street, Ozzie Lopez 10th Floor, Los Angeles, Louise McCarthy CA 90017 Honorable Gloria Molina Hilda Perez Sheryl Spiller

Staff Contact Malou Balones Committee Liaison, Board Services/x 4183 For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 310 BOARD OF GOVERNORS & PUBLIC ADVISORY COMMITTEES 2014 MEETING SCHEDULE / MEMBER LISTING

MEETING DAY, TIME, MEETING & LOCATION DATES 2014 MEMBERS Audit Committee MEETS AS NEEDED G. Michael Roybal, MD, MPH, Chairperson 1055 W. 7th Street, Jann Hamilton Lee 10th Floor, Los Angeles, Alexander K. Li, MD CA 90017 Staff Contact Hilda Stuart Committee Liaison, Board Services, x 4184

For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 311 BOARD OF GOVERNORS & PUBLIC ADVISORY COMMITTEES 2014 MEETING SCHEDULE / MEMBER LISTING

MEETING DAY, TIME, MEETING & LOCATION DATES MEMBERS L.A. Care Meets Annually or as needed Thomas Horowitz, DO, Chairperson 1055 W. 7th Street, Mark Gamble, Vice Chairperson Community 10th Floor, Los Angeles, Michael Rembis, FACHE, Treasurer Health CA 90017 Louise McCarthy, Secretary Jann Hamilton Lee Thomas S. Klitzner, MD, PhD, Alexander K. Li, MD Ozzie Lopez Honorable Gloria Molina Hilda Perez G. Michael Roybal, MD, MPH Sheryl Spiller Walter A. Zelman, PhD

Staff Contact: Howard A. Kahn, Chief Executive Officer, x4102 Linda Merkens, Manager, Board Services, x4050

L.A. Care Joint Meets Quarterly or as Thomas Horowitz, DO, Chairperson needed Mark Gamble, Vice Chairperson Powers Authority 1055 W. 7th Street, Michael Rembis, FACHE, Treasurer 10th Floor, Los Angeles, Louise McCarthy, Secretary

CA 90017 Jann Hamilton Lee Thomas S. Klitzner, MD, PhD, Alexander K. Li, MD Ozzie Lopez Honorable Gloria Molina Hilda Perez G. Michael Roybal, MD, MPH Sheryl Spiller Walter A. Zelman, PhD

Staff Contact: Howard A. Kahn, Chief Executive Officer, x4102 Linda Merkens, Manager, Board Services, x4050

For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 312 BOARD OF GOVERNORS & PUBLIC ADVISORY COMMITTEES 2014 MEETING SCHEDULE / MEMBER LISTING

Public Advisory Committees MEETING DAY, TIME, MEETING & LOCATION DATES STAFF CONTACT Children’s Health 3rd Tuesday of every other September 16 Lyndee Knox, PhD, Chairperson Consultant Advisory month November 18 Committee 8:30 AM General Meeting (for approximately 2 hours) Staff Contact: Hilda Stuart 1055 W. 7th Street, Committee Liaison, Board Services, x 4184 10th Floor, Los Angeles, CA 90017

Executive 2nd Wednesday of the month No meeting in August Aida Aguilar, Chairperson Community Advisory 10:00 AM September 10 Committee (for approximately 2 hours) October 8 November 12 1055 W. 7th Street, December 10 Staff Contact: 10th Floor, Los Angeles, Idalia Chitica, Community Outreach & CA 90017 Education, Ext. 4420

Technical Advisory 4th Thursdays every other September 25 Chairperson to be elected Committee month November 20 9:00 AM (for approximately 2 hours) Staff Contact: Malou Balones 1055 W. 7th Street, Committee Liaison, Board Services/x 4183 10th Floor, Los Angeles, CA 90017

For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 313 BOARD OF GOVERNORS & PUBLIC ADVISORY COMMITTEES 2014 MEETING SCHEDULE / MEMBER LISTING

REGIONAL COMMUNITY ADVISORY COMMITTEES

MEETING DAY, TIME, REGION & LOCATION MEETING DATE STAFF CONTACT Region 1 3rd Friday of every other October 17 Adela Guadarrama, Chairperson Antelope Valley month December 19 10:00 AM (for approximately 2-1/2 hours) Staff Contact: Chimbole Cultural Center Kristina Chung 38350 N. Sierra Highway Community Outreach & Education, Ext. 5139 Palmdale, CA 93550 Tel (661) 267-5656

Region 2 3rd Monday of every other October 20 Carlos Aguirre, Chairperson San Fernando Valley month December 15 10:00 AM (for approximately 2-1/2 hours) Francis Polytechnic Senior High Staff Contact: School Kristina Chung 12431 Roscoe Blvd. Community Outreach & Education, Ext. 5139 Sun Valley, CA 91352

Region 3 3rd Tuesday of every other October 21 Cynthia Conteas-Wood, Chairperson Alhambra, Pasadena month December 16 and Foothill 9:30 AM (for approximately 2-1/2 hours) Staff Contact: Jackie Robinson Community Liliana Arevalo Center Community Outreach & Education, Ext. 4586 1020 N. Fair Oaks Blvd. Pasadena, CA 91103 Tel (626) 744-7300

Region 4 3rd Tuesday of every other September 16 Hercilia Salvatierra, Chairperson Hollywood-Wilshire, month November 18 Central and Glendale 9:00 AM (for approximately 2-1/2 hours) St. Vincent Medical Center Staff Contact: Mark Taper Building Board Rm Liliana Arevalo 2200 W. Third St. Community Outreach & Education, Ext. 4586 Los Angeles, CA 90057 Tel. (213) 484-7766

Region 5 3rd Monday of every other October 20 Maria Guadalupe Mendez, Chairperson West month December 15 2:00 PM (for approximately 2-1/2 hours) Mar Vista Housing Dev. Staff Contact: Multipurpose Room Martin Vicente 4909 Marionwood Street Culver Community Outreach & Education, x 4423 City, CA 90230 Tel. (310) 915-9006

For information on the current month’s meetings, check calendar of events at www.lacare.org. Meetings may be cancelled or rescheduled at the last moment. To check on a particular meeting, please call (213) 694-1250 or send email to [email protected]. 314 BOARD OF GOVERNORS & PUBLIC ADVISORY COMMITTEES 2014 MEETING SCHEDULE / MEMBER LISTING

MEETING DAY, TIME, REGION & LOCATION MEETING DATE STAFF CONTACT Region 6 3rd Thursday of every other October 16 Mary Romero, Chairperson South, Compton, month December 18 Inglewood 3:00 PM (for approximately 2-1/2 hours) Staff Contact: Saint John’s Well Child & Family Center Auleria Eakins th 808 W. 58 Street Community Outreach & Education, x 4280 Los Angeles, CA 90037 Tel. (323) 541-1600 Region 7 3rd Thursday of every other September 18 Dalia Cadena, Chairperson San Antonio and month November 20 Bellflower 4:30 PM (for approximately 2-1/2 hours) Staff Contact: Old Timers Foundation Family Liliana Arevalo Center Community Outreach & Education, Ext. 4586 3355 E. Gage Avenue Huntington Park, CA 90255 Tel (323) 582-6090 Region 8 3rd Friday of every other September 19 Ana Romo – Chairperson Torrance and Harbor month November 21 10:30 AM (for approximately 2-1/2 hours) Staff Contact: John Mendez Community Center Idalia Chitica 707 W. C Street Community Outreach & Education, x 4420 Wilmington, CA 90748 Tel. (310) 549-0052 Region 9 3rd Monday of every other September 15 Christina Deh-Lee, Chairperson Long Beach month November 17 9:00 AM (for approximately 2-1/2 hours) Staff Contact: Miller Family Health Education Center Kristina Chung 3820 Cherry Avenue Community Outreach & Education, Ext. 5139 Long Beach, CA 90807 Tel. (562) 570-7987

Region 10 3rd Thursday of every other October 16 Aida Aguilar, Chairperson East Los Angeles, month December 18 Whittier and North- 4:00 PM East (for approximately 2-1/2 hours) Staff Contact: Boyle Heights Technology Youth Center Martin Vicente, Community Outreach & th 1600 East 4 Street Education, Ext. 4423 Los Angeles, CA 90033 Tel. (323) 526-0145 Region 11 3rd Wednesday of every September 18 Elda Sevilla, Chairperson Pomona and El other Month November 20 Monte 9:00 AM Staff Contact: (for approximately 2-1/2 hours) Martin Vicente, Community Outreach & First Christian Church Education, Ext. 4423 1751 North Park Avenue Pomona, CA 91768 Tel. (909) 622-1144