Tuesday, August 3rd, 2004


* One large Department of Health and Human Services: No more MRMIB, DMHC, OSHPD, CMAC, etc.

* Lots of specific policy recommendations in Medi-Cal, health plan oversight, etc.

* One proposal: consolidate Medi-Cal eligibility with CalWorks, Food Stamps, Healthy Families

* Another: relieve counties of responsibility for medically indigent adults

* Concerns over HMO patients protections, barriers to people enrolling in Medi-Cal

To great fanfare and apprehension, the California Performance Review (CPR) today unveiled its recommendations to restructure state government. The report comes out of the work of 275 state workers from various agencies, and others, to suggest changes to state government, under the direction of Governor Schwarzenegger to “blow up” boxes.

The Governor received the report today, and said, “I am looking forward to seeing what is in the report.” He warned against “special interests” that would call the proposals “unfair and impractical.” He added “Sometimes a surgeon has to cut in order to save the patient.” The report is at the Review’s web site, at:

THE PROCESS: The proposal was formally presented to the Governor and the CPR Commission’s co-chairs, Joanne Kozberg and Bill Hauck, who will hear the report with the at five statewide hearings on upcoming Fridays: August 13th (Riverside), 20th (San Diego), 27th (San Jose), and September 10th and 17th. Of interest to health advocates, the August 20th hearing in San Diego will cover the proposed changes in Health and Human Services, Training and Volunteerism. (The San Jose hearing will focus on General Government; Information Technology, Performance–based Management, Procurement and Personnel.) The testimony of witnesses will focus on specific topics, but the Commission’s 21 members will take public comment at the end on any issue in the report.

Senator President John Burton has indicated that he didn’t see the Legislature approving the full report as a package in its entirety. Governor Schwarzenegger is not expected to propose a final version of his plan to the Legislature until next year. However, some proposals could be enacted by executive order, and other proposals by individual bills this year and next year, in next year’s budget, or through a ballot initiative.

THE PROPOSAL: The over 2,500-page proposal suggests that California move from the current set of many smaller departments within large agencies (11 agencies, 79 departments, over 300 boards and commissions) to a small number (11) of very large departments, with realigned and additional responsibilities, eliminating over 100 boards and commissions.

In addition to restructuring, the CPR makes over 1,000 recommendations for the Governor’s consideration in 280 issue areas. Some suggested changes are government-wide, toward overall goals such as instituting customer service goals, changing the personnel system, finding savings (through efficiencies, tax enforcement, and federal matching funds), instituting accountability measures, improving management systems, and better using information technology.

SPECIFIC HEALTH PROPOSALS: In health and human services, the stated goal is to “improve the delivery of health and human services efficiency and effectiveness at both the state and county government levels.” A selected summary and analysis will soon be available at This includes:

  • Reorganizing all “state health and human services functions into a single state Department of Health and Human Services,” and thus eliminating entities from the Department of Managed Health Care to the Managed Risk Medical Insurance Board to the Medical Board.
  • Realigning “current state-county relationship in providing health and human services,” including the transforming and consolidating eligibility processing for multiple programs. (2 proposals)
  • Refocus basic operations in delivery and oversight of health care, including in:

    Children’s services, such as child care, foster care and child support (7 proposals);

    Public health, mental health, and other services, including alcohol and drug programs, AIDS reporting, WIC, immunization tracking, etc. (8 proposals);
  • Licensing and oversight services, of health facilities, health professionals and workers, community care facilities, and managed health care plans (5 proposals); and
  • Medi-Cal services, addressing both operation and funding issues, including efforts to get more federal funding, change processing and procedures, and target fraud (10 proposals).

OVERALL COMMENT: It is a laudable goal to reform government, especially to make it work better for those that it serves. This report does not specific legislation toward that goal, but has a series of concept papers on a range of often-unrelated areas. So many of the ideas are just that, and at least to date have not been fully fleshed out. The proposals should be seen as several choices on a menu, rather than a coordinated plan. While some of the ideas are of interest (such as self-certification for the Medi-Cal asset test), others pose serious concern to advocates. Some of the biggest concerns by health advocates include:

  • The undermining of HMO patient protections, by having the Department of Managed Health Care subsumed into the Department of Health and Human Services, and by scaling back the authority to audit health plans. The combination may make California’s patient protections meaningless.
  • The impact on access to care for low-income Californians, including proposals that may reduce access to care to uninsured adults; make it harder for families to find out about Medi-Cal, apply, and navigate the application process; and place other barriers to getting coverage and care.


The California Performance Review recommendations would create a single new Department of Health and Human Services that would take the functions of dozens of existing agencies, boards, and other government entities. Under this plan, agencies familiar to advocates from the Managed Risk Medical Insurance Board (MRMIB) to the Department of Health Services (DHS) to the Department of Managed Health Care (DMHC) would no longer exist. Within this new department would be six divisions, or centers, each with an undersecretary, focused on health purchasing, public health, quality assurance, behavioral health, services to disabled, and social services.

CONCERN: Health care advocates should be concerned with how proposed restructuring would change the function and focus of government. It is unclear if all the functions of the Department of Managed Health Care (DMHC), or the Office of Statewide Health Planning and Development (OSHPD), are preserved in the new Department of Health and Human Services. There are real concerns that key functions will get lost in the shuffle. What is clear is that there will no longer be an “HMO czar” with the specific task of protecting managed care patients. Instead there would be a mammoth department that would responsible for everything from licensing doctors to administering child care.


The CPR proposes to centralize and consolidate eligibility processing for Medi-Cal, CalWORKs, and Food Stamps at the state level, taking the responsibility away from counties. It would contract out that work to create and implement a One-e-App system (like Health-e-App used for Healthy Families) as the main way that people can apply for these programs. In order to help this process, the report recommends moving to self-certification of the asset test, and providing a $50 fee for application assistance.

CONCERN: While the current process of enrolling people into Medi-Cal and other health and human services programs clearly needs to be reformed, health advocates should be very concerned about this proposal. Whether on paper or on the Internet, these applications require assistance, and this proposal seeks to eliminate 17,000 county workers, many of whose jobs are to help people go through the application process. We replace them with one private contractor to the state to administer an online application, and the private efforts of nonprofits and others funded only by the $50 assistance fee. The reliance on the Internet as the main way to enroll is troubling, and combined with other issues may result in many more children and families not getting services for which they are eligible. In addition, over half of Medi-Cal recipients—3.9 million—are not eligible for CalWORKs or Food Stamps, and should not have to be burdened with additional questions or application procedures that might also become a barrier to getting coverage. Self-certification of the asset test is a good step, but much more needs to be done to streamline the application and make it easier to enroll in these programs.


The CPR proposes to realign Medically Indigent Adults (MIA), In-Home Supportive Services (IHSS), Community Medi-Cal Mental Health, and Child Welfare Services (CWS), which are now a combination of state and county responsibility, both in funding and in administration. The proposal would transfer full responsibility for indigent health care, MIA and IHSS to the state, while full responsibility for all remaining state-administered and funded mental health services, and CWS, would be transferred to the counties.

CONCERN: The proposal also appears to eliminate the existing obligation for counties to serve as their providers of last resort, leaving the uninsured dependent on private emergency rooms that are only required to provide minimal emergency care. The report says that “a single eligibility standard would be created” under the state without recommending what that standard would be. There is a real possibility that the statewide standard would be lower than what some counties now provide. There would also be a concern to not encourage counties that make real efforts to treat the uninsured to dismantle their programs.


The CPR proposes to tequire the state to use the results from accrediting organizations where they are equivalent to or exceed the state’s standards regarding medical surveys/audits of health plans.

CONCERN: This proposal is at the behest of health insurance plans that seek to file less information with the state. Yet even the savings to the health plans is minor, ranging from $50,000 to $250,000. The report states, “the state could save or redirect valuable resources by accepting NCQA accreditation in lieu of regular surveys or audits…” But the power to audit is a key function of the power of a regulator. The state needs to have access to the books, and to act if enforcement is needed. The proposal could eliminate the enforcement of California-specific standards for medical quality and fiscal solvency, relying instead on a private, industry-dominated body. The California standards that would be at risk include: cultural and linguistic competency, timeliness of access, and reglation of specific benefits such as diabetes supplies, contraceptive coverage, and mental health parity. Although these provisions would continue in statute, the private accreditation agency would not inspect for compliance with them.


  • Consolidate licensing and certification functions (& eliminate health professions boards)
  • Enroll more Medi-Cal patients in Medicare
  • Automate identification of Other Health Coverage (OHC) for Medi-Cal patients
  • Use smart cards and fingerprint technology in Medi-Cal
  • Discontinue Medi-Cal Disproportionate Share Hospital (DSH) Payments for some hospitals
  • Centralize Medi-Cal Treatment Authorization Request (TARs) process
  • Target Medi-Cal fraud efforts
  • Eliminate dual capitation for Medicare/Medi-Cal managed care plans.

Please watch the Health Access web site, at, for a more detailed summary and comment.

Health Access California promotes quality, affordable health care for all Californians.
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