California Healthcare News Oct 26, 2016

Nguyen, Grand Jury Clash On CalOptima

Questions Accuracy of Report That Plan Risks “Implosion”

By Ron Shinkman

Jan 31, 2013

California Region

Orange County Supervisor Janet Nguyen speaks at a press conference on Wednesday.

The Orange County Grand Jury and Supervisor Janet Nguyen have traded shots regarding a highly critical report the former issued last week regarding the state of the CalOptima Medi-Cal managed care plan.

Nguyen is the only Supervisor who sits on the CalOptima board of trustees – whom are also appointed by that elected body. She drew vague criticism from the often oblique report, which was entitled “CalOptima Burns While A Majority Of Supervisors Fiddle.” 

The 15-page missive suggested that CalOptima was on the verge of “implosion” due to the departure of as many as 16 senior level managers over the past 18 months, including virtually all of its C-Suite executives. 

The report suggested that the departure of the senior management had put the care of CalOptima's 427,000 enrollees at risk, although it did not provide specific examples. It also noted that recent board appointees and staff hires “lack the healthcare experience to understand the complexity of CalOptima as proven by their comments and questions during CalOptima Board meetings.” 

Along with Nguyen, the current CalOptima board includes two physicians, the heads of the Orange County Health Care Agency and Orange County Social Services Agency, and Lee Penrose, chief executive officer of St. Jude Medical Center in Fullerton, among others. Michael Schrader, CalOptima's chief executive officer, was the former COO of CenCal Health Plan, Santa Barbara County's Medi-Cal managed care plan, and held a similar position at a health plan owned by Boston General Hospital

Although the report named few individuals specifically, it blamed the exodus primarily from political meddling from what it referred to as a “registered lobbyist in Orange County and Los Angeles County” that provided campaign support to Nguyen, including hosting a $250-a-plate fundraiser for her political war chest.

The unnamed lobbyist – which sources have confirmed is the Hospital Association of Southern California – was also blamed by the grand jury for authoring and pushing through regulatory changes that changed the composition of the CalOptima board in December 2011 to give providers more influence in matters, according to the report. Nguyen has denied HASC's involvement in the ordinance change, which was approved by the Board of Supervisors on a 3-2 vote. While it retained three seats for providers, it gave a permanent seat to a hospital representative. It also extended Nguyen's tenure on the CalOptima board for a year.

The grand jury report suggested that allowing providers to have too much influence in the governance of CalOptima was risky, since “Medicare and Medicaid fraud perpetrated by clinics, doctors, pharmacists and other medical providers had spiked in recent years.” However it did not furnish evidence that such fraud was widespread in Orange County or elsewhere.

A HASC spokesperson declined to discuss the grand jury's report, saying the organization does not comment on the work of watchdog agencies.

Nguyen's response to the report has been aggressive. She authored an opinion piece in the Orange County Register earlier this week that blasted CalOptima’s former management for excessive spending, including $774,000 on gym memberships that went mostly unused, bonuses for executives at a time of budget cuts in the Medi-Cal program and more than $360,000 on a contract for a public relations firm she claimed did not go through a competitive bidding process. A press conference she held on Wednesday reiterated many of those charges, and included a slide presentation.

“While I have great appreciation for the province of the grand jury, unfortunately, in publishing this report, it has failed in its mission and has completely missed the mark,” Nguyen said. “This report is plagued by assumptions, and lacks factual basis.”

Media grilled Nguyen about her relationship with HASC during the press conference, but she claimed she met with all providers to seek input regarding any desired changes in CalOptima's governance.

The report praised the work of former CalOptima chairman Ed Kacic in applying for s $9.3 million federal grant that would be used to test medical homes and other new care models for CalOptima enrollees. It did not mention that the funds from this grant would have been managed by the Irvine Health Foundation, of which Kacic is president. Kacic was removed from his role as CalOptima chairman last spring after Nguyen and others raised concerns about a potential conflict of interest. He resigned from the board in July.

The grand jury report mentioned Payers & Providers specifically, in reference to an opinion piece it published last year by HASC Executive Vice President Jim Lott regarding the political climate in Orange County. 

The report recommended that more than one Supervisor should sit on the CalOptima board in order to reduce conflicts of interest; that CalOptima board members should be “educated” as to the health plan’s role in serving low-income residents and why it should be free of the influence of lobbyists; and that no county employees should serve on the CalOptima board because they would be reluctant to vote against a Supervisor.

The report also recommended that CalOptima’s executive salaries be raised in order to recruit more talented individuals to run the organization.


The following corrections have been made since publication: Supervisor Nguyen's opinion article in the Orange County Register made reference to gym memberships in general, not specifically for CalOptima employees.
Ed Kacic is the president of the Irvine Health Foundation, not its executive director.


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