DHCS Audit Findings 2024-2025 Highlight Challenges for Medi-Cal Managed Care Plans
The California Department of Health Care Services (DHCS) has increased monitoring of the Medi-Cal program as part of its efforts to enhance healthcare quality, access, and equity among beneficiaries. DHCS has been able to refine its Medi-Cal Managed Care Plan (MCP) contracts and sub-regulatory guidance, such as All Plan Letters (APLs) and policy manuals, to define what is expected of the program and in which situations enforcement measures, including corrective action plans and administrative or monetary penalties, can be implemented.
According to publicly available DHCS audit reports of 2024 and 2025, with these reforms, a significant portion of MCPs still have operational issues. The audits, spanning six major domains, reveal compliance gaps and underlying causes in various plans and delegated entities.
Key Audit Findings
1. Utilization Management
Auditors mentioned deficiencies across:
- Incomplete NOA Information
- Failure to Follow Authorization Timelines
- Lack of Written Consent for Appeals
- Inconsistent Application of PA Requirements or Clinical Criteria
- Inadequate Translation of Member Notifications
- Insufficient Monitoring of Prior Authorization Referrals
2. Population Health Management and Care Coordination
In Population Health Management and Care Coordination, DHCS found that failure to accomplish Initial Health Appointments (IHAs) within needed periods, mismanagement of continuity of care (COC) requests, persistent gaps in blood lead screenings and anticipatory guidance of young children, and nonadherence to Enhanced Care Management (ECM) requirements, such as lack of a health risk assessment and a care management plan.
3. Access and Availability of Care
The audits of the Access and Availability of Care revealed that there were cases wherein MCPs did not receive valid Physician Certification Statements for non-emergency medical transportation services.
4. Member Rights
The DHCs reported failure to resolve grievances promptly, inadequate grievance resolution letters, and a lack of timely medical director review of quality-of-care grievances under member rights.
5. Quality Management
In Quality Management, multiple plans were cited for insufficient investigation and tracking of Potential Quality Issues (PQIs).
Administrative and Organizational Capacity
Administrative and Organizational Capacity audits were characterized by delays in essential reporting of fraud, waste, and abuse (FWA).
Operational Gaps
According to DHCS, many of the deficiencies stem from gaps between written policies and day-to-day operations. Fragmented workflows, reliance on delegated vendors, limited oversight, and legacy technology systems with poor interoperability continue to hinder consistent compliance. In several cases, corrective actions implemented after prior audits were deemed insufficient, resulting in repeat findings across audit cycles.
Takeaway
The audit outcomes underscore the need for:
- Integrate Policy into Practice
- Enhance Delegate Oversight
- Elevate Provider Accountability
- Improve Language and Accessibility Compliance.
- Modernize Data Systems
- Standardize Training Protocols
- Strengthen CAP Oversight
- Adopt a Proactive Compliance Culture
