Managed Care Plans and FQHCs: How Los Angeles County Can Serve as the National Laboratory for Controlling Costs and Successful Collaboration

Vol. 10 No. 4

AuthorLos Angeles County (“LAC”) California’s implementation of the Patient Protection and Affordable Care Act (“PPACA”) can serve as a case study for how effectively managed Medicaid plans and community clinics can come together to enroll and manage the cost of care for the newly insured.  LAC has a significant managed care infrastructure and over 70 community clinics and affiliates that already provide primary care to low and middle income residents.1  These two key components, combined with the fact that LAC is one of the nation's largest counties with 4,084 square miles, and has the largest population of any county in the nation (approximately 27 percent of California's residents live in LAC),2 are ideal conditions for it to serve as a learning ground and laboratory for health lawyers to assess what they need to know and what steps should be taken for managed care plans (both Medicaid and PPACA health insurance exchange (“Exchange”) plans) to control costs by effectively partnering with community clinics, most of which are Federally Qualified Health Centers (“FQHCs”).3

In 2010, California approved Low Income Health Programs (“LIHPs”) for counties to serve as transitional mechanisms to qualify and enroll eligible low income individuals as a bridge to Medicaid expansion. With the full implementation of PPACA on January 1, 2014 expanding access to Medicaid and Exchange Plans,4 California will transition approximately 600,000 individuals currently enrolled in the LIHPs into managed Medi-Cal plans (Medicaid).5 In LAC, the number of individuals expected to be transitioned into managed Medicaid plans alone will be approximately 275,000.6 Knowing the core role the LIHPs will play in preparing for the implementation of PPACA, Dr. Mitchell Katz, the Director of Health Services for LAC, is widely known for the painfully accurate prediction that “[i]f Health Care Reform is to succeed, it must succeed in California and to succeed in California, it must succeed in Los Angeles County.”7  To that end, in 2010, the LAC Department of Health Services (“LACDHS”) set up its own LIHP, called Healthy Way LA, and contracted with community clinics across LAC to serve as enrollment and provider sites, in part to prepare these safety net providers for becoming managed plan providers.8 

Patient volumes at these FQHC and non-traditional providers can be staggering, and managed care plans should take note of the enormous impact on the costs to incorporate these new providers and members when planning for medical management of such large numbers of patients. Notable examples in Southern California include non-traditional providers like Planned Parenthood-Los Angeles, which provided reproductive health services to over 140,000 patients last year9 while JWCH Institute, an FQHC, provided over 130,000 patient encounters, many to homeless patients.10 Indeed, one of the key areas to watch will be how managed care plans learn to manage the special needs of populations which have not previously had to be addressed in such large numbers.11

Furthering the role as an effective laboratory, the number of patients who identify a community clinic as their medical home in LAC exceeds 1,031,000.12 Transitioning these patient encounters into the medical management collaborative partnership among primary care physicians, specialists and hospitals, including adherence to the previously unknown world of managed health plan policies and procedures specific to managed care, will require a significant investment of resources and technical support. If LAC’s journey is instructive, these lessons, if learned early, will make for smoother reform transition elsewhere in the country.

1. Managed Care Plans Need to Invest Resources and Expertise in Community Clinics to Manage Costs

A. Staffing and Technology: Though experienced with large patient volumes, community clinics will now have to become active and effective partners in the medical management of patients at a new level.  This will require new training of staff and doctors in the treatment authorization processes and procedures of managed care plans, a further departure from fee-for-service payment systems common in the past. Additionally, clinics will have to provide patients with timely access to appointments according to California law for health plan participating providers.  California was the first state to adopt healthcare access standards regarding the time it takes for patients in managed care plans to see a doctor.13 A key legal issue and regulatory compliance hurdle will be how managed care plans assess, monitor and enforce these standards.  Will there be a transition period? What will be the time parameter for providers failing to meet standards before they are subject to enforcement? What will enforcement mechanisms entail? California’s Timely Access Regulation also requires plans to describe their implementation and use of health information technology to provide timely access to care by providers.14 Providers were offered incentives to implement and meet Meaningful Use standards with Electronic Health Records (“EHRs”).15  There is little disagreement, however, that these funds don’t adequately cover the costs of implementation, training and process improvement to utilize these systems to needed capacity. Community clinics will require additional resources to fully deploy EHR systems to meet the medical management needs of patients and to report quality and access compliance in the most cost effective manner.

B. Coordination of Care: Community clinics have traditionally provided primary care and related services to populations within Health Resources and Services Administration (“HRSA”) program guidelines which include ensuring that they have core staff necessary to carry out all required primary and preventive care and provide  additional health services as appropriate and necessary, either directly or through established arrangements and referrals.16  However, to meet specialty and more advanced care needs, FQHCs have had to rely on referrals to government run specialty clinics and county hospitals for care beyond the scope of standard FQHC practice.17 As health plan participating providers, clinics will need resources for linkages to specialty care to be fully integrated into larger systems of care to manage patients effectively in order to reduce the over/misuse of specialty care and reduce the incidence of hospitalization and/or readmission.

In an effort to address these issues in LAC, community clinics, the local health initiative (“LA Care Health Plan”)18 and key county stakeholders, including LACDHS, have come together to deploy eConsult® as a tool to increase effective access to specialty care. eConsult is a web-based system that allows primary care providers (“PCPs”) and specialists to securely share health information and discuss patient care without a direct in-person patient encounter.19  The ability to get appropriate treatment more timely to patients reduces the chances of unchecked disease progression or infection transmission leading to hospitalization and further escalating treatment costs. Better coordination of care among providers of primary care, specialists and hospitals will go a long way toward reducing long term costs of care and improving health outcomes for patients when they are managed effectively.

Special populations like the homeless will present new challenges for managed care plans and providers to work together in new ways to address their unique needs. As an example of hospital discharge innovation, LACDHS has launched a test program to provide temporary housing to homeless patients and/or patients who live alone and cannot be discharged appropriately from inpatient hospitalization to the street or their home environment, offering further support to reduce readmission and lower the high cost of inpatient care should patients remain in hospitals.20

C. Technical Assistance: Managed care plans need to understand that restructuring business and service delivery models at many community clinics is necessary for them to become effective managed plan providers and that the plans need to be ready to offer resources to clinics.  Core operational issues such as treatment authorization, documentation for quality assurance reporting, and audits of care coordination activity are all challenges that require additional financial resources and technical expertise to learn and implement, along with ongoing technical support for process improvement.  Understanding its role to assist in addressing these needs, LA Care Health Plan has created a specific department called Safety Net Initiatives to work with community and government clinics to coordinate these types of activities.21

Basic technical assistance to implement plan operation policies and procedures, capacity support to manage so many new plan members and system deployment and utilization assistance to aid quality management and other reporting requirements will position community clinics to integrate more easily and effectively into a managed plan’s operation, validate the quality of care being provided and reduce costs of care while improving health outcomes.

2. Community Clinics Can Help Educate Managed Care Plans How to Meet the Needs of Special Populations Collaboratively

A. Patient Education:  Managed care plans will need to rely on these new community clinic provider “partners” to reach previously uninsured patient populations, educate them to navigate health plan procedures and, in turn, collaborate to manage expensive high acuity patient populations that have never before been managed in such large numbers.  The established cultural competency of community clinics and the community trust they have built over time will be key factors in successfully managing patients in new structures.  Traditional providers, through FQHCs and other community clinics, have years of experience with treatment, education and retention in care for special needs populations such as homeless patients, who were previously uninsured or underinsured.  Chronic conditions that did not rise to full disability under old Medicaid guidelines are still expensive to treat, and get more expensive when providers and managed care plans are not adept at working collaboratively together to keep patients adherent to treatment and retained in care.

B. Effective Medical Management Despite Old Barriers:  Certain patient populations will pose new challenges for managed care plans to understand how to address patients’ needs and supporting providers to remove obstacles to manage costs effectively.  Homeless patients,22 for example, (diabetes or HIV to illustrate), have specific wrap-around needs. Although these needs may not be covered by managed care plans initially, they have a direct impact on care costs if left unaddressed.  Without a home or address, finding patients, keeping track of where they can be reached for treatment, ensuring access to medication, proper storage of medication (refrigeration), transportation coordination, treatment education/adherence, mental health support, substance abuse treatment and counseling, oral health, and behavioral risk reduction, among other issues, all combine to have direct and ongoing impact on costs, patient satisfaction, patient well-being and health outcomes.23  As clinics are much more experienced at meeting these needs, managed care plans must be open and willing to establish processes which incorporate lessons learned from years of treatment and education experience by community clinics and compensation structures that are transparent and realistic to the actual costs of meeting the needs of special population patients.


LAC presents a unique opportunity for the nation to learn how a system with strong resources addresses the challenges inherent in Medicaid expansion. With such large numbers of patients being transitioned into managed care plans on January 1, 2014, managed care plans and community clinics (where these patients are currently seen through the LIHPs), need to come together to integrate their operations, processes and systems to make this transition successful.  Managed care plans need to understand the complexity of adding so many new, previously inexperienced managed care providers into their care continuum and provide the financial and technical support to integrate these providers and position them to succeed. Only by investing up front with these providers will managed care  plans be able to effectively manage costs.

Community clinics must take substantive steps internally to restructure business models and operating models to align processes with managed care plans for medical management of patients.  They must also deploy significant resources to train staff and educate patients on how care will be delivered and accessed in the new model of managed care.  These functions should be a high priority for managed care plans to collaboratively invest in to incorporate these vital partners into operations. The expertise of traditional providers and community clinics at reaching special needs populations, while serving as new access points for managed care plans, will be critical to maintaining cost effective medical management of these new patient populations.  LAC can be very instructive on what works, and ultimately what does not, and inform the rest of the nation as to how well managed care plans and community clinics can come together to form new partnerships while overcoming obstacles to fully integrate new providers and large patient numbers by collaborating effectively.  It is hoped that the lessons will be of successful partnership rather than lost opportunities.

1Community Clinic Association of Los Angeles County.  See
2Los Angeles County population demographics 2013. See this link.

The characteristics of a Federally Qualified Health Center  as defined by the Health Resources and Services Administration (“HRSA”) are:

  • Located in or serve a high need community (designated Medically Underserved Area or Population).
  • Governed by a community board composed of a majority (51% or more) of health center patients who represent the population served.
  • Provide comprehensive primary healthcare services as well as supportive services (education, translation and transportation, etc.) that promote access to healthcare.
  • Provide services available to all with fees adjusted based on ability to pay.
  • Meet other performance and accountability requirements regarding administrative, clinical, and financial operations.

Types of Health Centers

  • Grant-Supported Federally Qualified Health Centers are public and private non-profit healthcare organizations that meet certain criteria under the Medicare and Medicaid Programs (respectively, Sections 1861(aa)(4) and 1905(l)(2)(B) of the Social Security Act and receive funds under the Health Center Program (Section 330 of the Public Health Service Act).
  • Non-grant-supported Health Centers are health centers that have been identified by HRSA and certified by the Centers for Medicare & Medicaid Services as meeting the definition of “health center” under Section 330 of the PHS Act, although they do not receive grant funding under Section 330. They are referred to as "look-alikes."
  • Outpatient health programs/facilities operated by tribal organizations (under the Indian Self-Determination Act, P.L. 96-638) or urban Indian organizations (under the Indian Health Care Improvement Act, P.L. 94-437).


4California’s Exchange plans are governed under that state entity called Covered California.  Enrollment and information regarding California exchange plans can be found at:
5California Department of Health Care Services, Low Income Health Program Transition Resource Page. See
6Tangerine Brigham, Director of Managed Care, Department of Health Services, Los Angeles County, November 14, 2013.
7Women and Health Care Reform, 2011.  Id. on November 12, 2013 interview.
8See Los Angeles County Low Income Health Program:
9Planned Parenthood Los Angeles has 19 health centers across the 4,000 square mile area of Los Angeles County.  See
10JWCH Institute is an FQHC with six sites serving Los Angeles City and South Central portions of LA County. Al Ballesteros, Chief Executive Officer, JWCH Institute, Inc. See

Department of Health and Human Services, Washington, DC. “How the Health Care Law is Making a Difference for the People of California,”(August 1, 2013).

 Californians who are eligible for coverage through  Medi-Cal or the Exchange: 

  • 5,559,626 (18%) are uninsured and eligible
  • 3,987,161 (72%) have a full-time worker in the family
  • 2,239,807 (40%) are 19-34 years old
  • 1,584,870 (29%) are White
  • 334,654 (6%) are African American
  • 2,801,810 (50%) are Latino/Hispanic
  • 672,104 (12%) are Asian American or Pacific Islander
  • 3,076,471 (55%) are male
  • 5,091,522 (92%) of California's uninsured and eligible population can be enrolled in managed care plans.
12Community Clinic Association of Los Angeles County is an IRS 501(c)(3) tax exempt organization representing non-profit community and free clinics which operate primary care sites throughout Los Angeles County.  See

The California Department of Managed Health Care’s Timely Access to Non-Emergency Health Care Services Regulation (“Timely Access Regulation”) became effective January 17, 2010. The purpose of the Timely Access Regulation, Rule 1300.67.2.2, is to fully implement AB 2179 (Stats 2002) which enacted Health and Safety Code section 1367.03. Section 1367.03 directed the Department to adopt regulations to ensure enrollees’ access to necessary healthcare services in a timely manner. Section 1367.03 directed the Department to consider the clinical appropriateness, the nature of the specialty, the urgency of the care needed, and other legal requirements in developing the standards. The health plans licensed by the Department had until January 17, 2011 to fully implement the policies, procedures and systems necessary to comply with Rule 1300.67.2.2. Each health plan must show that its provider network is large and varied enough to offer enrollees appointments that meet the following standards:

  • The clinical appropriateness standard requires that enrollees be offered appointments for covered healthcare services within a time period appropriate for their condition.
  • Quality assurance standards requiring that enrollees be offered appointments within the following time-elapsed standards:
    • Within 48 hours of a request for an urgent care appointment for services that do not require prior authorization,
    • Within 96 hours of a request for an urgent appointment for services that do require prior authorization,
    • Within ten (10) business days of a request for non-urgent primary care appointments,
    • Within fifteen (15) business days of a request for an appointment with a specialist,
    • Within ten (10) business days of a request for an appointment with non-physician mental healthcare providers, and
    • Within fifteen (15) business days of a request for a non-urgent appointment for ancillary services for the diagnosis or treatment of injury, illness, or other health condition.
  • The applicable waiting time for an appointment may be shortened or extended as clinically appropriate in the opinion of a qualified healthcare professional acting within the scope of his or her practice consistent with professionally recognized standards of practice. If the waiting time is extended, it must be noted in the relevant record that a longer waiting time will not have a detrimental impact on the health of the enrollee.
  • Plans must contract with adequate numbers of doctors and other healthcare providers in each geographic area to meet the clinical and time-elapsed standards for appointment waiting times.
  • In areas with provider shortages, plans are not excused from their obligation to arrange for enrollees to receive timely care as necessary for their health condition. If timely appointments are not available in a particular area, a plan must refer enrollees to, or, in the case of a preferred provider network, assist enrollees in locating available and accessible contracted providers in neighboring service areas consistent with patterns of practice for obtaining healthcare services in a timely manner appropriate for the enrollees’ needs. For more information, see
14California Code of Regulations section 1300.67.2.2(g)(2)(E). 
15The Medicare and Medicaid EHR Incentive Programs provide incentive payments to eligible professionals, eligible hospitals and critical access hospitals (“CAHs”) as they adopt, implement, upgrade or demonstrate meaningful use of certified EHR technology. Eligible professionals can receive up to $44,000 through the Medicare EHR Incentive Program and up to $63,750 through the Medicaid EHR Incentive Program. See
16HRSA Grants Regulations: 45 CFR Part 74.
17FQHC Health Center Program Statute: Section 330 of the Public Health Service Act (42 U.S.C. §254b); Program Regulations: 42 CFR Part 51c and 42 CFR Parts 56.201-56.604; Grants Regulations: 45 CFR Part 74.  Required and Additional Services: Health center provides all required primary, preventive, enabling health services and additional health services as appropriate and necessary, either directly or through established written arrangements and referrals. (Section 330(a) of the PHS Act). Note: Health centers requesting funding to serve homeless individuals and their families must provide substance abuse services among their required services. (Section 330(h)(2) of the PHS Act). Staffing Requirement: Health center maintains a core staff as necessary to carry out all required primary, preventive, enabling health services and additional health services as appropriate and necessary, either directly or through established arrangements and referrals. Staff must be appropriately licensed, credentialed, and privileged. Section 330(a)(1), (b)(1)- (2), (k)(3)(C), and (k)(3)(I)  of the PHS Act).
18In April 1993, the California Department of Health Services established a Medi-Cal Two-Plan Model in which a locally developed health plan competes against a commercial health plan. The goals and objectives of the Medi-Cal Two-Plan Model include:  Expand choices of physicians and medical providers; improve access to primary and preventive healthcare services; ensure quality of care; and preserve the healthcare safety net.
19The Primary Care Physician (“PCP”) initiates a specialty consultation through a HIPAA compliant email system to the Specialist allowing the Specialist to request additional information and lab results, recommend treatment or request face-to-face consultation until the referral is made or consultation is closed.  For more information on the eConsult program, see
20Los Angeles County, Department of Health Services, Housing and Special Programs.
21Maria Calleros, Director of Safety Net Initiatives, LA Care.
22JWCH Institute estimation of 3,000 LIHP enrollees that will be transitioned to Medi-Cal managed care plans as of January 1, 2014.
23Division of HIV and STD Programs, Los Angeles County Department of Public Health and the Los Angeles County Commission on HIV, Los Angeles Coordinated HIV Needs Assessment-Care (LACHNA-Care): 2011 Final Report, December 2011:1-153.


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