Michael Schrader, the chief operating officer of the Boston Medical Center HealthNet Plan, was named CEO of CalOptima Thursday, ending a seven-month search for a leader of the $1.4-billion organization, which has seen its top ranks of administrators emptied by resignations.
The CalOptima board’s unanimous action came on the same day it received a letter from Ed Kacic, former board chairman, demanding a “full, complete, public and written retraction” of claims he owed the health plan $8,346. He called on the board to release its investigative report and said it is “clear to me that there was no apparent effort by those conducting the ‘investigation’ to identify or understand the facts.”
And further underscoring the turmoil that has wracked the county’s health care plan for 428,000 low-income, disabled and elderly residents, the new CEO was selected on the same day the board said goodbye to its chief medical officer, Dr. Gertrude Carter. She is one of at least 16 high-level executives to depart in the past 15 months. Carter is taking a similar position at Los Angeles County’s L.A. Care Health Plan.
The tumult began a year ago, when county Supervisor Janet Nguyen, a member of the CalOptima board, launched an ultimately successful effort to reconstitute the existing board so it would give hospital corporations and other providers a stronger voice.
CalOptima board chairman Mark Refowitz, who also heads the county Health Care Agency, emphasized Schrader’s experience at HealthNet and his 15 previous years with CenCal Health, a Santa Barbara and San Luis Obispo counties plan similar to, but smaller than, CalOptima.
Schrader, who will take over Dec. 30 at a salary of $315,000 plus a $500 a month car allowance, replaces Richard Chambers, who was making $335,000 annually when he left in April. Chambers left CalOptima to become president of Long Beach-based Molina HealthCare of California, a physician-owned firm that manages Medi-Cal and Medicare coverage for 350,000 people in five counties.
Schrader will face the challenge of rebuilding the CalOptima executive staff. Many of its top positions, including chief operating officer, are filled with interim appointments. However, CalOptima this month named Michael Ewing as chief financial officer. Ewing had been filling the position temporarily through the firm Resources Global Professionals.
In the past, 19-year-old CalOptima has been praised by state and federal officials for the way it is run. Recently under the direction of Carter, CalOptima underwent a stiff, three-year evaluation and now is accredited by the National Committee for Quality Assurance (NCQA).
According to a CalOptima news release, its score of 87.01 placed it atop the list of California Medi-Cal plans and in the top six Medicaid plans in the nation. Schrader’s HealthNet Plan also is accredited by NCQA and last year was rated the third best Medicaid health plan in the nation.
But Nguyen has led a yearlong attack on CalOptima’s former board. Backed by anonymous allegations, CalOptima staff conducted a lengthy investigation and in September sent letters to Kacic, former board Chairman Michael Stephens, the nonprofit Irvine Health Foundation where Kacic is president, and the nonprofit Managed System of Care where Stephens was a consultant.
The letters ask the four to repay a total of about $90,000 in staff time and office space that CalOptima said was improperly used. But Stephens sent back a letter by the Oct. 12 deadline saying the CalOptima staff was factually wrong and demanding an apology.
Kacic also demanded a public apology and in his Oct. 31 letter told CalOptima, “Be advised that I will not accede to the defamatory implied allegations contained in your letter.”
He warned, “I will not allow your Board — or any individual member of the Board — to hide behind anonymous slanders, sham investigations or half-truths and manipulations at my expense.”
Both Kacic and Stephens have said they had no role in assigning staff.
The staff time was used to help create the Managed System of Care, a group of top Orange County hospital and other high-level nonprofit executives, including a CalOptima representative. The group focuses on ways to increase care and cut the costs of treating those without insurance, among other issues.
As one result of the staff work, CalOptima this year received $12 million.
In addition, Chambers, the former CalOptima CEO, said he was the one who approved the use of staff and that he held the authority to do it.
“There is no credible basis legally or factually for your so-called 'reimbursement' request, and your letter fails to offer any,” Kacic wrote in his response.
“Although I might wonder about motive,” he added, “it is sadly too transparent. Given the intense media scrutiny surrounding your demand and the anonymous allegations against me that preceded it, one can only speculate that this ongoing campaign of innuendo has more to do with various personal agendas than any legitimate concern about any actions taken by me while at CalOptima.”
— TRACY WOOD
Correction: A previous version of this story incorrectly stated Richard Chambers' salary to have been $515,743. It was actually $335,000. Voice of OC regrets the error.