In the wake of a scathing federal audit of CalOptima, Orange County’s billion-dollar health care plan for the poor and elderly, county supervisors gave a clear indication Tuesday that they will move to blunt the influence of Supervisor Janet Nguyen on the agency.

After a tense hearing that stretched into the late afternoon, Supervisors’ Chairman Shawn Nelson announced that later this month supervisors will reconsider the ordinance change that swept Nguyen into power at CalOptima toward the end of 2011.

Nelson instructed county staff to place on the agenda CalOptima’s entire governing ordinance, saying he wants to be able to take action later this month to change supervisors’ board appointments and the structure of CalOptima’s other board membership, “so we don’t have limited options when we get here.”

Even Nguyen herself on Tuesday called for all five county supervisors to sit on the CalOptima board.

The county’s 2011 ordinance change, which increased representation on the board for medical providers and hospitals, at the time drew intense opposition from nonprofits and board members who feared it would leave those who use CalOptima’s services without a voice.

That measure passed on a 3-2 vote with Nelson and Supervisor John Moorlach going against then Supervisor Bill Campbell and Supervisor Pat Bates, who both backed Nugyen’s efforts to exert sole control over the CalOptima board.

In the months following the board reorganization, a number of CalOptima executives left the agency.

Throughout 2011, according to an internal review obtained by Voice of OC, executives were embroiled in an ongoing confrontation with CalOptima’s chief lawyers, with the report concluding that the environment was toxic.

On Tuesday, CalOptima CEO Michael Schrader told the Board of Supervisors that executive exodus had an adverse impact on the agency’s services, admitting under public questioning by Supervisor Todd Spitzer that the bad results on the federal audit were likely the result of the turmoil.

“That turmoil definitely had an impact in terms of operational focus,” Schrader said upon pressing from Spitzer.

He told Spitzer that after being hired, he spent his first six months stabilizing the organization and building a management team.

Yet throughout Tuesday’s hearing, Schrader attempted to navigate between admitting deficiencies at CalOptima and downplaying their significance.

Schrader told supervisors that federal auditors had found numerous problems with CalOptima’s tracking of eligibility procedures and prescriptions with its pharmacy management company.

“CalOptima historically didn’t do enough. When I look at compliance, it didn’t have people in right areas. It was smaller than it needed to be,” Schrader said.

Supervisor John Moorlach asked Schrader whether federal auditors found symptoms of problems. “What’s the disease?” Moorlach asked.

“It’s lack of oversight by CalOptima,” Schrader said. “We need to take compliance much more seriously.”

He told Moorlach that “when the auditor looked at the networks, they found staff confusing CalOptima, MediCal, with commercial plans” in terms of coverage.

Yet Schrader noted there’s a big difference between health outcomes and administrative problems identified by the federal audit.

“The audit is based on administrative procedures,” he said.

Yet when pressed, he also made the connection between those procedures and services.

“It matters to members, because if you don’t follow those procedures, you end up creating unnecessary delays for members. … Those administrative procedures matter,” Shrader said.

Both Spitzer and Nelson, who are both attorneys, kept pressing for answers.

“It’s all about delivery of services to people who need medical attention,” said a visibly irritated Spitzer as he pointed to a staff organizational chart that showed a lot of movement at the top levels of the organization.

“You had complete management turmoil in the organization,” Spitzer said, adding that appeals in the OneCare program audited by federal officials were going up in 2013.

“It’s a sign that something is going on here on how patients, clients, feels they are being treated by CalOptima,” Spitzer said.

“Appeals and grievances were trending up,” said Schrader, acknowledging that many compliance officials at the agency were the same but had different bosses.

Nelson took it a step further, again directly pointing at the ordinance change that Bates, Nguyen and Campbell supported in 2011.

“That‘s part of the problem,” Nelson said. “What they were getting before was parental limits, then all of sudden all the providers integrate themselves into the board,” Nelson said.

“Suddenly, we got an auditor saying we got chaos on our hands. The two seem related,” he said.

Nelson pointed to the numbers of complaints in the OneCare program audited by federal officials as a type of canary in a coal mine.

According to a Feb. 21, 2013, letter on CalOptima sent by Schrader to state Sen. Lou Correa that was referred to by both Spitzer and Nelson, greivances from consumers in the OneCare program went from 331 in 2011 to 452 in 2012. Appeals went from 189 in 2011 to 474 in 2012.

Meanwhile, provider appeals dropped, from 224 in 2011 to 201 in 2012.

“What are the odds, the provider complaints went down and the members are screaming?” Nelson said, referring to those numbers. “It’s almost predictable.”

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