Contract Dispute Could Have Left Some CalOptima Patients Without Mental Health Care

Board members cast their ballots for chairperson, with Yost winning on a 6-3 vote.

A contract dispute between Magellan Healthcare and CalOptima, the county’s health plan for low-income and elderly residents, may have left some of CalOptima’s 710,000 patients without mental health care when, for nine days in July, Magellan refused to process Medi-Cal payment claims.

CalOptima spokeswoman Bridget Kelly said the agency has “no evidence that anyone’s care was impacted” and that the few providers who said they might cancel their appointments were “reassured” they would be paid and should continue to see CalOptima members.

But the state’s Department of Managed Health Care wrote in a settlement it brokered with Magellan that “CalOptima received notice regarding providers refusing mental health services to CalOptima Medi-Cal enrollees,” although it doesn’t say how many providers were refusing services.

A department spokesman Friday did not provide the number of those refusing, instead requiring a reporter to file a Public Records Act request.

“Magellan’s actions in purporting to rescind the contract on extremely short notice posed a serious concern for the approximately 710,000 CalOptima Medi-Cal members whose access to behavioral health services had the potential to be interrupted.”

-Settlement document from the California Department of Managed Health Care

Magellan’s contract is worth $41 million a year, according to a September 2016 CalOptima staff report.

On average, Magellan administers the mental health care services of 6,700 patients a month, Kelly said.

The issue began when Magellan asked CalOptima to change the rate at which the company is reimbursed for applied behavioral analysis (ABA) services, a therapy for patients with a range of symptoms associated with autism, according to a staff report.

It said CalOptima couldn’t reach a rate agreement with Magellan, which has had a contract since January to administer the mental health care of nearly 710,000 CalOptima patients.

On June 28, the company notified CalOptima it would rescind its three-year contract effective July 1, according to the staff report.

According to the state Department of Managed Health Care, between July 1 and July 9, when Medi-Cal enrollees called Magellan, the company referred them to CalOptima’s customer service call center. When providers tried to submit claims to be reimbursed by Medi-Cal, the company blocked the submission and told providers to send all their claims directly to CalOptima.

The state, which regulates Magellan, stepped in on the grounds that Magellan could be disciplined for unfair business practices, and brokered a contract on July 14 that would require Magellan to retroactively process all Medi-Cal claims and continue to provide services through the end of August.

Colleen Flanagan Johnson, a representative for Magellan Health, did not comment on the company’s decision to rescind the contract, but said “Magellan has been and remains deeply committed to its work on behalf of CalOptima and to the service provided to their members.”

At its August 3 Board of Directors meeting, CalOptima CEO Michael Schrader declined to answer any questions about why Magellan rescinded its contract, saying he did not want to divulge any legally sensitive information.

Late Thursday afternoon, Voice of OC asked Kelly how long CalOptima and Magellan had been in dispute over the contract; what exactly Magellan is demanding; how many providers said they might cancel appointments and other questions, including requesting a copy of the disputed contract between CalOptima and Magellan.

Kelly, the communications director, had not responded to those questions by Sunday evening.

At its August 3rd meeting, the board voted in closed session, under an item to consider initiating litigation, to approve a transition plan for Magellan to provide services until the end of the calendar year.

The board now has three options for what to do next. It could continue working with Magellan, pick a new company to manage behavioral health care services, or take all of the work in-house.

Magellan currently manages more than 530 contracts on behalf of CalOptima, which includes 800 different mental health providers and 300 ABA providers.

CalOptima staff is recommending the board bring administration of mental health care in-house, which likely would require hiring additional staff and cost up to $6.6 million this fiscal year, according to a staff report.

The board will discuss its next steps at the September 7 meeting.

Contact Thy Vo at or follow her on Twitter @thyanhvo.

  • Daniel Lamb


    Do you have any comment regarding the derogatory statement Mr. Santana made this morning concerning individuals that suffer from mental illness?

    You should know that I reported him to the National Alliance on Mental Health. Promoting bigotry and stigma towards the most vulnerable is simply unacceptable.

  • So let me see, $41,000,000 annually for services for ±6700 patients that boils down to about $510 a month for each patient. So I will take a guess that at most 1 once a month visit to a Psychiatrist, (I will wager usually an inexperienced intern) and at most 4 visits to a MFCC therapist. This would be for critical outpatient care patients, routine, “stable” patients will likely see a Psych once every 3 months and a therapist 2 times a month sounds like $233 in monthly patient care (not considering patient co-pays) and $291 (each patient) to Magellan $291 x 6700= $1,949,700.00 a month to Magellan, how much of that goes into the pockets of Magellan management? $23,396,400.00 annually, leaving $17,603,600.00 year to be divided by care providers, (the people that actually DO something)

  • Daniel Lamb

    This is not very interesting. It’s speculative and given everything happening in OC, it’s obviously an editorialized distraction.

    Answer this question: What does Norberto Santana know about the current controversy plaguing the DA’s office and when did he know it?

    Also, why does this supposed news operation refuse to answer questions regarding how it delivers different information to different users through its digital platform? Given how Voice of OC is funded, that would potentially make you all in violation of the law.

    Thank you.

    • I am not going to waste my time counting the ± weekly stories I read in the VoC about DA controversies. Different information to different users? that sounds like a poorly adjusted firewall or internet security settings.

      • Daniel Lamb

        I just ponder, from time to time, whether Voice of OC is a news organization or an intelligence service (paid for by all taxpayers, but serving a few) that selectively collects and disperses information without regard to contributing to the market place of ideas.