Module 3: Oversight and Monitoring of Hubs
Section 1: Overview
Module 3 describes existing oversight and monitoring requirements that Medi-Cal Managed Care Plans (MCPs) must adhere to for all Administrative Subcontractors, Administrative Downstream Subcontractors, Partially Delegated Subcontractors, and Partially Delegated Downstream Subcontractors, including Hubs.
After reviewing Module 3, MCPs and Hubs will have a better understanding of:
- Compliance requirements.
- Data and quality improvement requirements.
- Considerations for Hubs assuming financial risk or serving specific Medi-Cal Member populations on behalf of an MCP.
Module 3 Key Takeaways
MCP’s may not delegate to a Subcontactor or Downstream Subcontractor their responsibility to ensure compliance with the MCP Contract.
MCPs must:
Ensure that subcontracted Hubs comply with requirements associated with their subcontracting type.
Demonstrate that they have robust compliance, monitoring, and oversight programs for subcontracted Hubs to ensure Medi-Cal Members can access and receive quality care.
Subcontracted Hubs that assume financial risk on behalf of the MCP are subject to a heightened level of oversight and monitoring to ensure compliance with Medi-Cal requirements, including ensuring financial viability and reporting medical loss ratios (MLRs) for subcontractor and Downstream Subcontractor delegated risk via a capitated payment arrangement.
See References for a list of applicable guidance for this module.
Section 2: MCP Oversight and Monitoring Requirements for Hubs
MCPs must regularly monitor all subcontracted Hubs, according to the MCP Contract, APL 23-006 or any superseding APL, and all relevant program requirements. At minimum, MCPs must:
- Maintain and be responsible for oversight of compliance with all provisions and Covered Services of the MCP Contract as applicable, regardless of the number of layers of subcontracting.
- Specify all delegated activities, obligations, and related reporting responsibilities, as applicable.
- Document in Subcontractor Agreements and Downstream Subcontractor Agreements the Hub’s agreement to perform the delegated activities, obligations, and reporting responsibilities, as applicable.
- Develop and maintain DHCS-approved policies and procedures to ensure subcontracted Hubs meet required responsibilities and functions.
- If the subcontracted Hub also provides direct care services and is therefore also a Network Provider in addition to being a Subcontractor or Downstream Subcontractor, ensure the Hub’s Provider capacity is sufficient to serve all eligible Medi-Cal Members.
- Report to DHCS required information for all subcontracted Hubs via Exhibit J of the MCP Contract, including the names of all subcontracted Hubs, service(s) provided, and county or counties in which Medi-Cal Members are served.
- Collect and review subcontracted Hubs’ ownership and control disclosures.
- Ensure all contracts with subcontracted Hubs are available to DHCS upon request.
MCPs must provide for the revocation of the delegation of activities or obligations, or specify other remedies, including corrective action and/or financial sanctions, where DHCS or the MCP determines a contracted Hub is not performing satisfactorily with the terms of their contract or any Medi-Cal requirements delegated to them.
In addition, to the extent applicable, MCPs must consider and flow down provisions pertaining the MCPs’ Memorandums of Understanding (MOUs) with third-party entities in its contracts with subcontracted Hubs. The intent of this requirement is to ensure that all parties—including third-party entities, such as Local Health Jurisdictions, or Child Welfare Departments, are aware of what services MCPs have arranged to cover under subcontracting agreements. MCP are required to train, as applicable, Subcontractors, Downstream Subcontractors, and Network Providers on the MOU requirements and services provided by the third-party entity. This provision is intended to ensure the MCP provides its Subcontractors, Downstream Subcontractors, and Network Providers with information necessary for them to coordinate care with, and make referrals to, or receive referrals from, the third-party entity. For example, a Hub which includes ECM Providers for Children and Youth POF in its Network should be made aware of and help support relevant activities outlined in the MOU between the MCP and the Child Welfare Department to the extent it is applicable. See APL 23-029 or any superseding APL for additional detail.
Table 1: MCP Oversight and Compliance Requirements by Subcontracting Type
| Subcontracting Type | MCP Oversight and Compliance Requirements |
|---|---|
| Administrative Subcontractor or Downstream Administrative Subcontractor | Document in the Subcontractor Agreement or Downstream Subcontractor Agreement the Hub’s agreement to perform the
administrative acticities, obligations, and reporting responsibilities. To the extent applicable, consider and flow down provisions pertaining the MCP’s MOUs with third-party entities. Monitor the Hub’s administrative performance, maintain oversight, and snsure compliance with relevant MCP Contract terms, regardless of the layers subcontracting. Meet the minimum requirements under Exhibit A, Attachment III, Section 3.1.1(B) and Exhibit J of the MCP Contract. |
| Partially Delegated Subcontractor or Downstream Partially Delegated Subcontractor | Document in the subcontractor Agreement or Downstream Subcontractor Agreement the Hub’s agreement to perform
delegated functions, obligations, and reporting responsibilities. To the extent applicable, consider and flown down provisions pertaining the MCP’s MOUs with third-party entities. Monitor the Hub’s performance for all delegated functions, maintain oversight, and ensure compliance with relevant MCP Contract terms, regardless of the layers subcontracting. Meet minimum requirements under Exhibit A, Attachment III, Section 3.1.1(B) and Exhibit J of the MCP Contract. |
Table 2: Example Compliance Activities Between MCPs and Hubs
| Example | Requirements for Compliance |
|---|---|
| MCP delegates claimes adjudication and payments to a hub | MCPs must have mechanisms to ensure that claims processing is conducted timely and accurately in accordance with the MCP Contract, APL 23-020 and any superseding guidance, and applicable state and federal requirements, including a provider dispute resolution mechanism. Ultimately, responsibility falls to the MCP to ensure that the Hub is maintaining compliance with rules pertaining timely and accurate payments of claims to providers rendering services to Medi-Cal Members. MCPs can monitor compliance by requesting monthly reports of claims adjudicated by the Hub and conducting periodic audits. |
| MCP delegates Provider enrollment and credentialing to a Hub | MCPs must ensure Hubs set and adhere to enrollment and credentialing policies in accordance with MCP Contract, APL 19-004 and any superseding guiance, and the Medi-Cal Provider Manual. The MCP is responsible for ensuring that the Hub is maintaining compliance with enrollment and credentialing requirements. MCPs can monitor compliance by requesting reports of the providers that the Hub enrolls/credentials and conducting periodic audits. |
MCP-Hub Compliance Requirements Checklist
MCPs must regularly monitor all functions delegated to subcontractors, including Hubs, according to the MCP Contract, APL 23-006 or any superseding APL, and all relevant program requirements.
At minimum, MCPs must:
- Oversee compliance with the MCP Contract.
- Include clear provisions in the subcontractor agreement that outline all delegated activities, obligations, and related reporting responsibilities.
- Develop and maintain DHCS-approved policies and procedures to ensure subcontractors meet required responsibilities and functions.
- Report to DHCS required information for all subcontracted Hubs via Exhibit J of the MCP Contract, including the names of all subcontracted Hubs, service(s) provided, and county or counties in which Medi-Cal Members are served.
- Train subcontractors and Network Providers on relevant provisions and avtivities outlined in the MCPs’ Memorandums of Understanding (MOUs) with Third Party Entities, as applicable.
- If the Hub accepts risk on behalf of the MCP, ensure compliance with financial vability, Population Needs Assessment (PNA), Subcontractor Network Adequacy, and Medical Loss Ratios (MLRs) requirements.
- If the Hub provides direct care services in addition to its otehr Hub services, and is therefore also a Network Provider in addition to being a Subcontractor or Downstream Subcontractor, ensure the Hub’s Provider capacity is sufficient to serve all eligible Medi-Cal Members.
- Collect and review Subcontractors’ or Downstream Subcontractors’ ownership and control disclosures.
- Ensure all contracts with Subcontractors and Downstream Subcontractor Agreements are available to DHCS upon request.
- Revoke delegation or provide other corrective actions if the Subcontractor’s or Downstream Subcontractor’s performance is not satisfactory.
Section 3: Data and Quality Improvement Requirements
MCPs that contract with Hubs for the administration and/or delivery of Medi-Cal benefits must adhere to data reporting and Quality Improvement (QI) requirements set forth in the MCP Contract and APL 23-006 (or any superseding APL). Additional program-specific data reporting and QI requirements may also apply.
Data Reporting Requirements
MCPs must have mechanisms in place to monitor subcontracted Hub’s adherence to data reporting, including systems to validate data are complete, accurate, reasonable and timely. This may include, but is not limited to data that can support MCP reporting of Encounter Data, monthly 274 Provider Network data files, Managed Care Program Data (MCPD), data reported via quarterly templates, electronic visit verification reporting, and any other ad hoc data requests required by DHCS, to the extent it is relevant to the subcontracted Hub.
Quality Improvement Requirements
MCPs are accountable for any QI and Health Equity functions delegated to subcontracted Hubs as specified in their Subcontractor Agreements or Downstream Subcontractor Agreements, as applicable. MCPs must maintain adequate oversight and monitoring to ensure compliance with all delegated QI activities, including to, at minimum:
- Evaluate subcontracted Hub’s ability to perform the delegated activities, including an initial determination that a subcontracted Hub has the administrative capacity, experience, and budgetary resources to fulfill contractual obligations.
- Ensure the subcontracted Hubs meet QI and Health Equity requirements set forth in the MCP Contract.
- Ensure the MCP’s continuous monitoring, evaluation, and approval of its delegated functions to subcontracted Hubs, including making the findings from this monitoring and evaluation process available at least annually or when requested by DHCS.
MCPs must also ensure subcontracted Hub’s compliance with its Quality Improvement and Health Equity Transformation Program Policies and Procedures (QIHETP).
MCP-Hub Quality Improvement Tools
MCPs are accountable for any quality improvement (QI) and Health Equity functions delegated to Subcontractors and Downstream Subcontractors as specified in their Subcontractor Agreements and Downstream Subcontractor Agreements, as applicable. MCPs must maintain adequate oversight and monitoring to ensure compliance with all delegated QI activities. MCPs that maintain an NCQA health plan accreditation must ensure to follow all applicable NCQA standards and guidelines regarding subcontracting relationships.
At minimum, MCPs must:
- Prior to delegating any functions to a Subcontractor or Downstream Subcontractor, evaluate the Subcontractor’s or Downstream Subcontractor’s ability to perform the delegated activities, including an initial determination that the Subcontractor or Downstream Subcontractor has the administrative capacity, experience, and budgetary resources to fulfill contractual obligations.
- Ensure that Subcontractors and Downstream Subcontractors meet QI and Health Equity Transformation Program (QIHETP) requirements set forth in the MCP Contract, to the extent applicable.
- Ensure the MCP’s continuous monitoring, evaluation, and approval of its delegated functions to Subcontractors and Downstream Subcontractors, including to make the findings from this monitoring and evaluation process available at least annually or when requested by DHCS.
Section 4: Additional Consideration for Hubs That Assume Financial Risk or Cover Specific Medi-Cal Member Populations
A Hub assumes financial risk for an MCP through risk-sharing and risk-shifting arrangements. Subcontracted Hubs that assume financial risk on behalf of the MCP are subject to a heightened level of oversight and monitoring to ensure compliance with Medi-Cal requirements. This includes requirements related to:
- Financial Viability
- Population Needs Assessment
- Medical Loss Ratios (MLRs)
Financial Viability Requirements
MCPs must maintain a system to evaluate and monitor financial viability of all subcontracted Hubs that accept financial riskl for the provisions of Covered Services. Subcontracted Hubs that assume financial risl must comply with MCP’s evaluation and monitoring protocols.
Population Needs Assessment Requirements
The Population Health Management (PHM) program ensures all Medi-Cal Members have appropriate access to comprehensive services based on their needs across the continuum of care. Under the PHM program, MCPs, their networks, and their partners, including applicable subcontractors, are responsible for Medi-Cal Member needs within the communities they serve based on a standardized framework and set of expectations. This includes providing Medi-Cal stakeholders with access data on:
- Medi-Cal Member health history, needs, and risks, and other program information to support risk stratification; assessment and screening procedures.
- Medical, behavioral, and social supports.
- Analytics and reporting processes.
The Population Needs Assessment (PNA) helps MCPs identify Medi-Cal Member and community needs and health disparities. MCPs meet the PNA requirement through meaningful participation in the Community Health Assessments (CHAs) and Community Health Improvement Plans (CHIPs) conducted by Local Health Jurisdictions (LHJs). MCP’s must ensure that any Medi-Cal Member populations covered by a Subcontractor or Downstream Subcontractor, including Hubs, are included in the PNA process. Subcontractors do not participate in the PNA separately; the MCP is responsible for including these populations in the PNA process. See the PHM Policy Guide and MCP Contract for additonal information.
Medical Loss Ratiors (MLRs)
Federal regulations require MCPs to annually calculate and report a medical loss ratio (MLR). Per Welfare and Institutions Code section 14197.2, DHCS established a minimum MLR standard of 85 percent and imposed a remittance requirement for MCPs that do not achieve this standard. Section 1915(b) California Advancing & Innovating Medi-Cal (CalAIM) Waiver Special Terms and Conditions (STCs) A11 requires DHCS to provide increased oversight of MLR reporting in the context of any Subcontractor or Downstream Subcontractor arrangements that assume risk, which may include Hubs, as applicable.
As of January 1, 2023, MCPs must impose MLR reporting requirements equivalent to the federally required standard on their applicable Subcontractors and Downstream Subcontractors that assume financial risk. In addition, as of January 1, 2025, MCPs must impose MLR remittance requirements equivalent to DHCS’ minimum standard for MCPs on those Subcontractors and Downstream Subcontractors. See APL 24-018 or any superseding APL for guidance on the MLR requirements applicable to Subcontractors and Downstream Subcontractors.
Table 3: Entities Subject to MLR Reporting and Remittance Requirements
| Entity Type | Definition | Subject to MLR? |
|---|---|---|
| Subcontractor Plans | Plans that assume fulle or partially delegated risk from an MCP, or its Subcontractor or Downstream Subcontractor, in a service area. | Maybe – see materiality threshhold info belo |
| Other Applicable Subcontractors or Downstream Subcontractors | Subcontractors or Downstream Subcontractors, except Subcontractor or Downstream Subcontractor Plans, that assume risk and receive payment from an MCP, or its Subcontractor or Downstream Subcontractor, for services provided beyond their own entity (i.e., services which they do not directly deliver to Medi-Cal Members). This may include IPAs, medical groups, hospital systems, or other entities. | Maybe – see materiaity threshold info below. |
| Non-Reporting Entities | Network Providers, purely Administrative Subcontractors or Downstream Administrative Subcontractors, and non-applicable Subcontractors or Downstream Subcontractors that do not assume risk or assume risk only for services provided within their own entity. | No – exempt |
Note: The distinction between reporting and non-reporting entities outlines in Table 2 is based the capitated risk for services that an entity does not directly provide. In accordance with STC A11, and subject to consideration of a materiality threshold, as discussed below, MCPs must require Subcontractor Plans and other applicable subcontractors to satisfy MLR reporting and remittance requirements. Non-Reporting Entities are exempt from having to calculate and report MLR in accordance with STC A11. A singel entity may be both a Non-Reporting Entity in some instances (e.g., for certain services or arragaments) and an Other Applicable Subcontractor in other instances.
Materiality Threshold
MCPs must utilize a materiality threshold established by DHCS for determining whether a subcontracted or downstream subcontracyed Hub is subject to the STC A11 reporting and remittance requirements.
For the CY 2023 MLR reporting year, and until modified by DHCS, applicable subcontracted Hubs that receive a certain amount in Medi-Cal Capitation annually, from a single upstream entity, as payment for services rendered in a single county or rating region, for which they assume risk and are not directly providing will be subject to MLR reporting requirements. Subcontracted Hubs that fall below the annual threshold amount will not be subject to reporting for the given MLR reporting year, except as required by DHCS on a case-by-case basis. For the CY 2023 MLR reporting year, and until modified by DHCS, the materiality threshold for $30,000,000 in Medi-Cal capitation annually, from a singel upstream entity, as payment for services rendered in a single county or rating region, for which the applicable Subcontractor or Downstream Subcontractor assumes risk and is not directly providing.
For more information about exemptions for newly contracted entities, and other details see APL 24-018 or any superseding APL.
Section 5: Summary of MCP Oversight Responsibilities
For all subcontracted Hubs:
- Oversight and monitoring
- Compliance
- Data and reporting
- Quality Improvement
For subcontracted Hubs that cover Medi-Cal Member populations:
- Financial viability
- Include in PNA
For subcontracted Hubs that assume risk:
- Check if MLR applies
Key References
2024 MCP Boilderplate Contract
Manage Care All Plan Letters (APLs)
APL 23-001: Network Certifiation Requirements
APL 23-006: Delegation and Subcontractor Network Certification
APL 23-020: Requirements for Timely Payment of Claims
APL 23-029: Memorandum of Understanding Requirements for Medical Managed Care Plans and Third-Party Entities
APL 20-017: Requirements for Reporting Managed Care Program Data
APL 19-001: Medi-Cal Managed Care Health Plan Guidance on Network Provider Status
APL 24-018: Medical Loss Ratio Requirements for Subcontractors and Downstream Subcontractos
PHM Policy Guide
ECM Policy Guide
Community Supports Policy Guide Volume 1
Community Supports Policy Guide Volume 2