California regulators raised concerns about hiring practices and a surplus of funds at CalOptima Health, a managed care plan with nearly 1 million members.
In a report published May 2, the California state auditor said CalOptima accumulated a surplus of funds that should have been spent on improving member services.
CalOptima is the sole Medicaid managed care plan in Orange County, Calif., according to the state auditor's report.
Orange County requires CalOptima to keep a certain threshold of reserves on hand, but the organization accumulated $675 million past the required reserve funds by June 2022, according to the report.
The organization also kept more intergovernmental transfer funds on hand than other managed care plans in the state, according to the auditor.
In a statement, CalOptima CEO Michael Hunn said actions are underway to address all of the report's recommendations.
"As the largest health insurer in Orange County serving our most vulnerable populations, opportunities to increase transparency and improve services provide a major benefit to CalOptima Health and the patients we serve," Mr. Hunn said.
The auditor's report also raised concerns about CalOptima's hiring practices. According to the auditor, the organization likely violated state law when it hired one of its current board members as interim CEO in 2020. The interim CEO no longer works for CalOptima, according to the report.
In addition to establishing by-laws to prevent board members from being employed by the organization for at least one year after their board term ends, the auditor recommended CalOptima implement a detailed plan to spend surplus funds on expanding care or upping provider reimbursement.