Profiles in Government: State Health Care Services Works to Update Key Systems

Fast Facts

Leadership: The California Department of Health Care Services is headed by Director Michelle Baass, who was appointed Sept. 10, 2021, by Gov. Gavin Newsom. A 20-year veteran of state service, Baass had been undersecretary of the California Health and Human Services Agency since 2018, and before that was deputy secretary of the Office of Program and Fiscal Affairs at the California Health and Human Services Agency from 2017 to 2018. Her time at the state dates to 2004, when she joined the California Legislative Analyst’s Office as a senior fiscal and policy analyst. Prior to joining the public sector, Baass was a manager and consultant at Accenture from 1996 to 2004. Baass has a Master of Public Policy and Administration degree from California State University, Sacramento, and a Bachelor of Arts degree in government and German from the University of Notre Dame. Chris Riesen is DHCS’ chief operating officer for programs, a role he has had since October, after previously serving the department as chief information officer since July 2018. In his current role, Riesen supports strategic initiatives that drive quality health care and is a member of the Directorate team with primary responsibility for enterprise data and information, enterprise technology, and program operations. DHCS opened recruitment for the deputy director/chief information officer post in mid-November. A 23-year veteran of state service, Riesen was CIO at the California State Lottery for nearly four years before joining DHCS. He has a Bachelor of Science degree in evolution and ecology from the University of California, Davis, where his activities included participating in the UC Davis dive program.

Budget: $162.7 billion according to 2023-2024 fiscal year numbers contained in Gov. Gavin Newsom’s proposed FY 2024-25 state budget, and the department’s website, which notes the funding will enable it to continue the transformation of Medi-Cal and behavioral health. The governor’s proposed budget would cut more than $1.5 billion from the DHCS budget, giving it $161.1 billion for FY 2024-25. (All numbers are rounded.)

Total staff: As of July 1, the start of FY 2023-24, DRE was approved for 4,618 staff, down from 4,641 in FY 2022-23. Newsom’s proposed budget would increase staffing to 4,650.

The California Department of Health Care Services (DHCS) is one of 12 entities under the umbrella of the California Health and Human Services Agency. The department is, per its website, the bulwark of the state’s health-care safety net, helping millions of residents with disabilities and who are low-income and providing access to affordable, integrated, high-quality health care. This includes medical, dental, mental health, substance use treatment services and long-term care.

Roughly one in three Californians get health care that’s either financed or organized by DHCS, making it the state’s largest health-care purchaser in California. The department, per its website, funds health care to more than 15.4 million Medi-Cal users. The programs DHCS administers — some federal- or state-mandated — include California Children’s Services; the Child Health and Disability Prevention program; the Newborn Hearing Screening Program; the Family Planning, Access, Care, and Treatment program; and Coordinated Care Management. The department also administers programs for the underserved, including farmworkers and Native American communities.

DHCS’ IT initiatives have, in recent years, included the ongoing transformation of Medi-Cal. Lynn Lee, an IT Specialist III at the department since April 2019, talked to Industry Insider — California in August 2022 for its One-on-One series and said her team had just completed and beta launched a new security enhancement for the Medi-Cal Transaction Services webpage. Work had also included adopting a new source model for this part of the site that would let DHCS manage hosting, platform and DevOps, said Lee, who was recognized with a Leadership Award at the CIO Academy Awards at the California Public Sector CIO Academy in June 2022.* Before the update, vendors had supported the whole system.

Newsom’s proposed budget for FY 2024-25 would give DHCS $233,000 from the state’s General Fund, $693,000 from other funds and five positions to support the Managed Care Capitation Payment Systems, a project for which the department submitted a budget change proposal (BCP). In the BCP, DHCS’ Business Operations Technology Services Division sought the positions and the funding in FY 2024-25 — $693,000 from federal funds — plus $881,000 ($221,000 from the General Fund and $660,000 in federal funding) in FY 2025-26 and ongoing to support the system and the Electronic Accounting Management Interface. DHCS needs dedicated resources, it said, because policies are shifting beneficiaries from Medi-Cal Fee-for-Service to Managed Care Plans, and the five staffers are necessary to continue updating, operating and supporting both systems.

The systems are vital to DHCS’ financial operations, including its monthly capitation payment to managed care plans, in support of health care for more than 13.5 million residents. Both systems are essential to the department’s ability to plan for and report on costs, and updates are constantly needed to address policy changes, capitated rate changes, plan changes and audit findings. There’s also an ongoing need to enhance detailed cost reporting of federal financial participation and to meet requirements of the Centers for Medicare and Medicaid Services, which requires details that are unable to be provided without continuous system updates and ongoing requirements to meet federal standards and requirements. Delays in implementing changes require manual work and additional retroactive processing.

*The CIO Academy Awards were presented by e.Republic, parent company of Industry Insider — California.