Legal Prescriptions

The California Department of Health Care Services (DHCS) funds healthcare services for more than 15.4 million Medi-Cal beneficiaries. About one-third of Californians receive health care services financed or organized by DHCS, making the Department the largest health care purchaser in California. In this episode of Legal Prescriptions, Heather Claus talks with John Puente, who served as Deputy Director and Chief Counsel to DHCS before joining Nossaman in May 2023. While in this role, John provided strategic legal counsel and advice to the organization and oversaw the Office of Legal Services and Office of Regulations. Heather and John discuss what it was like to work at this government agency during the COVID-19 pandemic and what to expect from DHCS going forward.

Transcript: A Discussion with John Puente, Former Chief Legal Counsel of the Department of Health Care Services

^{0:00:00.2 Heather Claus: Hello, and thank you for joining us today for our podcast. I'm Heather Claus, and I'll be speaking with my law firm partner John Puente about his recent experience as Chief counsel for the California Department of Healthcare Services. In addition to his particular experience, we'll be discussing the current landscape of managed care in California. This podcast will be of interest to Medi-Cal managed care plans, others who are in the Medi-Cal managed care space, and those who are simply interested in this space.}

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^{0:00:32.4 Speaker 2: Welcome to Legal prescriptions, Nossaman's podcast, exploring recent developments impacting healthcare companies and professionals.}

^{0:00:43.8 HC: Hello, John. It's nice to have a little time to learn more about you and what it was like to work at DHCS during the pandemic. Let's start off with a brief background on you.}

^{0:00:55.9 John Puente: I'm really glad to have this time with you today and it's great to share some of my background and experiences from my most recent public service opportunity. I'm a fifth generation Sacramento who has a lifelong interest in the intersection of law and public policy. My health coverage as a kid was Medi-Cal, and I had a chronic condition asthma. I experienced firsthand the challenges of navigating the delivery system and wanted to do something to make it better. And after having practiced law and healthcare space for over 25 years, I had the privilege and honor of being appointed by Governor Newsom as a Deputy director and Chief counsel at DHCS. Candidly, this is quite humbling, considering my childhood.}

^{0:01:35.9 HC: I didn't realize this journey was so personal for you, John. So thank you for sharing that. Going to DHCS, then, I imagine even in the best of times working for such a complex organization in such a large state, California, it would be daunting. And then on top of that, you joined right as the pandemic was getting started, if that's correct. What was that like?}

^{0:02:02.7 JP: You're right. I think under any other normal circumstances it would be a daunting task to be in the chief council position at the largest Medicaid agency in the country. But clearly during the pandemic it was really like drinking from the proverbial fire hose. I think though that all of us there, knowing what we were facing in terms of the pandemic, it motivated us to endeavor forward and do our best. I also would note how wonderfully committed and passionate my former colleagues at the department are. We all knew how important it was to do all we could to ensure Medi-Cal members remain covered and received the care they needed, especially during the middle of the pandemic.}

^{0:02:45.3 HC: And you were experiencing all this from the position of a senior leader. You were a chief counsel. What was that like to be in a leadership position at that time?}

^{0:02:56.7 JP: The Department of Healthcare Services is a very large department in terms of its staffing. The Office of Legal Services there is no different. There are over 150 staff that are part of the Office of Legal Services. Nearly 100 of those are attorneys. Even simply from an administrative perspective, it's like running a medium-sized law firm in the middle of a pandemic with nearly 100% of staff working remotely. That is a challenge. Of course, on the policy side, during the pandemic, the governor issued over 70 executive orders with over 550 provisions related to the public health emergency. These orders touched on everything from ensuring continuous coverage for Medi-Cal members to mandating payment for COVID vaccine administration. With respect to each of those orders that dealt with matters under the jurisdiction of the department, intensive research was necessary to ensure that each action had sound statutory and regulatory support and could withstand any potential legal challenges.}

^{0:04:00.5 HC: So it sounds like a lot of what you were dealing with was very unprecedented. Is there anything in particular, either any particular executive order or really any other event from early on in your tenure that stands out?}

^{0:04:14.4 JP: Interestingly enough, notwithstanding what I just shared around all the activity involving the pandemic, the public health emergency, what stands out to me now is that on top of the public health emergency and during the pandemic, there were a number of wildfires that swept across the state, those wildfires complicated how the state was responding to the pandemic and what was necessary for the state to do to ensure that members in the Medi-Cal space had continuing access to care. Unfortunately, each time a new disaster hit, we'd need to work our way through the checklist of statutes and regulations that would need to be relaxed or modified to keep facilities open and Medi-Cal members served. And that is what really stands out to me.}

^{0:05:05.7 HC: And of all these initiatives and orders and kind of new rules that you were navigating, is there anything that stands out for you as far as what you would consider to be your biggest accomplishment or most widespread impact? Anything like that stand out for you?}

^{0:05:23.3 JP: Heather, I would think of it, from my perspective, as a couple of accomplishments that were really important to me during my tenure at the department. One, really on the administrative side the other, on the sort of public policy side. On the administrative side, I worked for nearly a year and a half during my tenure at the department to reorganize the Office of Legal Services. As I noted earlier, it's a fairly sizable office and it had not undergone any organizational change of significance for over a decade. There had been some minor tweaks, but really nothing of scale. Well, of course, during that same period of time, the department had grown significantly, in terms not only of staffing, but also in terms of the programs under its purview in jurisdiction. I felt that it was really important in terms of ensuring quality and efficient delivery of legal services to update the office to really reflect how the department function today rather than 10 years ago.}

^{0:06:31.8 JP: Now on the policy side and as has been well covered in the media. The other accomplishment I'll note is reaching agreements with the various health plans that litigated against the department as a result of the Medi-Cal Managed Care contract procurement. As part of the CalAIM initiative and to better serve Medi-Cal members. The department undertook its first competitive procurement for contracts in decades. The pandemic had caused an initial delay, but work picked back up in 2021 going into 2022. Of course, as is well known in any competitive procurement, there are winners, losers, and litigation. My former colleagues and I worked feverishly over a period of months to reach a solution that would bring certainty to the transition timeline into Medi-Cal members overall. It was no small feat considering the tens of billions of dollars in revenue for the health plans over the course of the contracts. It was quite painful at the time, honestly. But I can look back now with pride that the disputes were resolved.}

^{0:07:39.0 HC: And John, regarding those contracts. I know that there are many of us in the managed care space that would have a lot of questions. Were you, and would like to hear more from you on your perspective on that. Is there anything else that you would feel comfortable sharing as far as your experience going through that process?}

^{0:08:00.7 JP: Absolutely, Heather. I think first off, the department's CalAIM initiative is the biggest initiative in decades in terms of broadening the scope of Medi-Cal services, as well as altering the requirements as they relate to the delivery of quality care and reporting metrics to the department. So the department can actually oversee how the plans are delivering the care. Now, I would note that in future podcasts we will likely cover some of these other issues. But I do think that for those in our audience who are counsel for Medi-Cal managed care plans, they cannot rest on what their historical knowledge is or was as it relates to the various contracts that exist currently, managed care contracts that go into effect 1/1/24 have much more robust reporting requirements as it relates to quality, as it relates to population health. There are also changes for medical loss ratio reporting, including MLR reporting for subcontractors. And it will behoove all managed care plan legal offices as well as compliance departments to become intimately familiar with those requirements to ensure that they are in compliance, moving forward.}

^{0:09:24.0 HC: Well, as someone who represents Managed care plans. That is very good to know, so thank you, John. Kind of just taking a step back from these larger initiatives, obviously CalAIM is huge, the procurement contracts, the pandemic. Can we kind of get a little more micro and take a look at what kind of an average day was like for you as the Chief Counsel? I'd be sort of curious about that myself, to the extent that there was an average day.}

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^{0:09:54.4 JP: Yeah, I have to chuckle because you kind of hit the nail on the head at the end. I don't know particularly during my tenure, during the pandemic, whether there was anything close to an average a day. But I do think there was, at least in the beginning of each day, some structure that kind of melted away during the course of the day. Most every day began with a senior executive check-in meeting, considering the size and scope of the department's responsibilities. The reality is that meeting entails over 20 senior execs, including the director and two chief deputies gathering mostly virtually, sometimes in person, to go over what the upcoming day will look like. It is the best way to socialize red flags, not-urgent issues and preview upcoming issues. The day would then really turn to literal back-to-back meetings that could be personnel matters to significant policy issues involving FQHCs.}

^{0:10:55.2 JP: Now in our family, I do the cooking. And so I endeavored each day to make sure that I had a bit of a break so I could cook dinner and spend that time with my family. But after that, I would have to return to my work to email, which I know we all love. I would note, interestingly enough, during my tenure at the department. I received anywhere from 3-500 email a day. Now, of course, some of those are spam, but still all of those have to be reviewed, and that is time consuming.}

^{0:11:26.1 HC: Yes, I'm sure it is. And, as someone who sends a lot of emails to regulators, I do appreciate [laughter] that you are reading them all. [laughter] And I know that, I'm sure going through everything that you went through during the pandemic, it sounds like that you were really handling a lot. And so I appreciate that as someone who lives in California and someone who works with Managed Care plans. So thank you so much for sharing, John. That was very interesting. Is there anything else that you feel we have not covered that you feel like you would want our listeners to know about?}

^{0:12:03.9 JP: No, I think we've covered a lot of ground already. The one thing I would say from a personal perspective though. And is how proud I am to have been part of such a great team at DHCS during the midst of the Worldwide Pandemic. I think folks often overlook or don't fully appreciate what public servants do on a daily basis. As each of us encountered a world changed overnight and worried about our own families. My colleagues came in every day with passion, commitment and hard work to make sure Medi-Cal members had access to and received the care they needed. This is no small feat considering the fact that Medi-Cal covers over 15 million people in this state and covers over half the births.}

^{0:12:47.5 HC: Thank you, John. I look forward to working with you on a team now. I'm super grateful to be working with you. And I'm sure I will have more questions for you, off the record. And thank you so much to our listeners for joining us for this episode of Legal Prescriptions. For additional information on this topic or other healthcare matters, please visit our website at nossaman.com. And don't forget to subscribe to legal prescriptions wherever you listen to podcasts so that you don't miss an episode. Until next time.}

^{0:13:22.6 Speaker 2: Legal prescriptions is presented by Nossaman LLP and cannot be copied or re-broadcast without consent. Content reflects the personal views and opinions of the participants. The information provided in this podcast is for informational purposes only, is not intended as legal advice and does not create an attorney-client relationship. Listeners should not act solely upon this information without seeking professional legal.}