Targeted Case Management (TCM) – A Viable Option

02/24/2020 By Nancy Leidelmeijer


In California, TCM, a Medicaid benefit program, is administered by the California Department of Health Care Services (DHCS). The TCM program started in 1995 after the Medi-Cal Administrative Claiming Program split in two: TCM and Medi-Cal Administrative Activities (MAA). Since then, the program has undergone structural changes related to how time is tracked and how annual costs are reported. From 1995 through 2009, the changes were relatively minor with no major impacts to how the program was run. The annual TCM cost report incurred relatively minor changes related to funding only.

In 2010, DHCS kept the program on status quo while major changes were pending. For a period of 3 years, California participants continued following already established protocols. In 2014, the TCM program underwent significant change: a new, perpetual time survey was implemented; and a new TCM cost report was released. Also, with those changes came a new wave of annual fiscal audits related to the TCM cost reports.



Many of the changes to the TCM program were labor-intensive for participants.

The new time survey:

  1. Prepared perpetually rather one month per year, as was done previously
  2. The one (1) single TCM code had been broken down into ten (10) TCM codes to which participants were required to breakdown their time when performing TCM activities.

The new TCM cost report:

  1. The cost report was completely overhauled. All worksheets were different, so preparers were required to learn a new way of reporting costs and funding
  2. DHCS trainings were confusing; preparation instructions were poorly written and contained unclear information and direction

TCM cost report/fiscal audits:

1. All TCM cost report reports, dating back to fiscal year 2010-11 were required to be audited retroactively, while DHCS auditors applied new rules and instructions to old cost report methods.

2. Items previously allowable were being disallowed in the audits:

- Indirect costs

- Smaller budget units

- Funding was being equated/confused with certified public expenditures (CPE)

3. Responding to audit requests for information and questions was time consuming and frustrating

4. DHCS planned to discontinue TCM as a local governmental program and proposed having managed care agencies take on the program.


During this period of flux, participating agencies accepted time survey and cost report changes, but were frustrated with the audit process. Many were pushed to either acquiesce to DHCS auditors’ unreasonable demands, or to dispute the audit findings by appealing the disallowances. Initially, several agencies disputed DHCS’ disallowances, but soon many folded and resigned to a more punitive, restrictive TCM program. Some agencies continued to pursue appeals. While many initially were defeated, recently, DHCS has been working more collaboratively with local governmental agencies. Many of the previously disallowed items were reversed and made allowable. It appears perseverance by local governmental agencies paid off. Indirect costs are no longer disallowed. Budget units may be smaller than a whole agency within certain limits, and while there is still some confusion on DHCS’ part related to CPE and funding, auditors are working with local governments rather than fighting them, to understand how it works at the local level.

Moreover, it was decided that DHCS would keep the TCM program under its purview and continue to work with local governmental agencies in provided TCM services to clients in California.



The TCM program has survived the many changes, conflicts, and scrutiny under which it was placed. The changes and conflicts, may well have led to TCM being stronger than ever. Now is a good time for local governmental agencies to seize the opportunity to participate once again. Audit issues have been ironed out and the audits, as whole, are no longer all-consuming, painful processes. 

While several participating agencies opted out, or reduced their programs, it appears TCM has once again become a program that local governmental agencies can rely on to provide much needed funding for their communities in need.

Agencies wishing to participate, should contact their local governmental agency coordinator for the MAA and TCM programs.