In a major change, the California Department of Health Care Services announced that it has negotiated with five commercial health plans to provide Medi-Cal services by 2024, eliminating a two-pronged bidding process. years for state contracts.
This eliminates previous state plans to award contracts to only three health plans. That means most Medi-Cal enrollees — including about one-third of Humboldt County’s population — are likely to keep their current insurance and doctors. , thereby preventing the re-enrollment of many members and preventing disruption to patient care. This means that the state will avoid a legal battle amid legal threats from insurers that previously left.
The big win: Blue Shield and Community Health Group will get a contract after losing the first bid, and Health Net will be able to keep some of its subscribers in Los Angeles.
“To bring certainty for members, companies and plans, the state used its authority to work directly with plans to reshape our partnership and move with confidence and speed towards the implementation of the changes we want to see,” the interior ministry wrote. a statement issued on Friday afternoon. The department did not respond to follow-up questions before publication.
“In some cases it makes the transition easier, but we want to be better than the status quo,” said Anthony Wright, executive director of Health Access, a consumer group. “It’s good to reduce the risk, but we don’t want to lose sight of the reason for the change, which is more of a response to these plans for moving forward.”
Medi-Cal provides health care to more than 14 million low-income Californians, more than one-third of the state’s population. In 2021, the Department of Health Services, which oversees the Medi-Cal program, began a bidding process that would allow contracts with commercial Medi-Cal health plans to work again. The goal of the state is to reduce the number of participating health plans from the current nine and moving forward only the most qualified, which will be done in high standards related to the results of patient, waiting time and satisfaction, as well as improving health.
In August, the state announced it would tentatively award $14 billion in Medi-Cal contracts to three companies – Health Net, Molina and Anthem Blue Cross. This proposed decision will force the nearly 2 million Medi-Cal enrollees to switch insurers and likely find new providers. Some health care providers rejected the department’s initial contract decision, saying it would cause “immeasurable” disruption to care.
Kaiser Permanente negotiated an exclusive contract with the state early last year, which did not go through the bidding process. And many non-profit organization health plans did not have to compete for a contract.
The state’s summer announcement was immediately controversial because health plans presented questioned the state’s process for selecting three insurance companies, appealed the decision and sued the state.
This change has questioned electric insurance companies that can be in the enforcement of state actions and legal threats. Health advocates say they hope not to set a precedent. Wright told Health Access that he wants the department to make it clear that the state is not backing down from the competitive contracting system in the future, because he thinks it is a key tool for accountability.
Blue Shield, one of the first insurance companies to leave, filed a complaint against the Department of Health, asking the department to release all the documents it had. used in the selection process.
The insurance company even launched a campaign in the fall asking Californians to protest the state’s decision. The company argued that the state failed to adequately engage Medi-Cal enrollees and physicians in the process. “The message of this announcement is that it’s never too late for the state to change course and make decisions to advance innovation and health equity for all,” said Kristen Cerf, President and CEO. Best of Blue Shield’s Medi-Cal plan, in a nutshell. in October.
Under the revised agreement, Blue Shield will continue to serve the San Diego area. Blue Shield declined a request for an interview, instead referring reporters to a statement.
Meanwhile, Health Net, which in the summer was awarded contracts in nine counties but lost its first contract and more in Los Angeles, also sued the state. Under the new deal, Health Net will be based in Los Angeles and will split its Medi-Cal population equally with its business partner, Molina Healthcare. Health Net will also maintain its Sacramento membership but lose the San Diego market.
Centene, the parent company of Health Net, said in a statement earlier this month that it would drop its legal claims against the state’s health services department.
Splitting membership between Molina and Health Net through a subcontracting agreement is a “step in the right direction,” said Jim Mangia, president and CEO of St. .
“Who 50 percent will be able to stay in Health Net and who 50 percent will have to move?” Mangia said. “We don’t have answers to that, so I think it’s a problem because it’s still changing a lot of patients.”
Currently, Health Net manages more than 1 million Medi-Cal patients in Los Angeles County. Almost a quarter of the patients of the Health of St. John has Health Net, with LA Care Health Plan advertising for the rest of the group. (Most Angelenos in Medi-Cal are enrolled in and will be able to continue in LA Care, a public health plan.)
According to Mangia, the recent decision will disrupt services for 12,500 patients in St. John’s alone will be forced to switch to Molina. He hoped that the hospital would need more staff to help manage patients, but there was no money for that.
“It is clear that it is an attempt to correct the first decision, but I am not sure that the impact on patients will be very different. That is my concern,” said Mangia. “It’s actually an unfunded mandate.”
Health Net and Molina Healthcare did not respond to requests for comment, but in a call with investors earlier this month, Molina CEO Joseph Zubretsky revealed the state’s final decision of the “three steps forward, one step back” for the company, which was. Medi-Cal enrollment was originally expected to triple under the permanent award announced in August.
In discussing the decision, Zubretsky and CFO Mark Keim cited closed negotiations between Molina, the state’s health services department and lobbying insurers. When asked if the state considered restarting the bidding process, Zubretsky said there is a “wide discretion” in California to award contracts and new bidders may take time.
“With that understanding, we think it’s best for the company, for membership and for investors to participate in the negotiation,” said Zubretsky.
Molina has agreed not to contest the final version of the contract and will share with Health Net Los Angeles County in “negotiations,” the statement said. Zubretsky. Molina will double its Medi-Cal membership — from 600,000 to 1.2 million — by 2024 because of this new contract.
“We have agreed to the allocation of membership that has already been announced by the state in addition to renouncing other types of rights that one usually has,” said Zubretsky to the investors.
Community Health Group, the largest Medi-Cal provider in San Diego County, will also get a new contract in 2024. The insurer was not included in the original announcement this summer, but the state appealed the decision.
Community Health Group declined an interview request, but over the summer, the company’s CEO, Joseph Garcia, told CalMatters that the state’s decision came as a surprise because his company has always been the best than other insurers.
Zara Marselian, CEO of La Maestra Community Health Centers in San Diego, said the state’s new decision is surprising. La Maestra Hospitals serves low-income patients in the county and has worked with the Community Health Group for nearly three decades. About 26 percent of its patients rely on Community Health Group for Medi-Cal, the most of any single patient group. Initially, Marselian also predicted the need to hire more staff to help patients navigate the transition.
“It’s better for Medi-Cal recipients to not have to transfer to another health plan and disrupt their entire continuum of care,” Marselian said. “I’m very grateful this happened. I’m very grateful on behalf of our patients.”
CalMatters is a non-profit, non-partisan news outlet dedicated to covering California politics and policy.