Medi-Cal will keep more insurance plans after the rollback

In a significant turnaround, 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-year bidding process for coveted state contracts.

This overrides the state’s previous plans to award contracts to just three health plans. It means more Medi-Cal enrollees are likely to keep their current insurer and doctors, avoiding a confusing re-enrollment process for most enrollees and avoiding interruptions in patient care. It also means the state will avoid a protracted legal battle amid threats of lawsuit from insurers that have previously been left out.

The big winners: Blue Shield and Community Health Group will win a contract after initially losing bids, and Health Net will be able to keep at least some of its Los Angeles affiliates.

“To provide certainty to members, providers, and plans, the State used its authority to work directly with the plans to redraw our partnership and move with confidence and speed toward implementing the changes we want to see,” the department wrote in a statement issued Friday afternoon. The department did not provide answers to follow-up questions prior to publication.

“On some level, it eases the transition, but we want to do better than the status quo,” said Anthony Wright, executive director of Health Access, a consumer advocacy group. “Less interruptions is good, but we don’t want to lose the reason for the change, which is to have more responsibility for these plans in the future.”

Medi-Cal provides health coverage to more than 14 million low-income Californians, more than a third of the state’s population. In 2021, the Department of Health Care Services, which oversees the Medi-Cal program, embarked on a bidding process that would allow it to modify contracts with commercial Medi-Cal health plans. The state’s goal was to reduce the number of participating health plans from the current nine and move forward with only the most qualified plans, which would be held to higher standards related to patient outcomes, waiting times and satisfaction, as well as improvement in health disparities.

In August of last year, the state announced that it would tentatively award $14 billion in Medi-Cal contracts to three companies: Health Net, Molina and Anthem Blue Cross. This proposed decision would force nearly 2 million Medi-Cal enrollees change insurance and probably find new providers. Some healthcare providers criticized the department’s original contract decision, claiming that have caused “immeasurable” disruption to import.

Kaiser Permanente negotiated a special contract with the state early last year, without going through the bidding process. And most non-profit community health plans he did not have to compete for a contract.

The state’s summer announcement quickly became contentious as the health plans left out questioned the state’s process for choosing the three insurers, appealed the decision and sued the state.

This change of course calls into question the power that insurers may have to pressure state action with legal threats. Health advocates say they hope it doesn’t set a precedent. Wright at Health Access said he would like the department to make it clear that the state will not back away from the competitive contracting process in the future, as he sees it as a key tool for accountability.

Blue Shield, one of the insurance companies initially excluded, filed a complaint against the Department of Health Care Services, requesting that the department release all documents used in the screening process.

Even the insurance giant launched a campaign in the fall asking Californians to speak out against the state’s decision. The company argued that the state failed to sufficiently involve Medi-Cal members and doctors in the process. “The message of this campaign is that it is not too late for the state to change course and make decisions that advance innovation and health equity for all,” Kristen Cerf, president and CEO of the Medi plan, said in a statement. -Blue Shield lime. in October.

Under the revised agreement, Blue Shield will be able to continue to serve the San Diego area. Blue Shield declined an interview request, instead referring reporters to a statement issuedTuesday.

Meanwhile, Health Net, which tentatively won contracts in nine counties in the summer but lost its previous and largest contract in Los Angeles, is also suing the state. Under the new agreement, Health Net will remain in Los Angeles and will split its share of Medi-Cal enrollees equally with its business counterpart, Molina Healthcare. Health Net will also keep its membership in Sacramento but will lose the San Diego market.

hundredsHealth Net’s parent company said in a statement Tuesday that it would end its legal actions against the state department of health services.

The equitable division of members between Molina and Health Net through a subcontracting agreement is a “step in the right direction,” said Jim Mangia, president and CEO of St. John’s Community Health, which serves low-income patients. in South Los Angeles, but much more remains uncertain.

“Who are the 50 percent that will be able to stay in Health Net and who are the 50 percent that will have to move?” Mangia said. “We don’t have answers for that, so I think it’s problematic because it still displaces a significant number of patients.”

Currently, Health Net manages more than 1 million Medi-Cal patients in Los Angeles County. Nearly a quarter of St. John’s Community Health patients have Health Net, with the publicly run LA Care Health Plan accounting for the remainder. (Most Angelenos with Medi-Cal are enrolled in and will be able to continue with LA Care, a publicly operated plan.)

Mangia said the latest decision will still disrupt services for the 12,500 patients in St. John’s alone who will be forced to switch to Molina. He anticipates that the clinic will need to hire more staff to help with patient orientation, but there is no money for that.

“Obviously it was an attempt to rectify the initial decision, but I’m not sure the impact on patients is going to be that different. That is my concern,” Mangia said. “It’s essentially an unfunded mandate.”

Health Net and Molina Healthcare did not respond to requests for comment, but in a Early Tuesday morning call with investorsMolina CEO Joseph Zubretsky characterized the state’s final decision as “three steps forward, one step back” for the company, which originally hoped to triple its Medi-Cal membership under the tentative award announced in August.

In discussing the decision, Zubretsky and CFO Mark Keim alluded to closed-door negotiations between Molina, the state’s department of health care services and the appellant insurers. Asked if the state ever considered restarting the bidding process, Zubretsky said California regulators had “broad discretionary authority” to award contracts and new bids could have taken a significant amount of time.

“With that in mind, we thought it was in the best interest of the company, the members and the investors to participate in the negotiation,” Zubretsky said.

Molina has agreed not to protest the final award of the contract and will subcontract to Health Net in Los Angeles County in the “negotiated settlement,” Zubretsky said. Molina will double its Medi-Cal membership, from 600,000 to 1.2 million, by 2024 as a result of this latest contract.

“We agreed to the membership assignments that the state has now articulated in addition to giving up other types of legal rights that one would normally have,” Zubretsky told investors.

Community Health Group, the largest Medi-Cal provider in San Diego County, will also get a new contract in 2024. The insurer was excluded in the original summer announcement but has appealed the state’s decision.

Community Health Group declined an interview request, but over the summer, the company’s chief operating officer, Joseph Garcia, told CalMatters that the state’s decision had been shocking because his company routinely outperformed other insurers.

Zara Marselian, executive director of La Maestra Community Health Centers in San Diego, said the state’s new decision was a welcome surprise. La Maestra’s clinics serve low-income patients throughout the county and have worked with Community Health Group for nearly three decades. About 26% of their patients trust Community Health Group for Medi-Cal, the most of any patient group. Previously, Marselian had also anticipated having to hire more staff to help patients navigate the transition.

“It’s really better for Medi-Cal recipients that now they won’t have to transfer to another health plan and have their entire continuity of care interrupted,” Marselian said. “I am very grateful however this happened. I am very grateful on behalf of our patients.”