Last year, state health officials launched a first-ever bidding process for its Medi-Cal insurance contracts, aimed at implementing higher standards. But when the winners were announced, several insurers complained about the process and the potential impact on patient care.
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In a significant shift, the California Department of Health Care Services announced that it has negotiated with five commercial health plans to provide Medi-Cal services in 2024, eliminating a two-year bidding process for coveted state contracts.
This upends the state’s previous plans to award contracts to just three health plans. This means more Medi-Cal enrollees will likely be able to keep their current insurer and physicians, avoiding a confusing re-enrollment process for most members and preventing disruption of patient care. It also means the state will avoid a protracted legal battle amid threats of legal action from insurers that were previously left out.
The big winners: Blue Shield and Community Health Group will get a contract after initially losing offers, and Health Net will be able to retain at least some of its registrants in Los Angeles.
“To bring certainty to members, providers and plans, the state has used its authority to work directly with plans to redefine our partnership and move forward with confidence and speed toward implementing the changes we want to see,” the department said. wrote in a statement released Friday afternoon. The ministry did not provide answers to follow-up questions prior to publication.
“On some level it makes the transition easier, but we want to do better than the status quo,” said Anthony Wright, executive director of Health Access, a consumer advocacy group. “Less disruption is good, but we don’t want to lose the reason for the change, which is to have more responsibility on these plans in the future.”
Medi-Cal provides health coverage to more than 14 million low-income Californians, more than one-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 rework contracts with Medi-Cal commercial 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 stand to higher standards linked to patient outcomes, wait times and satisfaction, and to improving health disparities.
In August of last year, the state announced it would tentatively award $14 billion in Medi-Cal contracts to three companies – Health Net, Molina and Anthem Blue Cross. This proposal for a decision would require nearly 2 million subscribers to Medi-Cal to change insurance and probably find new providers. Some health care providers denounced the ministry’s initial contract decision, saying it caused “immeasurable” disruption take care of.
The state’s summer announcement quickly became controversial as the health plans that were left out questioned the state’s process for choosing the three insurers, appealed the decision and sued. ‘State.
This shift in focus of course calls into question the power that insurance companies may have to pressure state action with legal threats. Health advocates say they hope it doesn’t set a precedent. Wright of Health Access said he would like the department to make it clear that the state is not backing down from the competitive contracting process in the future, as he sees it as a key accountability tool.
Blue Shield, one of the insurance companies initially excluded, filed a lawsuit against the Department of Health Services, demanding that the department release all documents used in the screening process.
The insurance giant even launched a campaign in the fall asking Californians to speak out against the state’s decision. The company argued that the state did not sufficiently engage Medi-Cal enrollees and physicians in the process. “The message of this campaign is that it’s not too late for the state to change course and make choices that will advance innovation and health equity for all,” said Kristen Cerf. , president and CEO of Blue Shield’s Medi-Cal plan, in a statement. in October.
Under the revised agreement, Blue Shield will be able to continue serving the San Diego area. Blue Shield declined a request for an interview, instead referring to journalists to a published statement Tuesday.
Meanwhile, Health Net, which over the summer tentatively secured contracts in nine counties but lost its previous and largest contract in Los Angeles, also sued the state. Under the new agreement, Health Net will be able to remain in Los Angeles and will split its share of Medi-Cal enrollees evenly with its commercial counterpart, Molina Healthcare. Health Net will also retain its membership in Sacramento but will lose the San Diego market.
centenethe parent company of Health Net, said in a statement on Tuesday that it would end its legal action against the state Department of Health Services.
The equitable distribution of membership between Molina and Health Net through an outsourcing 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 remains unclear.
“Who are the 50% who are going to be able to stay with Health Net and who are the 50% who are going to have to move? Mangia said. “We don’t have answers for that, so I think it’s problematic in that it’s still displacing a significant number of patients.”
Currently, Health Net serves over one million Medi-Cal patients in Los Angeles County. Nearly a quarter of St. John’s Community Health patients have access to Health Net, with the remainder managed by the LA Care Health Plan. (Most Angelenos with Medi-Cal are enrolled and will be able to continue with LA Care, a public plan.)
Mangia said the latest decision will still disrupt services for the 12,500 St. John’s patients alone who will be forced to move to Molina. He anticipates the clinic will need to hire more staff to help with patient navigation, but there is no money for that.
“It was obviously an attempt to rectify the original decision, but I’m not sure the impact on patients will be that different. This is my concern,” Mangia said. “It’s basically 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 called the state’s final decision “three steps forward, one step back” for the company, which had originally hoped to triple its Medi-Cal membership as part of the award provisional announced in August.
In discussing the decision, Zubretsky and Chief Financial Officer Mark Keim alluded to closed-door negotiations between Molina, the state’s Department of Health Services and insurers on appeal. When asked if the state had ever considered restarting the bidding process, Zubretsky said California regulators had “broad discretion” to award contracts and new bids could have taken a lot of time.
“With that as an understanding, we felt it was better for the company, for the members and for the investors to participate in the negotiation,” Zubretsky said.
Molina agreed not to protest the final contract award and will subcontract with Health Net in Los Angeles County in the “negotiated settlement,” Zubretsky said. Molina will double the number of its Medi-Cal members – from 600,000 to 1.2 million – by 2024 thanks to this latest contract.
“We accepted the membership stipends that the state has now articulated in addition to waiving other types of legal rights that one would normally have,” Zubretsky told investors.
Community Health Group, San Diego County’s largest Medi-Cal provider, will also get a new contract in 2024. The insurer was excluded in the summer’s initial announcement, but has appealed the decision to the state.
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 consistently outperformed other insurers.
Zara Marselian, CEO of La Maestra Community Health Centers in San Diego, said the state’s new decision came as a welcome surprise. La Maestra clinics serve low-income patients throughout the county and have worked with the community health group for nearly three decades. About 26% of its patients rely on the Community Health Group for Medi-Cal, the most of any patient group. Previously, Marselian also predicted having to hire more staff to help patients through the transition.
“It’s really better for Medi-Cal recipients who won’t have to switch to another health plan and have their entire continuity of care interrupted,” Marselian said. “I’m really grateful, but it happened. I am truly grateful on behalf of our patients.