By Christine Hwang and Ana B. Ibarra, CalMatters
In a major change of course, the California Department of Health Care Services announced that it has negotiated with five commercial health plans to offer Medi-Cal services in 2024, scratching the two-year bidding process for the state’s coveted contracts.
This upends the state’s previous plans to award contracts to only three health plans. This means more Medi-Cal enrollees will be more likely to get their current insurer and physicians, avoiding the confusing re-enrollment process for most members and preventing disruption to patient care. It also means the state will avoid a drawn-out legal battle amid threats of lawsuit from previously excluded insurers.
The big winners: Blue Shield and Community Health Group will get a contract after initially losing bids, and Health Net will keep at least some Los Angeles-based registrants.
“To bring certainty to members, providers, and plans, the state has used its authority to work directly with plans to reimagine our partnership and move with confidence and speed toward implementing the changes we want to see,” the department wrote in a statement Friday afternoon. The department 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. “Reducing disruption is good, but we don’t want to lose the reason for the change, which is to have more accountability for these plans going forward.”
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 Medi-Cal, has begun a bidding process that will allow it to reformulate 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 eligible plans, which would be held to higher standards related to patient outcomes, waiting times, and satisfaction, as well as improving health disparities.
In August of last year, the state announced that it would initially award $14 billion worth of Medi-Cal contracts to three companies — Health Net, Molina and Anthem Blue Cross. This proposed resolution will force Nearly 2 million are enrolled in Medi-Cal To switch insurance and potentially find new providers. Some health providers have decried the department’s original contract decision, claiming it would caused “unlimited” turmoil takes care.
Kaiser Permanente Negotiating a private contract With the state early last year, bypassing the bidding process. Most non-profit organizations Community health plans You don’t have to compete to get a contract.
The state’s summer announcement quickly became controversial as the excluded health plans questioned the state’s process for selecting the three insurers, appealing the decision and suing the state.
This change of course calls into question the power insurers can have in pressuring state action with legal threats. Health advocates say they hope this will not set a precedent. Health Access’s Wright said he would like the department to make it clear that the state is not backing down from the competitive contract process in the future, as it views it as a key accountability tool.
Blue Shield, one of the insurers that was initially disqualified, has filed a complaint against the Health Care Services Administration, asking the administration to release all documents used in the selection process.
Even the insurance giant Launch a campaign In the fall Californians are asked to speak out against the state’s decision. The company argued that the state failed to adequately involve Medi-Cal enrollees and physicians in the process. “The message of this campaign is that it’s never too late for the state to change course and make choices that advance innovation and health equality for all,” Kristin Cerf, president and CEO of Blue Shield’s Medi-Cal plan, said in a statement. in October.
Under the amended agreement, Blue Shield will continue to serve the San Diego area. Blue Shield declined an interview request, instead referring reporters statement issued Tuesday.
Meanwhile, Health Net, which in the summer was initially awarded contracts in nine counties but lost its previous and largest contract in Los Angeles, has filed a lawsuit against the state. Under the new agreement, Health Net will remain in Los Angeles and split its stake in Medi-Cal enrollees equally with its commercial counterpart, Molina Healthcare. Health Net will also retain Sacramento membership but lose the San Diego market.
two centsHealth Net’s parent company said in a statement Tuesday that it will end its legal action against the state’s Department of Health Services.
Jim Mangia, President and CEO of St. Still not confirmed.
“Who are the 50 percent who will be able to stay with Healthnet and who are the 50 percent who will have to relocate?” Mangia said. “We don’t have answers to that, so I think it’s problematic in that it continues to displace a significant number of patients.”
Currently, Health Net manages more than 1 million Medi-Cal patients in Los Angeles County. Almost a quarter of patients with St. (Most Angelenos with Medi-Cal are enrolled in and will be able to continue in LA Care, which is a publicly run plan.)
Mangia said the latest decision will still disrupt services for the 12,500 patients at St John’s Hospital alone who will have to switch to Molina. He expects the clinic to need to hire more staff to help move patients around, but there is no money for that.
“Obviously it was an attempt to correct the initial decision, but I’m not sure the impact on patients will be very different. It’s basically an unfunded mandate,” Mangia said.
HealthNet and Molina Healthcare did not respond to requests for comment Early Tuesday morning call with investorsMolina CEO Joseph Zubritsky described the state’s final decision as “taking three steps forward, one step back” for the company, which had originally hoped to triple its Medi-Cal membership under the interim award announced in August.
While discussing the decision, Zubretsky and Chief Financial Officer Mark Keim hinted at closed-door negotiations between Molina and the state’s Department of Health Care Services and the appellant insurance companies. When asked if the state had considered restarting the bidding process, Zubritsky said that California regulators have “wide discretion” to award contracts and that new bids could have taken too long.
“With this concept, we thought it was best for the company, for the membership and for the investors to participate in the negotiations,” Zubritsky said.
Molina agreed not to object to the final contract award and will subcontract with HealthNet in Los Angeles County in the “negotiated settlement,” according to Zubritsky. 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 membership allowances that are now set by the state in addition to waiving other types of legal rights that one would normally have,” Zubritsky told investors.
Community Health Group, the largest provider of Medi-Cal in San Diego County, will receive a new contract in 2024. The insurance company was disqualified in the original summer announcement, but has appealed the state’s decision.
The community health group declined an interview request, but over the summer, the company’s Chief Operating Officer, Joseph Garcia, said: CalMatters said That the state’s decision was shocking because his company routinely outperformed other insurance companies.
Zara Marcellian, CEO of La Maestra Community Health Centers in San Diego, said the state’s new decision was a pleasant surprise. La Maestra Clinics serves low-income patients across the county and has worked with the Community Health Group for nearly three decades. About 26% of its patients depend on the Community Health Group for Medi-Cal, the largest number of the patient group. Previously, Marseilles also anticipated having to hire more staff to help patients get through the transition.
“It is really best for Medi-Cal recipients that they now not have to transfer to another health plan and disrupt their entire continuity of care,” said Marcelian. “I am really grateful though that this happened. I am really grateful on behalf of our patients.”