In a major course change, the California Division of Well being Care Companies introduced that it has negotiated with 5 industrial well being plans to supply Medi-Cal companies in 2024, scratching a two-year-long bidding course of for the coveted state contracts.
This upends the state’s earlier plans of awarding contracts to solely three well being plans. It means extra Medi-Cal enrollees will probably get to maintain their present insurers and medical doctors, averting a complicated re-enrollment course of for many members and stopping disruption to affected person care. It additionally signifies that the state will keep away from a protracted authorized battle amid lawsuit threats from insurers who had beforehand been overlooked.
The massive winners: Blue Protect and Group Well being Group will get a contract after initially having misplaced bids, and Well being Internet will get to maintain at the least a few of its Los Angeles enrollees.
“To deliver certainty to members, suppliers and plans, the State used its authority to work immediately with the plans to re-chart our partnership and transfer with confidence and velocity towards the implementation of the modifications we wish to see,” the division wrote in an announcement launched Friday afternoon. The division didn’t present solutions to follow-up questions earlier than publication.
“At some stage it makes the transition simpler, however we wish to do higher than the established order,” stated Anthony Wright, govt director of Well being Entry, a client advocacy group. “Much less disruption is sweet, however we do not wish to lose the rationale for the change, which is to have extra accountability on these plans going ahead.”
Medi-Cal supplies well being protection to greater than 14 million low-income Californians, greater than a 3rd of the state’s inhabitants. In 2021, the Division of Well being Care Companies, which oversees the Medi-Cal program, launched into a bidding course of that may enable it to remodel contracts with industrial Medi-Cal well being plans. The state’s aim was to scale back the variety of collaborating well being plans from the present 9 and transfer ahead with solely essentially the most certified plans, which might be held to larger requirements associated to affected person outcomes, wait instances and satisfaction, in addition to enhancing well being disparities.
In August of final yr, the state introduced that it could tentatively award $14 billion value of Medi-Cal contracts to 3 firms — Well being Internet, Molina and Anthem Blue Cross. This proposed resolution would power near 2 million Medi-Cal enrollees to change insurance coverage and sure discover new suppliers. Some well being suppliers declared the division’s unique contract resolution, claiming it could have prompted “immeasurable” disruption to care.
“Much less disruption is sweet, however we do not wish to lose the rationale for the change, which is to have extra accountability.”
Anthony Wright, govt director of Well being Entry
Kaiser Permanente negotiated a particular contract with the state early final yr, bypassing the bidding course of. And most nonprofit community-based well being plans didn’t need to compete for a contract.
The state’s summer season announcement rapidly grew to become controversial as well being plans that have been overlooked questioned the state’s course of for selecting the three insurers, appealed the choice and sued the state.
This transformation in fact calls into query the facility that insurance coverage firms can have in urgent state motion with authorized threats. Well being advocates say they hope it doesn’t set precedent. Wright at Well being Entry stated he’d like for the division to clarify that the state just isn’t backing away from the aggressive contract course of sooner or later, as he considers it a key instrument for accountability.
Blue Protect, one of many insurance coverage firms initially overlooked, filed a grievance in opposition to the Division of Well being Care Companies, requesting that the division launch all paperwork used within the choice course of.
The insurance coverage big even launched a marketing campaign within the fall asking Californians to talk out in opposition to the state’s resolution. The corporate argued that the state did not sufficiently interact Medi-Cal enrollees and medical doctors within the course of. “The message of this marketing campaign is that it is not too late for the state to alter course and make decisions that may advance innovation and well being fairness for everybody,” Kristen Cerf, president and CEO of Blue Protect’s Medi-Cal plan, stated in an announcement. in October.
Below the revised settlement, Blue Protect will get to maintain serving the San Diego space. Blue Protect declined a request for an interview, as an alternative referring reporters to an announcement launched Tuesday.
In the meantime, Well being Internet, which in the summertime was tentatively awarded contracts in 9 counties however misplaced its earlier and largest contract in Los Angeles, additionally sued the state. Below the brand new settlement, Well being Internet will get to remain in Los Angeles and can divide its share of Medi-Cal enrollees equally with its industrial counterpart, Molina Healthcare. Well being Internet may even hold its Sacramento membership however lose the San Diego market.
Centene, the dad or mum firm of Well being Internet, stated in a Tuesday assertion that it could finish its authorized actions in opposition to the state’s well being companies division.
The splitting of members evenly between Molina and Well being Internet by means of a subcontracting settlement is a “step in the correct path,” stated Jim Mangia, president and CEO of St. John’s Group Well being, which serves low-income sufferers in south LA, however a lot stays unsure.
“Who’s the 50 % which can be going to have the ability to stick with the Well being Internet and who’s the 50 % which can be going to have to maneuver?” Mangia stated. “We do not have solutions to that, so I feel it is problematic in that it nonetheless displaces a major variety of sufferers.”
Presently, Well being Internet manages greater than 1 million Medi-Cal sufferers in Los Angeles County. Almost 1 / 4 of St. John’s Group Well being sufferers have Well being Internet, with the publicly run LA Care Well being Plan accounting for the remainder. (Most Angelenos with Medi-Cal are enrolled in and can have the ability to proceed with LA Care, a publicly operated plan.)
Mangia stated the newest resolution will nonetheless disrupt companies for the 12,500 sufferers at St. John’s alone who can be pressured to change to Molina. He anticipates the clinic needing to rent extra workers to assist with affected person navigation, however there is no cash for that.
“It was clearly an try and rectify the preliminary resolution, however I am unsure the influence on sufferers goes to be all that totally different. That is my concern,” Mangia stated. “It is basically an unfunded mandate.”
“Who’s the 50 % which can be going to have the ability to stick with the Well being Internet and who’s the 50 % which can be going to have to maneuver?”
Jim Mangia, president and CEO of St. John’s Group Well being
Well being Internet and Molina Healthcare didn’t reply to requests for remark, however in an early Tuesday morning name with traders, Molina CEO Joseph Zubretsky characterised the state’s closing resolution as “taking three steps ahead, taking one step again” for the corporate, which had initially hoped to triple its Medi-Cal membership underneath the tentative award introduced in August.
In discussing the choice, Zubretsky and CFO Mark Keim alluded to closed-door negotiations between Molina, the state well being care companies division and the interesting insurers. When requested whether or not the state had ever thought of restarting the bidding course of, Zubretsky stated California regulators had “broad discretionary authority” to award contracts and new bids may have taken a major period of time.
“With that because the understanding, we thought it greatest for the corporate, for membership and for traders to take part within the negotiations,” Zubretsky stated.
Molina has agreed to not protest the ultimate contract award and can subcontract with Well being Internet in Los Angeles County within the “negotiated settlement,” Zubretsky stated. Molina will double its Medi-Cal membership — from 600,000 to 1.2 million — by 2024 because of this newest contract.
“We have agreed to the membership allocations that the state has now articulated along with waiving different kinds of authorized rights that one would usually have,” Zubretsky instructed traders.
Group Well being Group, the biggest Medi-Cal supplier in San Diego County, may even get a brand new contract in 2024. The insurer was excluded within the unique summer season announcement, however appealed to the state’s resolution.
Group Well being Group declined an interview request, however over the summer season, the corporate’s chief working officer, Joseph Garcia, instructed CalMatters that the state’s resolution had been stunning as a result of his firm routinely outperformed different insurers.
Zara Marselian, CEO of La Maestra Group Well being Facilities in San Diego, stated the state’s new resolution was a welcome shock. La Maestra’s clinics serve low-income sufferers all through the county and have labored with the Group Well being Group for almost three many years. About 26% of its sufferers depend on Group Well being Group for Medi-Cal, essentially the most of any single affected person group. Beforehand, Marselian had additionally predicted having to rent extra workers to assist sufferers navigate the transition.
“It is actually higher for the Medi-Cal recipients who is not going to now need to switch to a different well being plan and have their entire continuity of care disrupted,” Marselian stated. “I am actually grateful nonetheless this occurred. I am actually grateful on behalf of our sufferers.”