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California’s Resolve Questioned After It Grants Medi-Cal Contract Concessions

California’s resolution final month to cancel the outcomes of a long-planned bidding competitors amongst industrial well being plans in its Medicaid program has some business insiders and shopper advocates questioning whether or not the state can stand as much as insurers and power enhancements in look after thousands and thousands of low-income beneficiaries.

In a backroom settlement introduced within the closing days of 2022, Gov. Gavin Newsom’s administration, going through lawsuits, granted concessions that allowed main insurers to claw again enterprise they might have misplaced had well being officers caught with the state’s preliminary contract awards for managed-care plans. Oakland-based Blue Defend of California and St. Louis-based Centene Corp. — which owns Well being Internet, the most important industrial well being plan in Medi-Cal, the state’s model of Medicaid — had been amongst people who had aggressively challenged the preliminary outcomes.

“They’d this lengthy course of, after which they simply type of struck offers,” mentioned Maya Altman, who retired a yr in the past after practically 17 years as CEO of the Well being Plan of San Mateo, which didn’t take part within the bidding. “It’s sort of bizarre. Not clear — very a lot behind closed doorways.”

It was a exceptional change in fact that got here 4 months after the state had introduced its preliminary contract awards. The Division of Well being Care Companies, which oversees Medi-Cal, had spent years getting ready for the bidding competitors and touted it as an essential technique of addressing substandard care. Eight industrial Medi-Cal plans, overlaying round 30% of this system’s 13 million managed-care enrollees, had been required to submit bids for contracts value about $70 billion over 5 years.

Noncommercial, domestically ruled Medi-Cal plans that cowl the opposite 70% of managed-care enrollees didn’t need to submit bids, however they are going to be required to signal the identical new contract because the industrial plans, scheduled to take impact subsequent yr.

State officers mentioned their new resolution avoids uncertainty after the shedding well being plans — Well being Internet, Blue Defend of California, Group Well being Group, and Aetna — threatened drawn-out authorized motion. It additionally dramatically reduces the variety of Medi-Cal enrollees who should swap plans — from an estimated 2.3 million to about 1.2 million. And state officers mentioned it strengthens their skill to boost Medi-Cal by means of the brand new contracts, which is able to include necessities for higher-quality care, larger transparency, and extra equitable entry.

Different states have confronted authorized disruption after they put their Medicaid contracts up for bid. In Louisiana, for instance, Centene and Aetna in 2019 protested the outcomes of a rebidding course of, which led that state to nullify its awards and begin over. The new outcomes had been introduced practically two years later, with Centene and Aetna among the many winners.

“Once you create disputes, and lawsuits, they at all times put some uncertainty into issues,” Dr. Mark Ghaly, secretary of the California Well being and Human Companies Company, informed KHN. “We really feel that we ended up in a spot the place we achieved certainty. We’ve a set of [health] plans who’re dedicated to this.”

Shopper advocates had fearful that lingering uncertainty would hinder the rollout of a far-reaching practically $12 billion, five-year Medi-Cal initiative to offer nonmedical social providers that tackle socioeconomic components similar to homelessness and meals insecurity, broadly considered as key well being indicators.

Nonetheless, the state’s resolution to throw out the bidding outcomes has many affected person advocates and a few well being plan executives questioning the worth of future contract competitions and even whether or not well being officers will successfully implement the upper requirements within the new contract.

“It could be extraordinarily disappointing if poor-performing plans had been in a position to litigate their manner into taking part in Medi-Cal,” mentioned Abbi Coursolle, a senior legal professional within the Los Angeles workplace of the Nationwide Well being Regulation Program.

Tony Cava, a spokesperson for the Division of Well being Care Companies, mentioned the bids submitted had been nonetheless “extremely worthwhile,” as a result of they confirmed how the well being plans intend to enhance care. He mentioned commitments made within the bids might be integrated into the brand new contracts. Cava additionally mentioned the division, which had not beforehand held a statewide bidding competitors, now intends to carry one each 5 years.

Affected person advocates and business insiders gave the state credit score for fining well being plans that fell wanting high quality and entry requirements in a report issued late final yr. However additionally they famous that a number of of the well being plans that may proceed to function in Medi-Cal — together with Molina Healthcare and Well being Internet — had been among the many lowest performers.

When the state introduced its preliminary awards in August, Blue Defend was shut out, regardless of its massive well being care footprint statewide and its long-standing efforts to curry favor with the state’s political class. The state additionally mentioned initially that it might take Los Angeles County, an enormous Medi-Cal contract, away from Well being Internet.

Between 2018 and 2022, Blue Defend spent at the very least $31 million on lobbying, political donations, and different contributions, together with $20 million to a state homelessness fund Newsom arrange, in response to a KHN evaluation of filings with the secretary of state and the California Honest Political Practices Fee. Well being Internet guardian Centene spent at the very least $5 million over that interval, totally on lobbying and political donations.

Beneath the brand new association, Blue Defend will preserve its San Diego County Medi-Cal enterprise after initially shedding it within the contract competitors, although it won’t get a contract in any of the opposite 12 counties the place it bid. Its roughly 129,000 San Diego enrollees won’t have to change plans, however over 100,000 different Medi-Cal members in San Diego will nonetheless have to change, as Well being Internet and Aetna exit.

In Los Angeles County, Well being Internet will retain its main Medi-Cal contract, however should break up its 1.1 million members 50-50 with Molina beneath a subcontract. Molina already subcontracts with Well being Internet within the county, however at present has solely 80,000 enrollees beneath that association.

Some observers questioned how the break up will be maintained. Cava mentioned half of recent Medi-Cal enrollees in L.A. County don’t select a plan and are assigned to 1 as a substitute, in response to the latest information. These assignments might be used to assist stability enrollment between Well being Internet and Molina, he mentioned.

The state and the 5 taking part well being plans issued an uncommon joint assertion, and the plans put a constructive spin on it. Centene mentioned the state’s revised resolution “is in the perfect curiosity of thousands and thousands of members.” A Blue Defend government mentioned it was “honored to proceed serving Medi-Cal beneficiaries in San Diego County.”

In an investor name this month, Molina’s CEO, Joseph Zubretsky, famous that his firm’s Medi-Cal membership will double with the brand new settlement, although it might have tripled beneath the state’s preliminary resolution. He summarized the state of affairs for Molina as “taking three steps ahead, taking one step again, and ending up being two steps forward.”

Shopper advocates, sufferers, and medical professionals expressed reduction that the brand new settlement permits Group Well being Group, the most important Medi-Cal well being plan in San Diego County, to maintain working there. Had the preliminary outcomes held, it might have misplaced its contract, and its 335,000 members would have had to decide on new plans.

Christine Xayalinh, a member of Group Well being Group in Escondido, mentioned the plan afforded her therapy for Kind 2 diabetes and referred her to College of California-San Diego for a profitable gastric bypass.

“I do know some individuals do have issues about their medical insurance,” Xayalinh, 29, mentioned, “however for me, it’s been a lifesaver.”

With the contract awards determined, the state’s hope of enhancing Medi-Cal will hinge on its skill to implement the brand new contracts.

“The main focus now must be on ensuring that works,” mentioned Kiran Savage-Sangwan, government director of the California Pan-Ethnic Well being Community. “This can be a very weak inhabitants of Californians who are usually not getting what they want.”

This story was produced by KHN, which publishes California Healthline, an editorially impartial service of the California Well being Care Basis.

KHN (Kaiser Well being Information) is a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is likely one of the three main working applications at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering data on well being points to the nation.


This story will be republished without spending a dime (particulars).



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