California’s choice final month to cancel the outcomes of a long-planned bidding competitors amongst business 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 take care of hundreds of thousands of low-income beneficiaries.
In a backroom settlement introduced within the remaining days of 2022, Gov. Gavin Newsom’s administration, dealing with lawsuits, granted concessions that allowed main insurers to claw again enterprise they’d have misplaced had well being officers caught with the state’s preliminary contract awards for managed-care plans. Oakland-based Blue Protect of California and St. Louis-based Centene Corp. — which owns Well being Internet, the most important business well being plan in Medi-Cal, the state’s model of Medicaid — had been amongst those who had aggressively challenged the preliminary outcomes.
“They’d this lengthy course of, after which they only form of struck offers,” mentioned Maya Altman, who retired a 12 months 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 outstanding change after all 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 business Medi-Cal plans, overlaying round 30% of this system’s 13 million managed-care enrollees, had been required to submit bids for contracts price about $70 billion over 5 years.
Noncommercial, regionally ruled Medi-Cal plans that cowl the opposite 70% of managed-care enrollees didn’t should submit bids, however they are going to be required to signal the identical new contract because the business plans, scheduled to take impact subsequent 12 months.
State officers mentioned their new choice avoids uncertainty after the shedding well being plans — Well being Internet, Blue Protect 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 potential to reinforce Medi-Cal by the brand new contracts, which is able to include necessities for higher-quality care, better 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.
“If you create disputes, and lawsuits, they all the time 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 have now a set of [health] plans who’re dedicated to this.”
Shopper advocates had frightened 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 handle socioeconomic elements equivalent to homelessness and meals insecurity, broadly seen as key well being indicators.
Nonetheless, the state’s choice 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 approach into collaborating in Medi-Cal,” mentioned Abbi Coursolle, a senior legal professional within the Los Angeles workplace of the Nationwide Well being Legislation Program.
Tony Cava, a spokesperson for the Division of Well being Care Companies, mentioned the bids submitted had been nonetheless “extremely priceless,” 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 12 months. However additionally they famous that a number of of the well being plans that can 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 Protect was shut out, regardless of its giant 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 could take Los Angeles County, an enormous Medi-Cal contract, away from Well being Internet.
Between 2018 and 2022, Blue Protect spent a minimum of $31 million on lobbying, political donations, and different contributions, together with $20 million to a state homelessness fund Newsom arrange, in line with a KHN evaluation of filings with the secretary of state and the California Honest Political Practices Fee. Well being Internet dad or mum Centene spent a minimum of $5 million over that interval, totally on lobbying and political donations.
Beneath the brand new association, Blue Protect will hold 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 major Medi-Cal contract, however should cut 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 cut up may 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 line with the newest knowledge. These assignments might be used to assist steadiness enrollment between Well being Internet and Molina, he mentioned.
The state and the 5 collaborating well being plans issued an uncommon joint assertion, and the plans put a constructive spin on it. Centene mentioned the state’s revised choice “is in one of the best curiosity of hundreds of thousands of members.” A Blue Protect 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 could have tripled beneath the state’s preliminary choice. 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 aid 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 could 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 considerations about their medical health 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 potential 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. “It is a very weak inhabitants of Californians who aren’t 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 without doubt one of the three main working packages at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering data on well being points to the nation.
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