California’s determination 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 client advocates questioning whether or not the state can stand as much as insurers and drive enhancements in look after tens of millions of low-income beneficiaries.
In a backroom settlement introduced within the remaining 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 Shield of California and St. Louis-based Centene Corp. — which owns Health Net, the most important business well being plan in Medi-Cal, the state’s model of Medicaid — have been amongst people who had aggressively challenged the preliminary outcomes.
“They had this long process, and then they just sort of struck deals,” mentioned Maya Altman, who retired a 12 months in the past after practically 17 years as CEO of the Health Plan of San Mateo, which didn’t take part within the bidding. “It’s kind of weird. Not transparent — very much behind closed doors.”
It was a exceptional change in fact that got here 4 months after the state had introduced its preliminary contract awards. The Department of Health Care Services, 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, protecting round 30% of this system’s 13 million managed-care enrollees, have 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 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 determination avoids uncertainty after the dropping well being plans — Health Net, Blue Shield of California, Community Health 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 means to reinforce Medi-Cal via the brand new contracts, which can comprise necessities for higher-quality care, larger transparency, and extra equitable entry.
Other 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 have been introduced practically two years later, with Centene and Aetna among the many winners.
“When you create disputes, and lawsuits, they always put some uncertainty into things,” Dr. Mark Ghaly, secretary of the California Health and Human Services Agency, instructed KHN. “We feel that we ended up in a place where we achieved certainty. We have a set of [health] plans who are committed to this.”
Consumer advocates had anxious that lingering uncertainty would hinder the rollout of a far-reaching practically $12 billion, five-year Medi-Cal initiative to supply nonmedical social providers that deal with socioeconomic elements akin to homelessness and meals insecurity, extensively considered as key well being indicators.
Still, the state’s determination 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 would be extremely disappointing if poor-performing plans were able to litigate their way into participating in Medi-Cal,” mentioned Abbi Coursolle, a senior lawyer within the Los Angeles workplace of the National Health Law Program.
Tony Cava, a spokesperson for the Department of Health Care Services, mentioned the bids submitted have been nonetheless “incredibly valuable,” as a result of they confirmed how the well being plans intend to enhance care. He mentioned commitments made within the bids can be included 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.
Patient advocates and business insiders gave the state credit score for fining well being plans that fell in need of high quality and entry requirements in a report issued late final 12 months. But in addition they famous that a number of of the well being plans that can proceed to function in Medi-Cal — together with Molina Healthcare and Health Net — have been among the many lowest performers.
When the state introduced its preliminary awards in August, Blue Shield 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 will take Los Angeles County, an enormous Medi-Cal contract, away from Health Net.
Between 2018 and 2022, Blue Shield spent at the least $31 million on lobbying, political donations, and different contributions, together with $20 million to a state homelessness fund Newsom arrange, in keeping with a KHN evaluation of filings with the secretary of state and the California Fair Political Practices Commission. Health Net father or mother Centene spent at the least $5 million over that interval, totally on lobbying and political donations.
Under the brand new association, Blue Shield will preserve its San Diego County Medi-Cal enterprise after initially dropping it within the contract competitors, although it is not going to get a contract in any of the opposite 12 counties the place it bid. Its roughly 129,000 San Diego enrollees is not going to have to change plans, however over 100,000 different Medi-Cal members in San Diego will nonetheless have to change, as Health Net and Aetna exit.
In Los Angeles County, Health Net will retain its major Medi-Cal contract, however should cut up its 1.1 million members 50-50 with Molina underneath a subcontract. Molina already subcontracts with Health Net within the county, however at the moment has solely 80,000 enrollees underneath that association.
Some observers questioned how the cut up could 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 an alternative, in keeping with the latest information. These assignments can be used to assist stability enrollment between Health Net and Molina, he mentioned.
The state and the 5 taking part well being plans issued an uncommon joint assertion, and the plans put a optimistic spin on it. Centene mentioned the state’s revised determination “is in the best interest of millions of members.” A Blue Shield government mentioned it was “honored to continue 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 will have tripled underneath the state’s preliminary determination. He summarized the state of affairs for Molina as “taking three steps forward, taking one step back, and ending up being two steps ahead.”
Consumer advocates, sufferers, and medical professionals expressed reduction that the brand new settlement permits Community Health Group, the most important Medi-Cal well being plan in San Diego County, to maintain working there. Had the preliminary outcomes held, it will have misplaced its contract, and its 335,000 members would have had to decide on new plans.
Christine Xayalinh, a member of Community Health Group in Escondido, mentioned the plan afforded her therapy for Type 2 diabetes and referred her to University of California-San Diego for a profitable gastric bypass.
“I know some people do have concerns about their health insurance,” Xayalinh, 29, mentioned, “but for me, it’s been a lifesaver.”
With the contract awards determined, the state’s hope of bettering Medi-Cal will hinge on its means to implement the brand new contracts.
“The focus now needs to be on making sure that works,” mentioned Kiran Savage-Sangwan, government director of the California Pan-Ethnic Health Network. “This is a very vulnerable population of Californians who are not getting what they need.”
This story was produced by KHN, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
KHN (Kaiser Health News) is a nationwide newsroom that produces in-depth journalism about well being points. Together with Policy Analysis and Polling, KHN is without doubt one of the three main working applications at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit group offering data on well being points to the nation.
USE OUR CONTENT
This story could be republished at no cost (particulars).