Will Medi-Cal Improve After California Eliminates Contractual Bargaining?

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A paramedic examines a patient in Weimar, Calif., in 2015. After the Department of Health canceled Medi-Cal contracts under pressure from major insurers, some consumer advocates questioned the administration’s will to improve the safety net program. .

File Sacramento Bee

California’s decision last month to cancel long-planned bidding among for-profit Medicaid health plans has some industry insiders and consumer advocates wondering whether the state will be able to stand up to insurers and force improved care for millions of low-income people. beneficiaries.

U backroom deal It was announced in the final days of 2022 that the administration of Gov. Gavin Newsom, who has been facing lawsuits, made concessions that allowed major insurers to win back business they would have lost if health officials had stuck with the state’s original contracts for managed care plans. Oakland-based Blue Shield of California and St. Louis-based Centene Corp. — which owns Health Net, the largest for-profit health plan in Medi-Cal, the state’s version of Medicaid — were among those aggressively challenging initial results.

“They had this long process and then they just did the deals,” said Maya Altman, who retired a year ago after nearly 17 years as CEO of the non-bidding Health Plan of San Mateo. “It’s kind of strange. Opaque – very much behind closed doors.”

It was a remarkable change of course, coming four months after the state announced the initial contracts. The Department of Health, which oversees Medi-Cal, spent years preparing for the contest and touted it as an important tool address poor care. Eight commercial Medi-Cal plans cover about 30% of the program 13 million managed care enrollees, were to bid on contracts worth about $70 billion over five years.

Locally managed nonprofit Medi-Cal plans, which cover the remaining 70% of managed care enrollees, did not have to apply, but they will have to sign the same new contract as for-profit plans effective next year.

State officials said their new decision avoids uncertainty after the losing health plans — Health Net, Blue Shield of California, Community Health Group and Aetna — faced lengthy lawsuits. It also dramatically reduces the number of Medi-Cal enrollees who will have to switch plans, from about 2.3 million to about 1.2 million. And state officials said it would strengthen their ability to expand Medi-Cal through new contracts that would contain requirements for better care, greater transparency and more equal access.

Other states have faced legal violations after they put their Medicaid contracts up for bid. In Louisiana, for example, Centene and Aetna in 2019 protested the results rebidding process, which resulted in the state voiding its awards and starting over. The new results were announced nearly two years later, with Centene and Aetna among the winners.

“When you create controversy and lawsuits, they always bring some uncertainty into things,” Dr. Mark Galli, secretary of the California Health and Human Services Agency, told KHN. “We feel that we are in a place where we have reached certainty. We have a set [health] plans tending towards it.’

Consumer advocates worried that continued uncertainty would hamper the rollout of Medi-Cal, a far-reaching, five-year, nearly $12 billion initiative to provide non-medical social services aimed at addressing socioeconomic factors such as homelessness and food insecurity, which are widely considered key indicators of health.

Still, the state’s decision to reject the bids has many patient advocates and some health plan executives questioning the value of future contract bidding and even whether health officials will effectively enforce the higher standards in the new contract.

“It would be extremely disappointing if inefficient plans were able to litigate participation in Medi-Cal,” said Abby Kursol, senior attorney for the Los Angeles office of the National Health Program.

Tony Cava, a spokesman for the Department of Health, said the submissions are still “incredibly valuable” because they show how health plans intend to improve care. According to him, the obligations taken in the applications will be included in the new contracts. Coffee also said the department, which has not previously held a statewide competition, now intends to hold one every five years.

Patient advocates and industry insiders blasted the state for penalizing health plans that failed to meet quality and access standards in report issued at the end of last year. But they also noted that several health plans that will continue to be part of Medi-Cal, including Molina Healthcare and Health Net, were among the lowest performers.

When the state announced its initial awards in August, Blue Shield was excluded, despite ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​statewide​​​​​​​​​​​​​​ The state also initially said Los Angeles County, a huge Medi-Cal contract, would take away from Health Net.

Between 2018 and 2022, Blue Shield spent at least $32 million on lobbying, political donations and other contributions, including $20 million to a state homeless relief fund created by Newsom, according to a KHN analysis of documents filed with the secretary of state and the California Fair. Political Practice Commission. Health Net parent Centene spent at least $5 million during that period, mostly on lobbying and political donations.

Under the new arrangement, Blue Shield will keep its Medi-Cal business in San Diego County after initially losing it in the contract competition, although it will not win a contract in any of the other 12 counties where it bid. Its roughly 129,000 members in San Diego won’t have to switch plans, but more than 100,000 other Medi-Cal members in San Diego will still have to switch if Health Net and Aetna pull out.

In Los Angeles County, Health Net will keep its primary Medi-Cal contract, but it will have to split its 1.1 million members 50-50 with Molina under the subcontract. Molina already subcontracts with Health Net in the county, but that arrangement currently covers only 80,000 enrollees.

Some observers questioned how the split could be maintained. Coffee said half of new Medi-Cal enrollees in Los Angeles County don’t choose a plan and are instead assigned to one, according to recent data. Those assignments will be used to help balance enrollment between Health Net and Molina, he said.

The state and five participating health plans issued an unusual joint statementand these plans contribute to that. Senten said The revised state decision “is in the best interest of millions of members.” Head of Blue Shield said it was “an honor continue to serve Medi-Cal beneficiaries in San Diego County.”

In an investor challenge this month, Molina CEO Joseph Zubrecki noted that his company’s Medi-Cal membership would double with the new agreement, though it would have tripled under the state’s original decision. He summed up the situation for Molina as “take three steps forward, take one step back and end up being two steps ahead.”

Consumer advocates, patients and health care providers expressed relief that the new agreement allows Community Health Group, the largest Medi-Cal health plan in San Diego County, to continue operating. If the original results had stood, it would have lost its contract and its 335,000 members would have had to choose new plans.

Christine Shaialin, a member of Community Health Group in Escondido, said the plan allowed her to recover from type 2 diabetes and referred her to UC San Diego for a successful gastric bypass.

“I know some people have issues with their health insurance,” Shayalin, 29, said, “but for me, it’s been a lifesaver.”

After the contracting decision, the state’s hope of improving Medi-Cal will depend on its ability to secure new contracts.

“The focus now is to make sure it works,” said Kieran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network. “This is a very vulnerable group of Californians who are not getting what they need.”

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