Kaiser Permanente’s No-Tender Medi-Cal Contract Gets First Hearing

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Kaiser Permanente South Sacramento Medical Center, pictured March 18, 2020. A deal, reached with Gov. Gavin Newsom’s office earlier this year, would allow Kaiser Permanente to operate Medi-Cal plans in at least 32 counties without having to bid for contracts.

Sacramento Bee File

California counties, health insurance plans, community clinics and a major national health care union are lining up against a controversial deal to give HMO giant Kaiser Permanente a no-bid Medi-Cal contract across the board. state as the bill heads to its first legislative hearing on Tuesday.

The deal, reached earlier this year in closed-door talks between Kaiser Permanente and Gov. Gavin Newsom’s office and first reported by KHN, would allow KP to operate Medi-Cal plans in at least 32 counties. without having to bid for the contracts. Medi-Cal’s other eight commercial health plans must compete for their contracts.

Medi-Cal is California’s version of Medicaid, the federal state program that provides health coverage for low-income people.

Opponents of the KP proposal say they were caught off guard after spending months planning big changes to Medi-Cal, which serves more than 14 million Californians. They say the deal would largely allow KP to continue to choose the enrollees it wants, and they fear it will give it a healthier and cheaper patient population than other health plans.

Currently, the state allows KP to limit its membership in Medi-Cal by only accepting those who have been its members in the recent past, primarily in employer-based plans or the Affordable Care Act, and their immediate family members.

“A closed system that excludes vulnerable populations is inequitable,” the heads of 10 county councils said in a letter to Assemblyman Jim Wood D-Santa Rosa, who chairs the State Health Committee. Assembly, which will examine the proposal. They wondered if Kaiser Permanente would be assigned patients with “more complex physical, behavioral and socio-economic needs instead of giving the existing safety net system and local plans, which do not exclude populations, a disproportionate share of complex and expensive patients”.

Kaiser Permanente said in an emailed statement that under the terms of the agreement, more high-needs Medi-Cal patients will be taken and will work with counties and other health plans on patient care. .

Michelle Baass, director of the Department of Health Care Services, which runs Medi-Cal, told KHN in early February that the agreement “would ensure that more low-income patients have access to the high-quality services of Kaiser” and “would lead to better health care”. for more Medi-Cal subscribers.

The deal must win state legislative and federal approval. Opposition to the bill that would codify it, AB 2724, is being led by California’s local health plans, which represent the 16 local and state Medi-Cal plans that cover most of the 12 million Medi-Cal beneficiaries in care. managed. The proposal would make many of them direct competitors of Kaiser Permanente, and they could lose hundreds of thousands of enrollees and millions of dollars in Medi-Cal revenue.

Among them are some of the largest Medi-Cal health plans in the state, including LA Care, by far the largest, with 2.4 million members; and the Inland Empire Health Plan, with approximately 1.5 million members in San Bernardino and Riverside counties.

Additionally, 16 county boards of supervisors had registered their opposition on April 15, as had the California State Counties Association, at least two community clinic groups, and the National Union of Health Care Workers, which represents thousands of KP clinicians.

Other Medi-Cal business plans are at an all-time low as they bid for the state’s Medi-Cal business. The two biggest, Health Net and Anthem Blue Cross, declined to comment.

Public health plans and many counties said the proposal was brought to them after spending months preparing for big Medi-Cal changes — for example, a tougher contract with the state, which is expected to come into effect. effective in 2024, and an ambitious $6 billion project to provide enrollees with non-traditional services, such as food assistance, home modifications, and housing assistance.

Some medical providers are also critical of the proposal.

Leslie Conner, CEO of Santa Cruz Community Health, which operates three clinics in Santa Cruz County, said his group was building a $19 million primary care clinic based on estimates — available at the time of the press release. plan development – ​​the number of uninsured residents and Medi-Cal members who do not have a doctor.

“It’s just not worth having to recalculate when Kaiser gets to take more lives in primary care,” Conner said. “We haven’t had a chance to talk about it with the state or with Kaiser.”

Conner said KP, which currently has no Medi-Cal members in Santa Cruz County, has generously partnered with Santa Cruz Community Health in the past and expects that to continue.

“I’m more disturbed that the state is doing this negotiation with a private company,” she said. “That’s just wrong.”

Kaiser Permanente said in its emailed statement that the Department of Health Services approached it with the proposal and that it agreed to collaborate “because we fundamentally recognize the benefits to enrollees.” The proposal, he said, “addresses the fundamental goals the state has for Medi-Cal: to improve quality, reduce complexity and improve patient outcomes.”

KP, which covers 9.4 million Californians, the vast majority in its commercial plans, has 912,000 enrolled in Medi-Cal. Most of them contract with other Medi-Cal health plans in 17 counties, and the rest are in the five counties where KP already contracts directly with the state.

Kaiser Permanente calls its current enrollment-limiting arrangement Continuity of Care, but critics say it puts other health plans at a disadvantage — and they fear it could be enshrined in state law. In addition to leaving them with a disproportionate share of sicker and more expensive patients, they say, it could land them lower grades from the state.

But KP said its mix of sick and healthy Medi-Cal patients is “comparable to other Medi-Cal managed care plans.” He added that the proposal called on him to increase the number of his Medi-Cal enrollees, including those from “more vulnerable populations.”

As part of the proposal, KP has committed to increasing its Medi-Cal membership by 25% over the five years of the contract. According to an 11-page document released in March by the Department of Health Services, it would achieve this in part by taking former KP enrollees to counties where there are currently no Medi-Cal members. KP would also, for the first time, take a limited number of enrollees who do not choose a plan when enrolling in Medi-Cal. And that would enroll foster children and generally complex, expensive patients who are eligible for both Medi-Cal and Medicare.

As of April 15, many details were not yet in the wording of the bill, which will be fleshed out and debated over the coming months.

For example, the bill makes no mention of the 25% enrollment growth target. And while the Department of Health Services document says KP’s direct contract would cover 32 counties, the bill leaves that number open.

“The state clearly needs to release a lot more information and details about how this will work,” said Edwin Park, a California-based research professor at Georgetown University’s Center for Children and Families.

Felicia Matlosz, spokeswoman for the bill’s author, Assemblyman Joaquin Arambula, D-Fresno, said her office is “working to reconcile the language” with the state’s proposal.

Arguably, the health plans that would be most affected by this proposal are those that are the only Medi-Cal plan in their counties, known as county-organized health systems, or COHS.

They were created by their county administrative boards and operate in partnership with counties, their safety net health facilities and private sector medical providers. In the 40 years since their inception in California, they have been the only state-contracted Medi-Cal plan in their counties.

“It’s the end of the model,” said Stephanie Sonnenshine, CEO of the Central California Alliance for Health, a county-organized health system for Santa Cruz, Monterey and Merced counties. “This is a significant policy change that has not been approved as a policy change.”

KHN correspondent Rachel Bluth contributed to this story.

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