No-bid Medicaid contracts for Kaiser Permanente are now California law, but the original

[Editor’s note: KHN is not affiliated with Kaiser Permanente.]

California lawmakers approved a controversial no-bid statewide Medi-Cal contract for HMO giant Kaiser Permanente over objections from county governments and competing health plans. But key details — including how many new patients KP will enroll — remain unclear.

On June 30, with little fanfare, Gov. Gavin Newsom signed the bill that codifies the agreement, although it was first reported by KHN that KP was receiving preferential treatment from the state that would allow it to continue enrolling a healthy pool of Medi-Cal patients. , leaving other health plans with a disproportionate share of the program’s sickest and most expensive patients. Medi-Cal, California’s version of Medicaid, the government-funded health insurance program for low-income people, covers about 14.6 million Californians, 84% of whom are in managed-care plans.

Now that the debate is over, opponents of the KP deal are waiting.

“We look forward to working with the state to implement the statewide agreement, and we will continue to support the value and importance of local plans in providing care to their communities,” said Linnea Koopmans, CEO of Local Health Plans of California. The opponent.

Kaiser Permanente is a huge player in California’s health insurance market, covering about a quarter of all Golden State residents. But its slightly fewer than 900,000 Medi-Cal enrollees make up about 7% of that program’s total managed-care membership.

Kaiser Permanente has long been allowed to limit its Medi-Cal membership by accepting only people who were KP members in the recent past — primarily employer-based or Affordable Care Act plans — and their immediate family members.

Under the new law, the number of enrollees in Kaiser Permanente will “increase by 25%” over the five-year life of the contract starting Jan. 1, 2024, when the contract takes effect Jan. 1, 2024, said Catherine Weir-Ebster, spokeswoman for the Department of Health Care Services, which manages Medi-Cal. But that 25% figure isn’t in the law’s text — and the exact level of enrollment growth slated for KP remains unclear.

Currently, most of KP’s Medi-Cal members are covered through subcontracts with local, publicly managed health plans around the state. Under the new law, those members will be covered directly by Kaiser Permanente under a statewide contract. Supporters say the change will increase efficiency, reduce consumer confusion and make Kaiser Permanente more accountable to the state.

Opponents have argued that a national behemoth competing with local plans — especially in places like Orange, Ventura, San Mateo and Sonoma counties, where county-run plans were the only Medi-Cal option — could weaken community control over health care. and compromises the safety net system that serves California’s most vulnerable residents.

The new law commits KP to expanding its footprint on Medi-Cal by accepting certain categories of new enrollees, including current and former foster care youth, children who receive services from other child welfare agencies, seniors who qualify for both Medi-Cal and . Medicare, and enrollees who fail to choose a health plan and are assigned one by default.

About half of Medi-Cal enrollees in counties with multiple health plans are assigned by default, Weir-Ebster said. The law, however, did not specify how many default enrollees Kaiser Permanente would accept, saying only that the number would be based on KP’s “projected capacity” in each county or region.

Another significant source of enrollment growth for Kaiser Permanente will be the transfer of patients — and their family members — from KP commercial plans to counties where KP will be a Medi-Cal option for the first time.

Some prominent consumer advocacy groups argue that the increase in Kaiser Permanente’s Medi-Cal population is a positive development, especially since the HMO gets high marks for its quality of care.

“We think that system is something that more Medi-Cal members should have access to, and this bill is a step in that direction,” said Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network, which advocates for equity in health care.

KP’s head of Medi-Cal contracts, Casey Velarde, said via email that the deal will give more people “access to our high-quality Medi-Cal managed care plans” and allow for better collaboration with states “to improve the quality of Medi-Cal for a -Cal Enrollment Broader Numbers.”

However, it is not yet clear how the new system will work.

Specifics — including enrollment growth figures — are expected to be included in a memorandum of understanding separate from the contract. This has raised some eyebrows, since MOUs are generally not binding in the same way that contracts are It is not clear when the details will come.

“Our expectation is that the Department of Health Services is developing the MoU,” Velarde said The department does not have an estimate of when a draft will be issued, Weir-Ebster said.

Many skeptics of the deal worry about its impact on safety-net populations. The law states that Kaiser Permanente will provide “highest need” specialty services to non-KP members in certain areas of the state. However, it did not specify which services or where they would be provided Those details, expected in the MoU, have yet to be decided, Weir-Ebster said.

Leslie Conner, CEO of Santa Cruz Community Health, which operates three clinics in Santa Cruz County, said access to specialty care is a challenge for patients. “This is going to be a residual issue that I hope Kaiser will work with the community to resolve,” he said. “If we don’t all figure this out together, there are going to be winners and losers and, frankly, the losers are always the low-income people.”

Lawmakers made a small number of changes to the original bill intended to address opposition concerns. One of them, fearing a sicker pool of Medi-Cal enrollees targeted by local health plans, said all Medi-Cal managed-care plans should pay “in a pragmatically sound manner” commensurate with the medical risks of their enrollees. .

Another directs the state to evaluate, before the contract begins, whether KP is adequately complying with behavioral health coverage requirements. The health care giant has come under fire in recent years for providing inadequate mental health services, and the state Department of Managed Health Care is investigating the HMO’s mental health program after a spike in complaints, department spokeswoman Rachel Arrezola said.

Sal Roselli, president of the National Union of Healthcare Workers, which has waged a hard-fought battle against KP on mental health care, said the new law’s provisions for compliance assessments are inadequate. The union wanted KP to go through an annual certification process that would prevent it from enrolling new Medi-Cal in a year it wasn’t certified.

“Can you imagine a health plan being granted such a large expansion of its Medi-Cal contract if it couldn’t offer therapies for cancer or cardiac care?” Roselli said.

Ultimately, KP’s deal creates more choice for the Medi-Cal population, said Linda Nugui, a lobbyist at the Western Center on Law and Poverty. But the group, which advocates for people with low incomes, has vowed to keep an eye on how the new law plays out.

“We will monitor it and certainly raise issues as they come up,” Ngui said.

This story was produced by KHN, which publishes California Healthline, the editorially independent service of the California Health Care Foundation.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Along with policy analysis and polling, KHN is one of the three main operating programs of the KFF (Kaiser Family Foundation). KFF is a non-profit organization that provides health information to the nation.

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