As California sets higher Medi-Cal contract standards, some providers predict major disruptions
More than 1.7 million Medi-Cal patients may get a new insurance provider in the coming months as a result of the state’s first-ever competitive bidding process, but critics and some providers fear the change will cause major disruptions to care.
California’s Department of Health Care Services last month announced its intent to award $14 billion-worth of Medi-Cal contracts to three companies — Health Net, Molina and Anthem Blue Cross — down from nine. The deal is part of the department’s multifaceted effort to overhaul the behemoth program that provides health insurance for a third of all state residents. Medi-Cal is the state’s version of federal Medicaid, which serves low-income residents.
“We are raising the bar for all of our managed care partners,” state Medicaid Director Jacey Cooper said. “We will be very focused on quality and access to care.”
The new contract includes strict new quality standards for patient outcomes and financial penalties for providers that do not meet the goals. The new benchmarks are “significantly better” than previous standards and competitive bidding is long-overdue, said Kiran Savage-Sangwan, executive director of the California Pan-Ethnic Health Network.
“This is a really big deal. It’s something that we have consistently advocated for the state to do more often and on a specific schedule in order to maintain accountability,” Savage-Sangwan said.
Many patients will keep the same insurance provider, but in four counties — Los Angeles, San Diego, Sacramento and Kern — the largest incumbent plans were ousted, precipitating a significant transition for nearly half of commercial Medi-Cal patients.
An ‘immeasurable’ disruption
In Los Angeles, Health Net, the largest Medi-Cal managed care plan in the state, lost its coveted contract to Molina. More than 1 million patients, roughly one-third of all Medi-Cal enrollees in the county, have Health Net. The other two-thirds have coverage through the county-operated L.A. Care Health Plan.
Medical providers in L.A. that serve primarily Medi-Cal patients say the decision to offer Molina the county contract could cause “immeasurable” disruption.
“It would be profound,” said Jim Mangia, president and CEO of St. John’s Community Health in south L.A. “You’re talking about completely changing providers and provider networks. It would completely interrupt their systems of care.”
Nearly 25,000 patients at St. John’s — a quarter of the facility’s patient population — have Health Net and would need to switch to Molina, which has far fewer patients and providers. Expecting the company to contract with an equivalent number of doctors and specialists as Health Net in the next year is unreasonable, Mangia said.
The state expects new contracts to be fully implemented by January 2024 with the transition period starting as soon as Oct. 10.
“They’re a minor player in the Medi-Cal market. “Can they get 10 times bigger in that many months? I doubt it,” Mangia said. “You’re going to see a tremendous lack of access to specialty care, to hospital care and to primary care.”
Molina did not respond to multiple requests for comment. Health Net Vice President of Communications and Marketing Darrel Ng said in a statement that the company would defer to providers’ assessment of the ramifications of the contract change.
Health Net appealed the state’s decision in Los Angeles and eight other counties where it lost bids. In the L.A. appeal documents, Health Net alleges that the state’s decision to move to Molina will “jeopardize the stability of Medi-Cal and its provision of services to California’s most vulnerable.”
Some providers, however, were less concerned about the change, predicting that there would not be much of an impact on patients.
“In theory nothing should change. Technically, Health Net and Molina switching places should have no impact on the consumer,” said David Ryu, chief strategy and advancement officer at Kedren Community Health Center, a primary care and acute psychiatric hospital system in South L.A.
That assessment, however, assumes Health Net will subcontract with Molina, giving them access to their network of providers. Neither Health Net nor Molina have stated whether they will pursue that option.
If Molina retains the contract offer after the appeal process, Medicaid Director Cooper said there will be a 15-month transition period to ensure enrollees are aware of the change and do not experience any interruptions in coverage.
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