No-bid Medicaid contract for Kaiser Permanente is now California legislation, however key particulars are lacking
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[Editor’s note: KHN is not affiliated with Kaiser Permanente.]

California lawmakers have accepted a controversial no-bid statewide Medi-Cal contract for HMO big Kaiser Permanente over the objection of county governments and competing well being plans. But key particulars — together with what number of new sufferers KP will enroll — are nonetheless unclear.

On June 30, with little fanfare, Gov. Gavin Newsom signed the invoice that codifies the deal, regardless of considerations first reported by KHN that KP was getting preferential therapy from the state that might enable it to proceed enrolling a more healthy pool of Medi-Cal sufferers, leaving different well being plans with a disproportionate share of this system’s sickest and costliest sufferers. Medi-Cal, California’s model of Medicaid, the government-funded medical insurance program for folks with low incomes, covers practically 14.6 million Californians, 84% of whom are in managed-care plans.

Now that the talk is over, opponents of the KP deal are trying forward.

“We look forward to working with the state on implementing the statewide contract, and we will continue to advocate the value and importance of local plans in providing care to their communities,” mentioned Linnea Koopmans, CEO of Local Health Plans of California, which spearheaded the opposition.

Kaiser Permanente is a large participant in California’s medical insurance market, masking practically 1 / 4 of all Golden State residents. But its barely lower than 900,000 Medi-Cal enrollees are solely about 7% of that program’s complete managed-care membership.

Kaiser Permanente has lengthy been allowed to restrict its Medi-Cal membership by accepting solely individuals who have been KP members within the latest previous — primarily in employer-based or Affordable Care Act plans — and their instant members of the family.

Under the brand new legislation, the variety of Kaiser Permanente enrollees in this system “would be permitted to grow by 25%” over the five-year lifetime of the contract, ranging from its stage on Jan. 1, 2024, when the contract takes impact, mentioned Katharine Weir-Ebster, a spokesperson for the Department of Health Care Services, which runs Medi-Cal. But that 25% determine isn’t within the textual content of the legislation — and the exact magnitude of the supposed enrollment improve for KP stays unclear.

Currently, most of KP’s Medi-Cal members are coated by means of subcontracts with native, publicly ruled well being plans across the state. Under the brand new legislation, these members could be coated immediately by Kaiser Permanente below its statewide contract. Proponents say the change will improve effectivity, cut back confusion for shoppers, and make Kaiser Permanente extra accountable to the state.

Opponents have argued that having a nationwide behemoth compete with native plans — particularly in locations similar to Orange, Ventura, San Mateo, and Sonoma counties, the place county-operated plans have been the only Medi-Cal possibility — might weaken group management over well being care and compromise the protection web system that serves California’s most susceptible residents.

The new legislation commits KP to rising its footprint in Medi-Cal by accepting sure classes of recent enrollees, together with present and former foster care youths, youngsters who’ve obtained providers from one other little one welfare company, seniors who’re eligible each for Medi-Cal and Medicare, and enrollees who fail to decide on a well being plan and are assigned one by default.

Nearly half of Medi-Cal enrollees in counties with multiple well being plan are assigned by default, Weir-Ebster mentioned. The legislation, nonetheless, does not specify what number of default enrollees Kaiser Permanente will settle for, saying solely that the quantity can be based mostly on KP’s “projected capacity” in every county or area.

Another vital source of enrollment progress for Kaiser Permanente can be sufferers — and their members of the family — transferring out of KP business plans in counties the place KP can be a Medi-Cal possibility for the primary time.

Some distinguished shopper advocacy teams argue that any improve in Kaiser Permanente’s Medi-Cal inhabitants is a constructive growth, particularly for the reason that HMO will get excessive marks for the standard of its 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,” mentioned Kiran Savage-Sangwan, govt director of the California Pan-Ethnic Health Network, which advocates for fairness in well being care.

Kaycee Velarde, head of Medi-Cal contracting for KP, mentioned through e-mail that the deal will give extra folks “access to our high-quality Medi-Cal managed care plan” and permit for higher collaboration with the state “to improve quality for a broader number of Medi-Cal enrollees.”

But precisely how the brand new association will work stays unclear.

The specifics — together with the enrollment progress determine — are anticipated to be enshrined in a memorandum of understanding separate from the contract. That has raised some eyebrows, since MOUs aren’t usually binding in the identical method contracts are. Nor is it clear when the small print will come.

“Our expectation is that the Department of Health Care Services is developing the MOU,” Velarde mentioned. The division does not have an estimate of when a draft can be issued, Weir-Ebster mentioned.

Many skeptics of the deal stay involved about its influence on the safety-net inhabitants. The legislation says Kaiser Permanente will present the “highest need” specialty providers to non-KP members in sure areas of the state. But it doesn’t specify which providers or the place they are going to be supplied. Those particulars, anticipated to be within the MOU, haven’t but been determined, Weir-Ebster mentioned.

Leslie Conner, CEO of Santa Cruz Community Health, which runs three clinics in Santa Cruz County, mentioned entry to specialty care is a problem for sufferers. “That’s going to be a remaining problem that I hope Kaiser would work with the community to address,” she mentioned. “If we don’t all figure it out together, there’s going to be winners and losers, and, honestly, the losers are always the low-income people.”

Lawmakers did make a small variety of modifications to the unique invoice supposed to deal with opponents’ considerations. One of them, geared toward native well being plans’ concern of getting a sicker pool of Medi-Cal enrollees, says all Medi-Cal managed-care plans ought to be paid in “an actuarially sound manner” in keeping with the medical threat of their enrollees.

Another one directs the state to evaluate, earlier than the contract begins, whether or not KP is sufficiently complying with behavioral well being protection necessities. The well being care big has come below fireplace lately for offering insufficient psychological well being providers, and the state Department of Managed Health Care is investigating the HMO’s psychological well being program after a pointy improve in complaints, mentioned Rachel Arrezola, a division spokesperson.

Sal Rosselli, president of the National Union of Healthcare Workers, which has waged a pitched battle in opposition to KP over psychological well being care, mentioned the supply within the new legislation to evaluate compliance is inadequate. The union had wished KP to endure an annual certification course of that might have barred it from enrolling new Medi-Cal enrollees in any yr it wasn’t licensed.

“Can you imagine any health plan would be granted such a large expansion of its Medi-Cal contract if it couldn’t provide therapy for cancer or cardiac care?” Rosselli mentioned.

Ultimately, KP’s contract creates extra selection for the Medi-Cal inhabitants, mentioned Linda Nguy, a lobbyist with the Western Center on Law & Poverty. But the group, which advocates for folks with low incomes, pledged to regulate how the brand new legislation is rolled out.

“We will be monitoring it and certainly raising issues as things come up,” Nguy mentioned.

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

This article was reprinted from with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially unbiased information service, is a program of the Kaiser Family Foundation, a nonpartisan well being care coverage analysis group unaffiliated with Kaiser Permanente.

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