California No-Bid Contract With Kaiser Triggers Concerns

The proposed contract, which would begin in 2024, allows Kaiser Permanente to skip a bidding process required for other commercial insurers to participate in Medi-Cal, the state’s health insurance program for low-income residents. The bidding process for all other insurers starts Wednesday.

As first reported by Kaiser Health News, the state’s special deal with Kaiser Permanente has raised concerns among other Medi-Cal plans. They say Kaiser Permanente is getting special treatment that bypasses state procedures and allows it to cover only certain portions of the population.

Nonprofit local health plans, which cover the majority of Medi-Cal enrollees, estimate that Kaiser’s expansion could strip them of up to 30% of their members in some counties.

“Offering a statewide, no-bid contract on a silver platter to a commercial plan undercuts the local public health infrastructure while paving a path for large-scale corporate health plan expansion in Medi-Cal,” Linnea Koopmans, chief executive officer of the Local Health Plans of California, said in a statement. Her organization represents 16 local health plans, which will not have to bid for a contract since they are nonprofits.

The contract would have to be approved by the Legislature and federal officials before it would be implemented.

Sen. Richard Pan, a Sacramento Democrat who chairs the Senate Health Committee, said the state’s move raises many questions. Because local Medi-Cal plans usually report to counties and public boards as well as the state, he wants to know whether Kaiser will engage in a similar process to answer to the local communities they serve.

Pan also has questions about how the state’s payments to Kaiser and other health plans will reflect the potential differences in their mix of patients they end up serving.

“If the counties are concerned and they start calling their legislators there might be a lot of questions about this,” Pan said. “Kaiser Permanente is a good system, and I’m not saying this is a bad idea, but there are a lot of things here we have to understand.”