Medi-Cal will keep more insurance plans after pushback

This upends the state’s previous plans of awarding contracts to only three health plans. It means more Medi-Cal enrollees will likely get to keep their current insurer and doctors, averting a confusing re-enrollment process for most members and preventing disruption to patient care. It also means that the state will avoid a protracted legal battle amid lawsuit threats from insurers who had previously been left out.

The big winners: Blue Shield and Community Health Group will get a contract after initially having lost bids, and Health Net will get to keep at least some of its Los Angeles enrollees.

​“To bring certainty for members, providers and plans, the State used its authority to work directly with the plans to re-chart our partnership and move with confidence and speed toward the implementation of the changes we want to see,” the department wrote in a statement released Friday afternoon. The department did not provide answers to follow-up questions before publication.

“At some level it makes the transition easier, but we want to do better than the status quo,” said Anthony Wright, executive director of Health Access, a consumer advocacy group. “Less disruption is good, but we don’t want to lose the reason for the change, which is to have more accountability on these plans going forward.”

The state’s plan

Medi-Cal provides health coverage to more than 14 million low-income Californians, more than a third of the state’s population. In 2021, the Department of Health Care Services, which oversees the Medi-Cal program, embarked on a bidding process that would allow it to rework contracts with commercial Medi-Cal health plans. The state’s goal was to reduce the number of participating health plans from the current nine and move forward with only the most qualified plans, which would be held to higher standards related to patient outcomes, wait times and satisfaction, as well as improving health disparities.

‘Immeasurable’ disruption

In August of last year, the state announced that it would tentatively award $14 billion worth of Medi-Cal contracts to three companies — Health Net, Molina and Anthem Blue Cross. This proposed decision would force close to 2 million Medi-Cal enrollees to switch insurance and likely find new providers. Some health providers decried the department’s original contract decision, claiming it would have caused “immeasurable” disruption to care.

Kaiser Permanente negotiated a special contract with the state early last year, bypassing the bidding process. And most nonprofit community-based health plans did not have to compete for a contract.

The state’s summer announcement quickly became controversial as health plans that were left out questioned the state’s process for choosing the three insurers, appealed the decision and sued the state.

Undue power

This change of course calls into question the power that insurance companies can have in pressuring state action with legal threats. Health advocates say they hope it does not set a precedent. Wright at Health Access said he’d like for the department to make clear that the state is not backing away from the competitive contract process in the future, as he considers it is a key tool for accountability.

Blue Shield, one of the insurance companies initially left out, filed a complaint against the Department of Health Care Services, requesting that the department release all documents used in the selection process.

The insurance giant even launched a campaign in the fall asking Californians to speak out against the state’s decision. The company argued that the state failed to sufficiently engage Medi-Cal enrollees and doctors in the process. “The message of this campaign is that it’s not too late for the state to change course and make choices that will advance innovation and health equity for everyone,” Kristen Cerf, president and CEO of Blue Shield’s Medi-Cal plan, said in a statement in October.

Under the revised agreement, Blue Shield will get to keep serving the San Diego area. Blue Shield declined a request for an interview, instead referring reporters to a statement released Tuesday.