Homegrown Medi-Cal plan misses out in state's new contracting program [The San Diego Union-Tribune]

More than half of San Diego County's nearly 900,000 Medi-Cal recipients will have to switch health plans in 2024, according to a major consolidation effort announced by the state Department of Health Care Services Thursday.

The move pares the number of companies able to manage Medi-Cal plans for the state from seven to three in San Diego, awarding future contracts to giants HealthNet, Molina Healthcare and Kaiser Permanente. The move leaves Blue Shield of California, Aetna, United Health Care and Community Health Group on the outs.

With about 330,000 members, Community Health Group is the largest Medi-Cal plan operating in the region and also has, by far, the deepest local roots. Created in San Ysidro 40 years ago, the organization is the only nonprofit health plan serving Medi-Cal members in San Diego County.

In a written statement, the organization decried the state's announcement.

"We vigorously oppose this decision and will engage our community to join the cause," said Norma Diaz, Community Health Group's chief executive officer. "We have already begun the process of protesting this decision."

The organization employs more than 300 people in the county, with 95 percent of its staff living in the region.

No one currently covered by Medi-Cal, the state's safety net health insurance system, will lose their coverage as a result of the announcement. Rather, there will be a smaller number of plans able to offer "managed care" services in the region. Managed care refers to the practice of having a health insurance company contract with a specific set of local medical providers to serve their members.

Starting in the 1970s, California has gradually migrated Medi-Cal beneficiaries into managed care plans and away from a "fee for service" model where those with coverage due to low wages or disability could seek care with any health care provider willing to accept the state program's reimbursement schedule.

Today, about 12.3 million of California's 14.6 million Medi-Cal enrollees are in managed care plans.

Most California counties have one or two different companies running Medi-Cal managed care plans, but that's not the case in San Diego County, which has seven, and Sacramento County, which has five.

The reason why these two counties have followed a different path has to do with fundamental decisions made in the early 1990s. But the idea of having so many competing plans came under scrutiny in 2019 in a report from the California Healthcare Foundation. The nonprofit research organization commissioned an examination of Sacramento and San Diego Medi-Cal recipients as compared to urban counties with fewer plans.

Researchers found that the counties with more plans tended to do a few percentage points worse on everything from managing chronic disease to child and adolescent access to primary care. The differences weren't always visible, with no differences observed, for example, in the percentage of patients who needed to be readmitted after receiving care.

Nonetheless, the state Department of Health Care Services, which runs the Medi-Cal program, decided to award no more than two managed contracts per county in a first-ever "procurement" program that was announced Thursday. The state will also maintain its existing contracts with Kaiser Permanente in many counties, including San Diego. As both provider and health insurance company, Kaiser is a little different than the others who competed for contracts.

The procurement is part of a larger "CalAIM" program designed to overhaul most aspects of Medi-Cal. The new system will requires plans to commit to more holistic operations and do more to pay for care that is more accessible, proactive, transparent and culturally competent.

San Diego County government has been behind the state's move to narrow the playing field with Nathan Fletcher, chair of the county board of supervisors, and his colleague Nora Vargas, getting unanimous approval in a "letter of support" program on a county agenda in July of 2021.

Though Fletcher declined through a representative to comment on DHCS's choice of plans in San Diego, he was clear during the board meeting last year that he thought shrinking the number of managed care plans operating in the San Diego region was a good idea. He said many local health care providers find it difficult to work with so many different players, each of which has its own unique operating procedures. Consolidating, he said, could make it easier to do broad-reaching work across the entire Medi-Cal population and it would have helped during the COVID-19 pandemic.

"We think that at the end of this we will arrive with a Medi-Cal system that has more consistency, that is easier for our providers to accommodate and will provide more services, particularly those services we think are most valuable and most important," Fletcher said on July 13, 2021.

But Community Health Group is crying foul, indicating that health care quality reports have long shown that its members are doing well, in many cases better than those in other local managed care plans. The most-recent external quality review reports published by DHCS seem to bear that notion out.

For example, 63.2 percent of CHG members age 50 to 74 were said to have received cancer screening mammograms. That was one of the better scores among plan providers in San Diego County, slightly besting Molina's score and significantly exceeding Health Net's. Slightly lower percentages of Health Net and Molina patients needed to be readmitted after receiving care than was the case for CHG patients, though all three had numbers that beat expectations.

"We work hard to meet and exceed the Department of Health Care Services contract requirements and take pride in our audit results, high quality scores, proven access to care and exceptional customer service," CHG's statement said.

The new contracts start Jan. 1, 2024, meaning that local members have a year to wait before they have to make a decision.

This story originally appeared in San Diego Union-Tribune.

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