Battle Lines Are Drawn Over California Deal With Kaiser Permanente

[Editor’s note: KHN is not affiliated with Kaiser Permanente.]

California counties, medical health insurance plans, neighborhood clinics, and a significant nationwide well being care labor union are lining up towards a controversial deal to grant HMO large Kaiser Permanente a no-bid statewide Medicaid contract because the invoice heads for its first legislative listening to Tuesday.

The deal, hammered out earlier this yr in closed-door talks between Kaiser Permanente and Gov. Gavin Newsom’s workplace and first reported by KHN, would enable KP to function Medi-Cal plans in at the very least 32 counties with out having to bid for the contracts. Medi-Cal’s different eight industrial well being plans should compete for his or her contracts.

Medi-Cal is California’s model of Medicaid, the federal-state program that gives well being protection to low-income individuals.

Opponents of the KP proposal say they have been blindsided by it after having spent months planning for large modifications occurring in Medi-Cal, which serves greater than 14 million Californians. They are saying the deal would largely enable KP to proceed choosing the enrollees it needs, and so they worry that will give it a more healthy and cheaper affected person inhabitants than different well being plans.

At the moment, the state permits KP to restrict its Medi-Cal membership by accepting solely those that have been its members within the latest previous, primarily in employer-based or Inexpensive Care Act plans, and their fast members of the family.

“A closed system that excludes susceptible populations is inequitable,” the heads of 10 county boards stated in a letter to Meeting member Jim Wooden (D-Santa Rosa), who chairs the Meeting Well being Committee, which can think about the proposal. They questioned whether or not Kaiser Permanente can be assigned sufferers with “extra advanced bodily, behavioral, and socio-economic wants versus giving the present security internet system and native plans, who don’t exclude populations, a disproportionate share of advanced and dear sufferers.”

Kaiser Permanente stated in an emailed assertion that, underneath the phrases of the deal, it might take extra Medi-Cal sufferers with excessive wants and would collaborate with counties and different well being plans on affected person care.

Michelle Baass, director of the Division of Well being Care Providers, which runs Medi-Cal, informed KHN in early February that the deal would “make sure that extra low-income sufferers have entry to Kaiser’s prime quality companies” and “result in higher well being take care of extra Medi-Cal enrollees.”

The deal should win state legislative and federal approval. Opposition to the invoice that will codify it, AB 2724, is being spearheaded by Local Health Plans of California, which represents the 16 local, publicly governed Medi-Cal plans that cowl many of the 12 million Medi-Cal beneficiaries in managed care. The proposal would make lots of them direct rivals of Kaiser Permanente, and so they might lose lots of of 1000’s of enrollees and tens of millions of {dollars} in Medi-Cal income.

Amongst them are among the state’s largest Medi-Cal well being plans, together with L.A. Care, by far the most important, with 2.4 million members; and the Inland Empire Well being Plan, with about 1.5 million members in San Bernardino and Riverside counties.

As well as, the boards of supervisors of 16 counties had registered their opposition as of April 15, as had the California State Association of Counties, at the very least two neighborhood clinic teams, and the National Union of Healthcare Workers, which represents 1000’s of KP clinicians.

The opposite industrial Medi-Cal plans are mendacity low as they bid for the state’s Medi-Cal enterprise. The 2 largest, Well being Internet and Anthem Blue Cross, declined to remark.

The general public well being plans and lots of the counties stated the proposal was sprung on them after they spent months making ready for main Medi-Cal shifts — for instance, a more demanding contract with the state, scheduled to take impact in 2024, and an bold $6 billion project to supply enrollees with nontraditional companies, corresponding to meals help, dwelling modifications, and assist with housing.

Some medical suppliers are additionally essential of the proposal.

Leslie Conner, CEO of Santa Cruz Neighborhood Well being, which operates three clinics in Santa Cruz County, stated her group is constructing a $19 million main care clinic based mostly on estimates — out there on the time the plan was drawn up — of the variety of uninsured residents and Medi-Cal members who don’t have a health care provider.

“It’s simply not useful to should recalculate when Kaiser is available in taking extra main care lives,” Conner stated. “We didn’t get an opportunity to speak via that with the state or with Kaiser.”

Conner stated that KP, which at the moment doesn’t have Medi-Cal members in Santa Cruz County, has generously collaborated with Santa Cruz Neighborhood Well being up to now and that she expects that to proceed.

“I’m extra disturbed by the state doing this negotiation with a non-public firm,” she stated. “That’s simply mistaken.”

Kaiser Permanente stated in its emailed assertion that the Division of Well being Care Providers approached it with the proposal and that it agreed to collaborate “as a result of we acknowledge, essentially, the advantages to the enrollees.” The proposal, it stated, “meets the basic targets the state has for Medi-Cal: to enhance high quality, scale back complexity and enhance affected person outcomes.”

KP, which covers 9.4 million Californians, the overwhelming majority in its industrial plans, has 912,000 Medi-Cal enrollees. Most of them are via subcontracts with different Medi-Cal well being plans in 17 counties, and the remainder are within the 5 counties the place KP already contracts straight with the state.

Kaiser Permanente calls its present enrollment-limiting association continuity of care, however critics say it leaves different well being plans at an obstacle — and so they fear about it turning into enshrined in state legislation. Along with leaving them with a disproportionate share of sicker, costlier sufferers, they are saying, it might saddle them with decrease high quality scores from the state.

However KP stated its mixture of sick and wholesome Medi-Cal sufferers is “akin to different Medi-Cal managed care plans.” It added that the proposal calls on it to extend the variety of its Medi-Cal enrollees, together with these from “extra susceptible populations.”

Below the proposal, KP has dedicated to growing its Medi-Cal membership 25% over the 5 years of the contract. It could accomplish this partly by taking earlier KP enrollees in counties the place it at the moment doesn’t have Medi-Cal members, in response to an 11-page document launched in March by the Division of Well being Care Providers. KP would additionally take, for the primary time, a restricted variety of the enrollees who don’t select a plan once they join Medi-Cal. And it might enroll kids in foster care and the usually advanced, costly sufferers who’re eligible for each Medi-Cal and Medicare.

As of April 15, many particulars weren’t but within the invoice language, which shall be fleshed out and debated over the subsequent a number of months.

For example, the bill makes no mention of the 25% enrollment development goal. And though the Division of Well being Care Providers doc says KP’s direct contract would cowl 32 counties, the invoice leaves that quantity open.

“The state clearly has to reveal much more data and element about how this may work,” stated Edwin Park, a California-based analysis professor with Georgetown College’s Heart for Kids and Households.

Felicia Matlosz, a spokesperson for the invoice’s creator, Meeting member Joaquin Arambula (D-Fresno), stated his workplace is “working to reconcile the language” with the state’s proposal.

Arguably, the well being plans that will be most affected by this proposal are these which can be the only Medi-Cal plan of their counties, generally known as county organized well being methods, or COHS.

They have been created by the boards of their counties and function in partnership with the counties, their safety-net well being amenities, and private-sector medical suppliers. Within the 40 years since they have been established in California, they’ve been the one state-contracted Medi-Cal plan of their counties.

“It’s the top of the mannequin,” stated Stephanie Sonnenshine, CEO of the Central California Alliance for Well being, a county organized well being system for Santa Cruz, Monterey, and Merced counties. “It’s a big coverage change that hasn’t been vetted as a coverage change.”

KHN correspondent Rachel Bluth contributed to this report.

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

KHN (Kaiser Well being Information) is a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is among the three main working packages at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering data on well being points to the nation.


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