Almost 2 million of California’s poorest and most medically fragile residents may have to switch health insurers as a result of a new strategy by the state to improve care in its Medicaid program.
A first-ever statewide contracting competition to participate in the program, known as Medi-Cal, required commercial managed-care plans to rebid for their contracts and compete against others hoping to take those contracts away. The contracts will be revamped to require insurers to offer new benefits and meet stiffer benchmarks for care.
The long-planned reshuffle of insurers is likely to come with short-term pain. Four of the managed-care insurers, including Health Net and Blue Shield of California, stand to lose Medi-Cal contracts in a little over a year, according to the preliminary results of the bidding, announced in late August. If the results stand, some enrollees in rural Alpine and El Dorado counties, as well as in populous Los Angeles, San Diego, Sacramento, and Kern counties, will have to change health plans — and possibly doctors.
“I’m still shocked and I’m still reeling from it,” said John Sturm, one of about 325,000 members of Community Health Group, the largest Medi-Cal plan in San Diego County, which could lose its contract. “Which doctors can I keep? How long is it going to take me to switch plans? Are there contingency plans when, inevitably, folks slip through the cracks?” Sturm wondered.
Sturm, 54, who has three mental health conditions, largely because of childhood sexual abuse, said finding a psychologist and psychiatrist he could trust took a lot of time and effort. He pointed to the disruption caused by the rollout of Medi-Cal’s new prescription drug program this year, despite assurances it would go smoothly.
“I have concerns, and I know other people in the community have concerns about what we’re being told versus what the reality is going to be,” Sturm said.
Arguably, the biggest loser in the bidding is Health Net, the largest commercial insurer in Medi-Cal, which stands to lose half its enrollees — including more than 1 million in Los Angeles County alone. St. Louis-based Centene Corp., which California is investigating over allegations it overcharged the state for prescription drugs, bought Health Net in 2016, in part for its Medicaid business, of which L.A. is the crown jewel.
But the state’s health plan selections are not set in stone. The losing insurers are fiercely contesting the results in formal appeals that read like declarations of war on their competitors and on the state. Some of the losers essentially call their winning rivals liars.
The stakes are high, with contracts in play worth billions of dollars annually. Insurers that lose their appeals with the state Department of Health Care Services, which runs Medi-Cal, are likely to take their complaints to court. That could delay final decisions by months or years, causing a headache for the department, which wants coverage under the new contracts to start Jan. 1, 2024.
State officials hope to spend the rest of this year and all of 2023 ensuring the chosen health plans are up to the task, which includes having enough participating providers to minimize disruptions in care.