Molina, Elevance, Centene win big with Medicaid contracts in California

Dive Transient:

• Elevance, Molina and Centene have gained profitable contacts to ship Medicaid managed care in California starting in 2024, the state’s Division of Well being Care Companies stated Thursday.
• The five-year contracts in California’s Medicaid program, known as Medi-Cal, are the results of the state’s first-ever aggressive procurement for industrial managed care plans, based on a DHCS launch.
• The state plans to award 28 contracts to Molina Well being Care, Elevance-owned Anthem Blue Cross Partnership Plan and Centene-owned Well being Internet to ship Medi-Cal providers in 21 counties.

Dive Perception:

Medi-Cal is the most important Medicaid program within the U.S., masking greater than 14.6 million low-income Individuals as of this 12 months.

Holding a aggressive procurement for industrial managed care plans displays California’s goal to carry managed care corporations and their subcontractors extra accountable for high-quality care, DHCS stated. With the brand new contracts, DHCS desires to reshape how care is delivered to Medi-Cal beneficiaries, 99% of whom shall be enrolled in managed care by 2024.

At the moment, managed care plans will present not solely medically crucial healthcare providers, but additionally extra providers to deal with the entire individual. Plans can accomplish this via partnerships with native teams like well being departments and social providers, DHCS stated.

Plans and their subcontractors with a constructive web earnings can even be required to reinvest 5% to 7.5% of earnings in area people infrastructure.

DHCS can be strengthening its oversight of Medi-Cal suppliers. Funds to plans shall be linked extra carefully to member entry and outcomes, and plans shall be required to report on major care utilization and spending, the state stated.

Plans should additionally meet necessities for decreasing well being disparities and enhancing outcomes, together with addressing unmet social wants like meals insecurity.

DHCS can be permitting 17 counties to alter the kind of managed care mannequin they take part in, and accepted a proposed direct contract with Kaiser Permanente in 32 counties, topic to federal approval. That can enable Kaiser to proceed deciding on its clients, a controversial allowance that rivals argue permits the payer to pick more healthy and subsequently inexpensive members.

Molina, Centene and Elevance already held Medicaid contracts with California, however the overhaul in counties served is already inflicting one payer to contemplate interesting the proposed contracts.

In a press release, Centene stated it was happy to have been awarded the contracts in 9 counties, however was upset to lose contracts in Los Angeles, Sacramento and Kern.

“We strongly consider our exit in these counties shall be a big disruption in providers to our members and suppliers. We’re evaluating all choices to enchantment the choice,” the St. Louis-based payer stated.

Centene, the most important Medicaid insurer within the U.S. (and in California), acquired the contract regardless of a latest California investigation into allegations that the insurer defrauded Medi-Cal by overbilling for prescribed drugs.

CVS-owned Aetna and UnitedHealth had been amongst these not chosen for the Medi-Cal contracts. On the finish of final 12 months, Aetna had contracts in two counties — Sacramento and San Diego — whereas UnitedHealth had a contract to serve San Diego.

Plans that misplaced bids have till Sept. 1 to enchantment.

DHCS estimates that roughly 2.3 million managed care members, or 18%, will seemingly transition to a brand new plan as a consequence of the industrial procurement, with the vast majority of churn within the counties of Los Angeles, Kern, Sacramento and San Diego.

The contracts might be profitable for managed care organizations. Centene’s Well being Internet, for instance, reported web earnings of $127 million within the final quarter of 2021, whereas Molina introduced in $59 million and Elevance’s Blue Cross of California Partnership Plan introduced in $31 million, based on state information.