What are the impacts of Kaiser’s no-bid contract on Medi-Cal?

The Kaiser Permanente hospital in San Diego, a 617,000-square foot facility. (Photo: Roaming Panda Photos)

In giving private health care giant Kaiser Permanente a broad, no-bid Medi-Cal contract that is light on detail, the state could unwind over 40 years of locally driven health care coordination and collaboration for the most vulnerable among us.

In February, details of a secret negotiation came to light, whereby Kaiser would be given an “all access” pass to Medi-Cal. They would be allowed to sidestep the competitive bidding process required of all commercial health plans, restrict access for the most at-risk populations, and pick and choose where in the state they want to serve Medi-Cal without regard to existing state and federal regional care delivery requirements.

Kaiser has created a VIP program where they restrict access to only those who had the luxury of Kaiser coverage shortly before getting on Medi-Cal…

This deal is now winding its way through the legislative process, with scant details, and it deserves a thorough examination of its impact on the people Medi-Cal serves. This contract would endorse a two-tiered system that excludes the most vulnerable and grants broader expansion of this inequitable approach at the expense of locally based safety net providers.

The job of a health plan in Medi-Cal is to serve anyone who is eligible and ensure all their care needs are met, no matter the complexity of their needs. Unlike all the other Medi-Cal health plans, Kaiser has created a VIP program where they restrict access to only those who had the luxury of Kaiser coverage shortly before getting on Medi-Cal or a family member who has Kaiser coverage.

Whom do they exclude?

Generally speaking, those who are unhoused, are re-entering the community from incarceration, or have a serious mental illness would be just some of the people restricted from having Kaiser’s Medi-Cal coverage.

So, who’s in?

Individuals who lost Kaiser coverage when they recently lost commercial insurance are in. Individuals living with a family member covered by Kaiser are in. Low-income seniors with both Medi-Cal and Medicare coverage are in (Kaiser would get their higher Medicare reimbursement rate). Foster youth, including those with significant behavioral health needs, are in (county mental health systems cover the cost for more serious behavioral health needs).

Kaiser’s strategy to limit access means they carry a relatively healthy roster under their existing, more limited Medi-Cal operations. Inland Empire Health Plan (IEHP) is one of several local Medi-Cal plans that partner with Kaiser as part of a larger ecosystem of partners. Kaiser’s enrollment restrictions have resulted in IEHP carrying a disproportionate percentage of seniors and persons with disabilities in their service areas, which is 71 percent higher than Kaiser in San Bernardino county and 49 percent higher in Riverside county.

Kaiser’s direct contract will result in zero savings to Medi-Cal members or taxpayers. The state would pay Kaiser the same amount it pays any health plan covering a Medi-Cal enrollee. In fact, the state budget does not estimate any savings from this contract.

The fact that this proposal was developed behind closed doors belies the promises of transparency and accountability. It gives the state broad authority to make changes or expand this contract without public notice or review of changes or their relating impact to the Medi-Cal infrastructure.

In serving the public’s interest, giving an expansive no-bid contract to a multi-billion-dollar corporation that, while a legal non-profit, includes a large for-profit medical group and no public accountability, does not serve the state or taxpayers well.

This Kaiser contract appears to be a solution in search of a problem. It won’t save the state money, doesn’t help improve care for the people Medi-Cal serves, and does nothing but improve the bottom line for a private corporation. We thank the legislators who have fairly reviewed the deal, are asking important questions, and are suggesting amendments in the best interest of those who will be impacted the most: the people who rely on Medi-Cal services.

Editor’s Note: Jarrod McNaughton is the CEO of the Inland Empire Health Plan.


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