Editor’s word: KHN is just not affiliated with Kaiser Permanente.
Gov. Gavin Newsom’s administration has negotiated a secret deal to provide Kaiser Permanente a particular Medicaid contract that might enable the well being care behemoth to increase its attain in California and largely proceed choosing the enrollees it desires, which different well being plans say leaves them with a disproportionate share of this system’s sickest and costliest sufferers.
The deal, hammered out behind closed doorways between Kaiser Permanente and senior officers in Newsom’s workplace, might complicate a long-planned and costly transformation of Medi-Cal, the state’s Medicaid program, which covers roughly 14 million low-income Californians.
It has infuriated executives of different managed-care insurance coverage in Medi-Cal, who say they stand to lose a whole lot of hundreds of sufferers and tens of millions of {dollars} a yr. The deal permits KP to restrict enrollment primarily to its earlier enrollees, besides within the case of foster youngsters and people who find themselves eligible for each Medicare and Medi-Cal.
“It has precipitated an enormous quantity of frenzy,” mentioned Jarrod McNaughton, CEO of the Inland Empire Well being Plan, which covers about 1.5 million Medi-Cal enrollees in Riverside and San Bernardino counties. “All of us are doing our greatest to implement essentially the most transformational Medi-Cal initiative in state historical past, and to place all this collectively with out a public course of may be very disconcerting.”
Linnea Koopmans, CEO of the Native Well being Plans of California, echoed McNaughton’s considerations.
Insurance coverage obtained wind of the backroom talks when broad outlines of the deal had been leaked days earlier than the state briefed their executives Thursday.
Dr. Bechara Choucair, Kaiser Permanente’s chief well being officer, argued in a prepared written response on behalf of KP that as a result of it operates each as a well being insurer and a well being care supplier, KP needs to be handled in another way than different business well being plans that take part in Medi-Cal. Doing enterprise instantly with the state will get rid of complexity and enhance the standard of take care of the Medi-Cal sufferers it serves, he mentioned.
“We’re not looking for to show a revenue off Medi-Cal enrollment,” Choucair mentioned. “Kaiser Permanente participates in Medi-Cal as a result of it’s a part of our mission to enhance the well being of the communities we serve. We take part in Medi-Cal regardless of incurring losses yearly.”
His assertion cited almost $1.8 billion in losses in this system in 2020 and mentioned KP had donated $402 million to assist take care of uninsured those that yr.
Kaiser Permanente, the state’s largest managed-care group, is one in all Newsom’s most beneficiant supporters and shut political allies.
The brand new, five-year contract, confirmed to KHN by administration officers and anticipated to be introduced publicly Friday, will take impact in 2024 pending approval from the legislature — and can make KP the one insurer with a statewide Medi-Cal contract. It permits KP to solidify its place earlier than California’s different business Medi-Cal plans take part in a statewide bidding process — and after these plans have spent many months and appreciable sources creating their bidding methods.
Different well being plans concern the contract might additionally muddle an enormous and costly initiative referred to as CalAIM that goals to supply social companies to the state’s most weak sufferers, together with home-delivered meals, housing support for homeless folks, and mold removal from houses. Below its new contract, KP should present a few of these companies. However some executives at different well being plans say KP is not going to must enroll numerous sick sufferers who want such companies due to the way it limits enrollment.
Critics of the deal famous Newsom’s shut relationship with KP, which has given almost $100 million in charitable funding and grant cash to spice up Newsom’s efforts in opposition to homelessness, COVID-19 response, and wildfire aid since 2019, in line with state information and KP information releases. The well being care large was additionally one in all two hospital programs awarded a no-bid contract from the state to run a field hospital in Los Angeles throughout the early days of the COVID pandemic, and it obtained a special agreement from the Newsom administration to assist vaccinate Californians final yr.
Jim DeBoo, Newsom’s government secretary, used to lobby for KP earlier than becoming a member of the administration. Toby Douglas, a former director of the state Division of Well being Care Companies, which runs Medi-Cal, is now Kaiser Permanente’s vp for nationwide Medicaid.
Nonetheless, many critics agree that Kaiser Permanente is a linchpin of the state’s well being care system, with its sturdy give attention to preventive care and excessive marks for high quality of care. Lots of the public insurance coverage upset by the deal subcontract with KP for affected person care and acknowledge that their general high quality scores will doubtless decline when KP goes its personal manner.
Michelle Baass, director of the state Division of Well being Care Companies, mentioned Medi-Cal had risked dropping KP’s “prime quality” and “scientific experience” altogether had it been required to simply accept all enrollees, as the opposite well being plans should. However she mentioned KP should adjust to all different circumstances that different plans should meet, together with tightened necessities on entry, high quality, client satisfaction, and well being fairness.
The state may also have better oversight over affected person care, she mentioned.
“This proposal is a manner to assist guarantee Kaiser treats extra low-income sufferers, and that extra low-income sufferers have entry to Kaiser’s high-quality companies,” Baass mentioned.
Although Kaiser Permanente has 9 million enrollees, near 1 / 4 of all Californians, solely about 900,000 of them are Medi-Cal members.
Below the present system, 12 of the 24 different managed care insurance coverage that take part in Medi-Cal subcontract with KP to take care of a subset of their sufferers, conserving a small slice of the Medi-Cal {dollars} earmarked for these sufferers. Below the brand new contract, KP can take these sufferers away and preserve the entire cash.
In its subcontracts, and in counties the place it enrolls sufferers instantly, KP accepts solely people who find themselves latest Kaiser Permanente members and, in some instances, their relations. It’s the solely well being plan that may restrict its Medi-Cal enrollment on this manner.
The brand new contract permits KP to proceed this observe, however it additionally requires Kaiser Permanente to tackle extra foster youngsters and sophisticated, costly sufferers who’re eligible for each Medi-Cal and Medicare. It permits KP to increase its geographic attain in Medi-Cal to take action.
Baass mentioned the state expects KP’s Medi-Cal enrollment to extend 25% over the lifetime of the contract.
KP defended the observe of limiting enrollment primarily to its earlier members, arguing that it gives “continuity of care when members transition into and out of Medi-Cal.”
The state has lengthy pushed for a bigger KP footprint in Medi-Cal, citing its prime quality scores, its sturdy built-in community, and its big function on the broader well being care panorama.
The Kaiser facility on Scotts Valley Drive.
(Through Kaiser Permanente)
“Kaiser Permanente traditionally has not performed a really huge function in Medi-Cal, and the state has lengthy acknowledged that we’d profit from having them extra engaged as a result of they get higher well being outcomes and give attention to prevention,” mentioned Daniel Zingale, a former Newsom administration official and medical health insurance regulator who now advises a lobbying agency that has Kaiser Permanente as a consumer.
However by accepting primarily individuals who have been KP members within the latest previous, the well being system has been in a position to restrict its share of high-need, costly sufferers, say rival well being plan executives and former state well being officers.
The executives concern the deal might saddle them with much more of those sufferers sooner or later, together with homeless folks and people with psychological diseases — and make it more durable to supply satisfactory take care of them. Lots of these sufferers will be a part of Medi-Cal for the primary time beneath the CalAIM initiative, and KP is not going to be required to simply accept a lot of them.
“Awarding a no-bid Medi-Cal contract to a statewide business plan with a observe report of ‘cherry choosing’ members and providing solely restricted behavioral well being and group assist advantages not solely conflicts with the intent and objectives of CalAIM however undermines publicly organized well being care,” in line with an inside doc ready by the Inland Empire Well being Plan.
The plan mentioned it stands to lose the roughly 144,000 Medi-Cal members it delegates to KP and about $10 million in annual income. L.A. Care, the nation’s largest Medicaid well being plan, with 2.4 million enrollees in Los Angeles County, will lose its 244,000 KP members, primarily based on information shared by the plan.
The state had been scheduled on Wednesday to launch last particulars and directions for the business plans which might be submitting bids for brand spanking new contracts beginning in 2024. Nevertheless it delayed the discharge per week to make the KP deal public beforehand.
Baass mentioned the state agreed to exempt KP from the bidding course of as a result of the standardized contract anticipated to outcome from it might have required the insurer to simply accept all enrollees, which Kaiser Permanente doesn’t have the capability to do.
“It’s not shocking to me that the state will go to extraordinary means to ensure that Kaiser is within the combine, given it has been within the vanguard of our well being care supply system,” Zingale mentioned.
Having a direct statewide Medi-Cal contract will drastically scale back the executive workload for KP, which can now cope with just one company on reporting and oversight, fairly than the 12 public plans it at present subcontracts with.
And the brand new contract will give it an excellent nearer relationship with Newsom and state well being officers.
In 2020, KP gave $25 million to one in all Newsom’s key initiatives, a state homelessness fund to maneuver folks off the streets and into lodge rooms, in line with a KHN evaluation of charitable funds filed with the California Fair Political Practices Commission. The identical yr, it donated $9.75 million to a state COVID aid fund.
In summer season 2020, when native and state public well being departments struggled to include COVID unfold, the well being care large pledged $63 million in grant funding to assist contract-tracing efforts.
KP’s affect extends past its large charitable giving. Its CEO, Greg Adams, landed an appointment on the governor’s financial restoration job power early within the pandemic, and Newsom has showcased KP hospitals at vaccine media occasions all through the state.
“In California and throughout the U.S., the marketing campaign contributions and the organizing, the lobbying, all of that stuff is essential,” mentioned Andrew Kelly, an assistant professor of well being coverage at California State College-East Bay. “However there’s a unique kind of energy that comes out of your potential to have this privileged place inside public packages.”
This story was produced by KHN, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
