- The California Department of Health Care Services has offered five insurers coveted contracts to provide Medicaid managed care coverage in 21 counties across the state, partially reversing its decision in August to award the business to just three winners of a competitive bidding process.
- The awards are part of California’s effort to transform its Medicaid program, known as Medi-Cal, by adopting a population health approach that prioritizes prevention and long-term coordination of care throughout members’ lives.
- The five insurers receiving new contracts are Elevance Health's Anthem Blue Cross of California Partnership Plan, Blue Shield of California Promise Health Plan, Community Health Group Partnership Plan, Centene’s Health Net Community Solutions, and Molina Healthcare of California. Kaiser Permanente also has a no-bid contract under a separate arrangement.
The revamp of the Medi-Cal health insurance program is an ambitious undertaking designed to improve patient care in the nation’s largest Medicaid market. Medicaid spending proposed in California Gov. Gavin Newsom’s 2022-23 budget is more than $130 billion per year, according to Fitch Ratings.
The program serves more than 14.6 million low-income Californians, of whom 12 million are enrolled in managed care plans.
With its overhaul of the Medi-Cal system, California is betting that holding insurance plans more accountable for quality care, and placing a greater focus on prevention and social determinants such as housing and access to nutritious food, will lead to better health outcomes and reduced spending by keeping people out of the hospital.
The state’s announcement that five plans will now receive the five-year contracts, beginning in January 2024, comes after several plans that initially lost out in California’s first-ever competitive procurement process appealed the DHCS decision.
As a result, Blue Shield and Community Health Group have been offered contracts in San Diego County. In addition, Health Net, which had lost its contract in Los Angeles County, will now subcontract to Molina for 50% of members. Health Net also gained a contract in Sacramento County.
Molina, in a statement Tuesday, said its annual premium revenue from Medi-Cal is now expected to be about $3.9 billion for full year 2024, compared to its earlier expectation of $5.5 billion based on the August DHCS announcement. The company’s current annual premium revenue from Medi-Cal is about $1.9 billion.
Molina predicted its Medi-Cal membership will double to about 1.2 million people in 2024 under the finalized award from the DHCS. The insurer, which also recently received Medicaid contracts in two new states, Iowa and Nebraska, projected its 2024 revenues from California, Nebraska and Iowa combined will total $4.2 billion.