Most-vulnerable Californians stand to benefit under health care contract proposal

The Legislature will begin this week to consider a proposal by the California Department of Health Care Services to engage Kaiser Permanente in a single, direct contract for Medi-Cal services in counties where we operate.The change is significant, and so are the benefits to the most vulnerable enrollees.

Medi-Cal is the state and federally funded program offering health care to low-income residents. Kaiser Permanente proudly provides the highest-quality Medi-Cal coverage and care in the state to more than 900,000 people in 22 counties. We are a direct contractor with the state in five counties, including Sacramento and San Diego. We subcontract with local Medi-Cal health plans in the other counties. 

The health conditions and demographic mix of our Medi-Cal membership are comparable to other Medi-Cal managed care plans, as measured by the Department of Health Care Services. 

We base our Medi-Cal services on our continuity-of-care approach. This approach, for example, allows a single mother covered by Kaiser Permanente to move between employee-sponsored coverage, Covered California and Medi-Cal over the course of a year without disruption to her health insurance and access to physicians. 

The change under consideration this week allows more people like her in the other areas we serve to enjoy a similar seamless approach. It also allows us to do the same for foster children and for seniors who are dually enrolled in Medicare and Medi-Cal.

The state is engaging in new, standard contracts with Medi-Cal managed care health plans to ensure greater quality, transparency and accountability. Because Kaiser Permanente provides both care and coverage within a select geographic presence, unlike other health plans, we cannot participate in the state’s established procurement process. The Department of Health Care Services’ direct, single-contract proposal, spelled out in budget trailer bill language and in Assembly Bill 2724 by Assemblymember Dr. Joaquin Arambula, seeks to align our delivery model with the growth and quality goals the state has laid out for Kaiser Permanente.

The proposed agreement, which would begin in 2024, is consistent with the state’s mission to provide Medi-Cal services through a whole-person care approach. Most importantly, it provides significant benefits to Californians who depend on Medi-Cal for care and services. It also:

Advances equity by requiring Kaiser Permanente, over time, to serve even more vulnerable populations with complex needs in all areas where we serve our members and patients in California, creating more equitable access to the state’s highest-quality plan. This will help further expand our existing commitment to delivering high-quality care and coverage to people with limited incomes and resources.

Eases access by removing confusing layers of administration, resulting in a single, direct contract that offers less fragmented care and improves the patient experience.

Increases affordability by eliminating the need for the state to pay administrative oversight fees to local plans for services they delegate to Kaiser Permanente, resulting in savings that will be used to reduce costs and invest in care.

Does more for Medi-Cal overall by requiring Kaiser Permanente to:

• Leverage its model to help Federally Qualified Health Centers and other safety net providers to improve quality.

• Strengthen the safety net by helping to expand the virtual care and clinical capacities of the state’s Federally Qualified Health Centers and our other clinic partners.

• Provide more specialty care through piloting in-person, outpatient specialty care visits for the highest-need patients.

Participating in Medi-Cal is part of Kaiser Permanente’s mission as a nonprofit. 

We provide Medi-Cal enrollees with the same access to our care and coverage while receiving lower reimbursements, operating in Medi-Cal at a significant loss.

We will not compete with local plans and will continue to support the core functions of safety net providers. We will collaborate with counties on several topics, such as behavioral health, public health and more. 

In total, the single-contract proposal requires Kaiser Permanente to collaborate with local health plans, counties and the safety net to determine enrollment growth, implement Medi-Cal reforms and, ultimately, provide higher-quality, more affordable health care for everyone who depends on Medi-Cal.