Insurance giant gets California contract, pays $215 million settlement

Your guide to California policy and politics
Ben Christopher BY Ben Christopher February 9, 2023
Presented by Dairy Cares, Southern California Gas Company, Climate-Smart Agricultural Partnership and Politifest 2023

Insurance giant gets California contract, pays $215 million settlement

From CalMatters health reporter Kristen Hwang: 

California Attorney General Rob Bonta on Wednesday announced a $215.3 million settlement against Centene Corp., a multi-billion dollar health care company that is the state’s largest commercial Medi-Cal insurer, with 20 contracts. 

Centene is also the parent company of Health Net, which just won a lucrative contract for Medi-Cal, the public insurance option for more than 14 million very low-income Californians.

The settlement alleges Centene inflated the cost of prescription drugs over a two-year period in violation of the state’s False Claims Act. In a statement, the Department of Justice said Centene negotiated a $2.70 savings per prescription between 2017 and 2018 with its pharmacy benefits manager and failed to disclose or pass those savings along to the Medi-Cal program. The settlement amounts to twice the value of Centene’s inflated prices and “ensures full restitution” to Medi-Cal, the attorney general said.

  • Bonta: “Medi-Cal is a lifeline that provides access to free or affordable healthcare services for millions of Californians. When companies overcharge the Medi-Cal system, it drains valuable resources from the people who rely on this care.”

Centene does not admit any wrongdoing in the settlement. At least nine other states have reached settlements with Centene over similar allegations.

Wednesday’s announcement is the latest in a string of recent settlements alleging Medi-Cal fraud by health care providers in California, including one of the largest clinic networks in the Central Valley and an online birth control pharmacy.

Centene, notably, is the parent company of Health Net, which was one of three major Medi-Cal insurers that successfully lobbied state officials to reverse course on a competitive bidding process after threatening legal action. The new contracts are set to begin in 2024 and preserve much of Health Net’s membership base, which it had originally lost to competitor Molina. The two-year competitive bidding process was the first time California reevaluated all of its Medi-Cal contracts at once and was intended to hold insurers to higher performance standards.

The Department of Health Care Services, which Bonta said assisted in the investigation and oversees Medi-Cal contracts, did not respond by deadline to questions of whether the settlement will impact Health Net’s contract. 

Bonta’s statement does not mention the new contract.

Centene also took over Magellan Health, which nabbed the state’s Medi-Cal pharmacy contract last year and suffered widespread complaints of unfilled prescriptions for weeks at a time, according to Kaiser Health News.


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1 Boosted CalFresh set to fade

In this April 18, 2020, file photo, San Francisco-Marin Food Bank volunteers pack food into bags to be delivered to people in San Francisco. Food banks and anti-hunger advocates are bracing for the end of a pandemic-era boost in food assistance that the federal government has been providing for nearly three years. Photo by Jeff Chiu, AP Photo
San Francisco-Marin Food Bank volunteers pack food into bags to be delivered to people in San Francisco on April 18, 2020. Photo by Jeff Chiu, AP Photo

Here’s the good news: The emergency phase of the COVID-19 pandemic is officially coming to a close. California will be ending its emergency order at the end of this month. The federal government plans to follow suit in mid-May.

Now the bad news: With the end of the emergency comes the end of many emergency relief programs that millions of Californians have come to count on. 

Jeanne Kuang, a reporter with CalMatters’ California Divide team, explains that a pandemic-era boost to CalFresh, the state’s food stamp program, is actually ending sooner than expected. March will be the last month low-income Californians who get financial assistance to pay their grocery bills should expect to receive the “emergency allotments” they’ve been getting since March 2020.

By the numbers:

  • More than 5 million: The number of Californians who receive CalFresh benefits;
  • $200 a month: The drop in aid for the average CalFresh household, starting in April;
  • $500 million a month: The price tag of enhanced benefits for Californians for the federal government.

That presents a devastating math problem for Tom McSpedden, 69, who lives in the high-cost Sacramento area, where nearly half of his Social Security check goes to rent.

  • McSpedden: “I’m just not going to be able to afford food. It’s that simple.”

Nationwide, the era of free COVID vaccines and at-home test kits will soon be over, too. The Biden administration is expected to announce a transition plan away from the country’s emergency footing as soon as today.

2 Boosting paid leave?

A person working at home and taking care of their child. Photo via iStock Photo
A person working at home and taking care of their child. Photo via iStock Photo

From CalMatters’ Capitol reporter Sameea Kamal:

In the latest effort to make paid family leave more accessible to California workers, Assemblymember Buffy Wicks, a Democrat from Oakland, has introduced a bill to expand the list of people Californians can take time off to care for

State law currently allows people to take time off to care for a sick child, spouse, parent, grandparent, grandchild, sibling or domestic partner. This bill would add “any other individual related by blood or whose association with the employee is the equivalent of a family relationship.” 

That would help LGBTQ+ Californians, bill supporters say.

In 2021-22, California paid out 289,000 family leave claims totaling more than $1.6 billion, according to the Employment Development Department. 

This bill would be the latest to bolster the state’s paid leave policy: A bill authored by Sen. María Elena Durazo, a Los Angeles Democrat, and approved last year increased the benefit for low-wage workers.

This week, Wicks also introduced the Family Caregiver Anti-Discrimination Act, which would bar employers from refusing to hire, fire or demote workers because of their family responsibilities.

While “this type of discrimination affects employees of every income level, race, gender and industry,” people of color and low-wage earners tend to be impacted most, according to a press release from Wicks and advocacy groups.

  • Wicks: “Employee protections must continue to evolve so workers can care for those they love, and not get punished for it.”

The California Chamber of Commerce, which opposed expansion efforts in the past, has not yet taken a position on these bills. 

For the record: This item has been updated to correct the author of the new law that increased family leave benefits for low-wage workers.

3 Still priced out

Caitlyn O’Connell at her apartment in Venice on Feb. 7, 2023. O’Connell and her husband started looking for a home in 2021 but gave up shortly after because prices were too high. They both work from home in their two bedroom apartment and want to start a family soon, so they hope to find a home with more space. Photo by Alisha Jucevic for CalMatters
Caitlyn O’Connell, shown at her apartment in Venice on Feb. 7, 2023, looked for a home in 2021 with her husband, but gave up because prices were too high. Photo by Alisha Jucevic for CalMatters

Now that California’s blistering housing market finally seems to be cooling off, you might think that it’s finally time for would-be homeowners to get their piece of the California Dream.

But you’d be wrong. 

The state’s housing market is only cooling thanks to higher interest rates set by the Federal Reserve. That’s translated to higher mortgage rates, writes CalMatters’ Alejandro Lazo. Taken together, the still-pretty-high prices and the spike in borrowing costs make for a state housing market “more unaffordable than at any point in the last decade.”

Though higher interest rates are meant to slow economic activity and bring prices down, it’s also had the counterproductive effect of reducing the inventory of available homes at a time when places to live across California are in desperately short supply.

  • Selma Hepp, chief economist at CoreLogic: “Sellers don’t want to give up the price that they thought they were going to get, or had in mind, and they also have locked in mortgage rates that are incredibly cheap.”

Providing a long-term boost to the housing supply is, as always, a major priority for state lawmakers. Easier said than done.

Cities across the San Francisco Bay Area had until the end of last month to submit plans with the state to zone for much, much more housing construction. While San Francisco rolled out its ambitious plan to get 82,000 units built by the next decade, many cities missed the deadline or submitted plans that were immediately rejected. Things have apparently gotten so bad for one Silicon Valley developer that he’s gone on a hunger strike.

Now, as our old friend Emily Hoeven writes in her column at the San Francisco Chronicle, pro-housing advocacy groups are about to “sue the daylights out of cities across the Bay Area.”

  • Keith Diggs, an attorney for YIMBY Law: “From my perspective, this is just the first step in a kind of generational campaign to completely change the way land-use regulation gets done.”

Before the legal battles begin, some developers are turning to a once-obscure provision of state law that may allow them to bypass local zoning restrictions in municipalities without state-approved plans. We’ve seen a number of these proposed by-right projects in Southern California

With a new plan to build a 20-unit apartment building in Santa Clara County ‘burb of Los Altos Hills, the “builder’s remedy” seems to have come to the Bay Area. To learn more about this rather obscure law, listen to the “Gimme Shelter” podcast.


CalMatters Commentary

CalMatters columnist Dan Walters: Seven western states are playing a high-stakes game of chicken over how diversions from the crisis-ridden Colorado River will be reduced.

CalMatters columnist Jim Newton: The recent reappointment of LA Police Chief Michel Moore focused the attention on his work as a reformer rather than a crime-fighter, but law enforcement can do both.

California’s elderly parole program isn’t releasing enough incarcerated seniors, who are dying or will die in prison, despite extremely low recidivism rates, argues Robert Outman, a writer incarcerated in the California Substance Abuse Treatment and State Prison in Kings County.


Other things worth your time

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California bill seeks to limit solitary confinement — again // CapRadio

Fact check: Does less California oil drilling create higher gas prices? // Sacramento Bee 

SF mayor pledged $5M to fix homeless housing, but no progress // San Francisco Chronicle

San Diego County supervisors OK plan to assist migrants with Title 42 // Times of San Diego

Confidential files shed more light on turmoil behind Oakland police chief’s exit // Oaklandside

Bob Iger announces 7,000 layoffs at Disney // Los Angeles Times

Basic income bill would give $1,000 to homeless students // Sacramento Bee

Was fatal Huntington Park shooting justified? Experts weigh in // LAist

Doctor sues SF for $12M over fence, says ‘not about the money’ // San Francisco Standard

Ex-Twitter execs grilled on Hunter Biden laptop ‘censorship’ // Washington Post

Why Marin County is losing so much population // San Francisco Chronicle

LA County bans large-caliber handguns, guns on county property // San Gabriel Valley Tribune

Berkeley tries traffic ticket reform as fees, fines hit exorbitant levels // Mercury News

Huntington Beach bars LGBTQ pride flag from flying over City Hall // Los Angeles Times

People across Southern California are scrambling for eggs // Orange County Register

Opinion: Steph Curry’s NIMBY ‘scandal’ is more complex than meets the eye // MSNBC

Opinion: Time for stronger protections for California’s cougars // Los Angeles Times

See you tomorrow


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