Kaiser Permanente's special California Medicaid contract raises concerns

California awarded Kaiser Permanente an exclusive Medicaid contract that would allow it to hand-pick enrollees as it grows in the state, according to Kaiser Health News

However, the contract, which was negotiated via a secret meeting between the payer and the state, raises concerns among Kaiser Permanente's competitors that the patients left for them will be riskier and potentially more costly. 

"It has caused a massive amount of frenzy," Jarrod McNaughton, CEO of Inland Empire Health Plan, which covers about 1.5 million Medi-Cal enrollees, told Kaiser Health News. "All of us are doing our best to implement the most transformational Medi-Cal initiative in state history, and to put all this together without a public process is very disconcerting."

Managed care plans, like Inland Empire Health Plan, claim the deal could cost them hundreds of thousands of patients and millions of dollars. Plans learned of the deal through a leaked outline, and details were confirmed to Kaiser Health News

In a statement, Kaiser Permanente said the plan was struck to uniquely help the payer — which also operates as a provider — to grow beyond its capacity.

"We need to have the providers in place in our care delivery system, in order to enroll and serve more members," the statement read. "So we've always needed to be careful in growing at the right pace, to match our capacity. The state and other plans and many other hospitals have wanted us to grow more."

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