California approves Kaiser Permanente's special Medicaid contract

California Gov. Gavin Newsom signed legislation June 30 that codified a controversial state Medicaid contract with Kaiser Permanente, though some details are still unknown.

The five-year contract was developed in secret with Mr. Newsom's office and first reported in early February. It will allow the Oakland-based payer-provider to hand-pick enrollees and avoid the state's Medi-Cal contract bidding process in 32 counties.

Starting on Jan. 1, 2024, the number of enrollees in the Kaiser program would be allowed to grow by 25 percent over five years, according to CaliforniaHealthline. The 25 percent figure isn't actually included in the legislation and is expected to be part of a forthcoming memorandum of understanding, though the state has no timeline available.

The legislation garnered opposition from payers, providers, counties and unions across the state.

One change made from the proposed bill aims to address payers' concerns that they are being left with sicker populations to choose enrollees from. The bill says all managed-care plans under Medi-Cal should be reimbursed in an actuarial manner that aligns with enrollees' medical risk.

"We look forward to working with the state on implementing the statewide contract, and we will continue to advocate the value and importance of local plans in providing care to their communities," Linnea Koopmans, CEO of Local Health Plans of California, which opposed the contract, told CaliforniaHealthline July 18.

Bechara Choucair, MD, senior vice president and chief health officer at Kaiser, penned an op-ed in April to explain why he believes the contract will benefit vulnerable Californians through increased care equity, ease of access and affordability.

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