Health plans, including Blue Shield of California, Health Net, and Community Health Group Partnership Plan, have filed lawsuits against the California Department of Health Care Services (DHCS) following the first ever statewide competitive procurement for commercial Medi-Cal managed care plans for the 2024 Medi-Cal contract awards.
Stay one step ahead. Join our email list for the latest news.Subscribe
Through this procurement, DHCS did not award Blue Shield or Community Health Group a contract in any county, and did not award Health Net a contract in Los Angeles, Sacramento, or Kern counties.
These lawsuits come after DHCS, on Sept. 30th, requested to deny appeals to the state’s Medi-Cal managed care awards, including appeals filed by Blue Shield, CVS/Aetna, Community Health Group, and Centene/Health Net.
DHCS awarded 28 contracts, all beginning Jan. 1st, 2024, to 3 commercial managed care plans to deliver Medi-Cal services in 21 counties across the state. The awarded health plans include Molina Healthcare, Anthem Blue Cross Partnership Plan, and Health Net.
Molina Healthcare will operate in Los Angeles, Riverside, San Bernardino, Sacramento, and San Diego counties.
Anthem Blue Cross Partnership Plan will operate in Alpine, Amador, Calaveras, El Dorado, Fresno, Inyo, Kern, Kings, Madera, Mono, Santa Clara, San Francisco, Sacramento, and Tuolumne counties.
Health Net will operate in Amador, Calaveras, Inyo, Mono, San Diego, San Joaquin, Stanislaus, Tulare, and Tuolumne counties. Health Net’s parent company Centene Corporation, however, is voicing their opposition to DHCS’s decision to not specifically contract with them in Los Angeles, Sacramento, and Kern counties once the new contracts begin.
Blue Shield alleges DHCS violated the state public records act by refusing to produce documents on the scoring process, methodology, and communications related to the awarding of contracts for 2024.
Blue Shield claims it submitted a request for public records to the state as part of the appeals process, and that it also requested more time for the appeals process from the state-appointed hearing officer. The plan states that DHCS has not provided the requested documents and that the hearing officer has denied the request for additional time.
Kristen Cerf, President and CEO of Blue Shield of California Promise Health Plan, expressed the plan’s frustration on the matter.
“We have waited in good faith and the Department of Health Care Services is refusing to provide the public information we are requesting or to provide a reasonable amount of time for the appeal process,” she stated in a press release.
“On behalf of the Medi-Cal beneficiaries we serve today whose health care is directly impacted by this decision, and of every Californian, we are turning to the court to insist on a full, fair, and robust Medi-Cal procurement appeals process. We believe that the Department of Health Care Services has a duty to get this right and not just rubber stamp its original decision.”
Blue Shield also noted that the state-appointed hearing officer is an employee from the Information Management Division.
“This means an IT professional is responsible for reviewing all appeal materials and making the final decision as to which health plans will be available to millions of Medi-Cal beneficiaries.”
As of Oct. 14th, Health Net and Community Health Group Partnership Plan have joined Blue Shield in filing lawsuits against DHCS to release documents related to this year’s procurement.
When the contract awards were announced, Centene Corporation released this statement on behalf of Health Net.
“… We are disappointed to learn the state has chosen not to award us contracts in Los Angeles, Sacramento and Kern counties,” Centene stated. “Through our local health plan, Health Net of California, we have been providing quality, comprehensive and equitable healthcare to members throughout California for 25 years. We have a deep history in serving these communities and members who have come to rely on our services and care.
We strongly believe our exit in these counties will be a significant disruption in services to our members and providers. We are evaluating all options to appeal the decision and protect our members and their access to quality healthcare.”
In addition to its lawsuit, Blue Shield of California also launched a public campaign earlier this month that includes statewide digital advertising that Blue Shield says underscores the consequences for Medi-Cal beneficiaries if DHCS’s preliminary awards decision is not reversed.
The public campaign also includes a website, StandUpForHealthcare.com, that provides information about the awards decision and encourages Californians to voice their concerns to Gov. Gavin Newsom.
Blue Shield of California President and CEO Paul Markovich also wrote an “Open Letter to Californians,” in which he criticized the state’s decision.
“This year’s historic Medi-Cal procurement was an opportunity to address the shortcomings and inequities in the old system by choosing health plans best positioned to help realize the vision of CalAIM, the state’s initiative that demands health plans be innovative, partner with physicians, and bring Medi-Cal into the digital age,” Markovich stated.
“Instead, the state intends to choose for-profit health plans with poor track records in improving access to quality care and constructively engaging local communities. The state’s preliminary decision was made with virtually no input from the people and the communities the Medi-Cal program serves—the voices of hundreds of organizations, community leaders, elected officials, providers, and patients. It was a breach of trust with the very communities whose health and lives depend on Medi-Cal.”
DHCS made the following comment regarding the litigation in a statement for Becker’s Payer Issues:
“DHCS remains committed to a robust procurement process to select awardees that demonstrate the capacity and capability to deliver on DHCS’ stated goals and priorities, including transparency, high-quality care, access, behavioral health services, children services, coordinated/integrated care, increased health equity, and accountability,” DHCS stated.