Blue Shield of California sues state over Medi-Cal changes

Blue Shield of California sues state over Medi-Cal changes

Photo: Pichsakul Promrungsee Eyeem/Getty Images

Blue Shield of California has filed a lawsuit against the state’s Department of Health Care Services alleging the department of failing to supply documents detailing plans for how it will contract with for-profit insurers who seek participation in Medi-Cal, California’s Medicaid program.

Blue Shield criticized DHCS for intending to award contracts to national, for-profit companies. It also criticized the agency for giving Kaiser Permanente a separate, no-bid Medi-Cal contract, charging the health system has received preferential treatment that allows it to prioritize healthier Medi-Cal enrollees – leaving sicker patients to Blue Shield CA and other health plans.

As part of the appeals process, Blue Shield submitted a public records act request to the state seeking information about their scoring process, methodology, and communications about the bid. Blue Shield also requested that the state-appointed hearing officer provide more time for the appeals process so that each party to the appeal has the opportunity to review all documents related to the request for proposals.

But Blue Shield charges the requested documents have not been provided, while the hearing officer denied the request for additional time.

“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,” said Kristen Cerf, President and CEO, Blue Shield of California Promise Health Plan.

The insurer also took issue with DHCS assigning an employee from its Information Management Divisions the hearing officer in the matter.


Proponents of the law, which was signed by California Governor Gavin Newsom earlier this summer, say Kaiser Permanente is well-positioned to serve Medi-Cal enrollees. While the law doesn’t mention Kaiser specifically, draft legislation did, saying that Kaiser was the only plan that met all of the bill’s requirements.

The early legislation also asserted that by contracting with Kaiser as an alternative health care service plan (AHCSP), the state would have oversight of its Medi-Cal involvement, and wouldn’t need to take funds meant for care and apply them instead to administrative processes.

The final draft of the law does not contain language specific to Kaiser Permanente or its involvement in the Medi-Cal program.


Blue Shield of California is one of five large payer organizations that entered into a new primary care agreement this year with the Purchaser Business Group on Health. They have agreed to increase investment in and access to a value-based advanced primary care model that emphasizes comprehensive, person-focused care, integration of behavioral and physical health services and high-quality outcomes.

The initiative adopts an agreed-upon payment model for primary care providers, standardizing the way payers finance, support and measure the delivery of advanced primary care through the adoption of a measure set jointly developed by the California Quality Collaborative and the Integrated Healthcare Association.

The other organizations involved in the agreement are Aledade, a physician-led ACO, and insurers Aetna, Health Net, Oscar and UnitedHealthcare. Each has signed a memorandum of understanding in the California Advanced Primary Care Initiative.

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