Payers & Providers: HealthNet, DHCS Settle Rate Lawsuit

Health Net has settled a long-running lawsuit with the Department of Health Care Services over the rates the agency paid  or providing services to Medi-Cal managed care enrollees for much of the last decade. The terms reached between Health Net and the DHCS, which administers the MediCal program, are unusual: they will be based entirely on the insurer’s pre-tax profit margins from managing its Medi-Cal population over the next seven years.

DHCS is being sued by several health plans over the issue, with the payers accusing them of setting Medi-Cal managed rates between 2003 and 2010 that were faulty.Meanwhile, California’s state budget has been groaning under multi-billion dollar deficits for several years, prompting government agencies such as DHCS to fund creative resolutions to lawsuits that could indict even more financial damage – all while keeping its safety net payer network intact.
“What we wanted to do was resolve these lawsuits in a way that provides a framework for reducing very costly litigation,” said DHCS spokesman Norman Williams.

Whether Health Net actually reaps anything from the settlement remains to be seen. It could receive hundreds of millions of dollars – or the DHCS may have to pay nothing at all to the Woodland Hills-based insurer…

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  • LAAAC is managed by St. Barnabas Senior Services; Funded, in part, by Archstone Foundation.
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