Background of Medi-Cal Managed Care

What is Medi-Cal Managed Care?

The California Department of Health Care Services (DHCS) released the final version of its strategic plan for expanding Medi-Cal Managed Care in March 1993.  The Plan was designed to transfer the delivery of care of most of the Medi-Cal population from a predominately fee-for-service payment system to capitated managed care.  The State believed that, through capitation and shifting the risk to local managed care plans and providers, they would be able to control the growing State costs for the Medi-Cal program.

Under this plan for 13 counties, DHS proposed to place a significant number of Medi-Cal beneficiaries into one of two Knox-Keene licensed health maintenance organizations (HMOs) in each of the 13 counties. The State of California went to these counties and offered them an opportunity to have one of the two HMO’s by forming a county-sponsored plan, known as a Local Initiative.

Kern County was one of the counties in the state designated to participate in the Medi-Cal Managed Care Program. Under this model, there is a Local Initiative and a Commercial health plan.  Having two plans in each participating county provides the Medi-Cal population freedom of choice in selecting providers of their medical services.  It also allows for competition between the two systems in terms of service and cost.

The Kern County Board of Supervisors established Kern Health Systems, known as Kern Family Health Care, in April 1993 as a non-profit, public-benefit corporation to be the Kern County Local Initiative.  Kern Health Systems was awarded Knox-Keene licensure by the Department of Corporations on May 2, 1996 and a contract with the Department of Health Care Services to administer care beginning July 1, 1996.