Facing dramatic federal funding cuts, Santa Clara County leaders want to lessen the taxpayer dollars needed to support its massive public hospital system. That means reining in an institution the county created decades ago — which officials warn risks putting its own survival over health services.
The Board of Supervisors voted unanimously May 20 to remove a majority of the governing board of Santa Clara Family Health Plan in favor of filling the seats with county employees. It’s one of several steps county leaders are taking to maximize their public hospital reimbursements from the state’s Medi-Cal program for low-income families, foster youth, disabled people and older adults. The plan is to streamline Medi-Cal reimbursements, known federally as Medicaid, under a single-plan model to improve reimbursement rates, remove inefficiencies and axe duplicative costs.
Leaders of the Santa Clara Family Health Plan came out swinging against the idea last week.
“The county administration’s proposal is frankly reprehensible,” Family Health Plan CEO Christine Tomcala told supervisors at the meeting. “It disrespects our governing board, our staff and most importantly our members.”
Family Health Plan leaders called the move a “hostile takeover” in a May 16 letter to supervisors.
Santa Clara County established the Family Health Plan in 1995 to integrate care for people eligible for both Medicare and Medi-Cal. The goal was to give enrolled members a more coordinated, person-centered care experience. The county established the health care program as a separate entity because officials thought it would be too difficult to manage in-house.
But the program has since become a barrier to funding care, County Executive James Williams said at last week’s meeting.
About 300,000 Santa Clara County residents are enrolled in Family Health Plan — making it the largest managed care plan in the county. Due to its governance structure, county leaders say the agency largely functions as a separate insurance company more concerned with cost containment and surplus revenue.
The Family Health Plan lacks a financial backstop like the county’s general fund, a taxpayer-funded bucket for discretionary spending. County leaders said this encourages the program to reimburse the hospitals at lower than preferred rates.
Having more supervision over the Family Health Plan will give the county more of a say on those rates, Williams said. Meanwhile, he warned efforts by Republicans in Congress to make steep federal Medicaid reductions, compounded by reductions proposed by California Gov. Gavin Newsom, have put pressure on the timeline to make these changes now.
The state Department of Health Care Services will have to approve Santa Clara County’s “single plan” request. If approved, the county would remove Anthem and make Family Health Plan the sole Medi-Cal/ Medicare provider. But the request could take several years.
There are essentially four different health plans managing Medi-Cal and Medicare members. Two are private insurance providers: Anthem and Kaiser Permanente. Two are public: Valley Health Plan and Family Health Plan insurance providers.
“There is really an urgent need for an efficient, unified and effective Medi-Cal strategy that can mitigate these cumulative impacts and support the stability of these critical safety net services,” Williams said at the meeting.
Family Health Plan filed a lawsuit against the county requesting a temporary restraining order against the takeover, arguing it is unlawful since Family Health Plan is a separate entity. A judge denied that request.
“We’re pleased that the court did not intervene to stop the board of supervisors from properly exercising its policymaking authority to improve managed care in Santa Clara County, and that Family Health Plan subsequently requested dismissal of the lawsuit the next day,” County Counsel Tony LoPresti told San José Spotlight.
District 4 Supervisor Susan Ellenberg, in remarks directed to residents, said the actions the board took that day won’t impact patients.
“(It’s) to simply fund the best care available to you — from the doctors and health care professionals you trust,” Ellenberg said at the meeting.
Contact Brandon Pho at [email protected] or @brandonphooo on X
