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CalOptima invests $526.2 million to raise reimbursement rates for Medicaid providers

The increase counteracts some of the financial uncertainty caused by the California state budget deficit, CalOptima says.

Susan Morse, Executive Editor

Photo: MCCAIG/Getty Images

The CalOptima Health Board of Directors has approved an investment of $526.2 million to increase rates paid to hospitals, physicians, community clinics, behavioral health providers and ancillary services providers in Orange County, California.听

This represents the largest provider rate increase of its kind in CalOptima Health's nearly 30-year history, the organization said. The investment is for a 听30-month period from this July to December 2026.

It is intended to support access to healthcare services for members and promote longer-term financial stability of the managed care network.

The money to augment provider reimbursement is coming from an unallocated reserve fund.

WHY THIS MATTERS

CalOptima is an independent health system that provides Medi-Cal and Medicare coverage for low-income children, adults, seniors and people with disabilities in Orange County, California.

This provider rate increase comes at a much-needed time to counteract some of the 听in the听California state budget due to a deficit and its likely impact on health programs, including Medi-Cal.听

The complex nature of the ongoing budget negotiations underscores why the action to deliver a separate provider rate increase is so significant, CalOptima Health said.听

THE LARGER TREND

CalOptima Health, a county organized health system, provides health insurance benefits to nearly one in three Orange County residents. It serves more than 928,000 low-income children, adults, seniors and people with disabilities through a managed care delivery model, including health network partners, hospitals, physician groups, community health centers, skilled nursing facilities, behavioral health providers and other ancillary service providers. Together, these organizations are the healthcare safety net for Orange County.

CalOptima Health has a network of 10,900 primary care doctors and specialists and 39 acute and rehab hospitals.

ON THE RECORD

"Historically, Medi-Cal reimbursement has been a barrier to access for patients and their families," said Michael Hunn, CEO of CalOptima Health. "We ask a lot of our hospitals, doctors and others who provide life-saving care to our members. During the public health emergency, CalOptima Health supported providers with temporary, short-term supplemental payments. These new rate increases will help ensure member access, provider financial stability, network access and medical care for CalOptima Health members throughout Orange County over the next two-and-a-half-years."

"Orange County pediatricians appreciate that CalOptima Health's rate increase is designed to ensure that physicians are adequately reimbursed for the excellent care they deliver. Also, the increase will serve to improve healthcare disparities for the population served, resulting in better health outcomes and decreased overall costs," said Dr. Reshmi Basu, president, American Academy of Pediatricians鈥揙range County Chapter.

"These rate increases by CalOptima Health put members' healthcare needs first and foremost. All of the hospitals, community clinics, physicians and others who care for CalOptima Health members appreciate the recognition and validation of our important role in supporting the health care safety net in Orange County," said Robert Braithwaite, president and CEO of Hoag Memorial Hospital Presbyterian and Chair of the Orange County Area for the Hospital Association of Southern California

Email the writer: SMorse@himss.org