State regulators have ordered health insurance giant Health Net to overhaul how it is winding down assisted living benefits for thousands of low-income Californians, after the company’s abrupt termination plan left vulnerable residents and their caregivers scrambling for alternatives.
Under a corrective action plan issued by the California Department of Health Care Services, Health Net must now continue covering assisted living and home care services for all affected members through the end of the year, rather than cutting off some as early as October as originally planned.
Health Net, one of the nation’s largest Medicaid insurers, informed providers months ago that it intended to drop its assisted living and home care contracts. Because those services are optional benefits under Medi-Cal, California’s Medicaid program, insurers can choose annually whether to keep offering them. But providers and families say they received little advance notice, leaving many uncertain about how to secure alternative housing or care for loved ones.
In an August letter to Health Net, state regulators outlined eight separate violations in how the company managed the transition, including failing to submit individual transition plans for members, neglecting to move patients into appropriate alternative care, and denying services outright to some enrollees. The department warned that these lapses “jeopardize member safety, disrupt continuity of care, and endanger medically vulnerable members.”
The state has threatened fines of up to $25,000 per member, per day of violation, if Health Net fails to extend coverage and develop transition plans tailored to each patient’s needs.
Advocacy groups and care providers estimate roughly 3,500 Medi-Cal enrollees depend on Health Net to help cover the cost of assisted living. Most are elderly, and a significant number live with cognitive conditions such as dementia. Health Net administers Medi-Cal coverage across 10 counties, including Los Angeles, Fresno, Sacramento, San Joaquin, Stanislaus and Tulare, among others.
Health Net spokesperson Beatriz Lopez confirmed the company will maintain coverage for all affected members through December but still intends to eliminate the benefit altogether starting next year. “Health Net and DHCS share a commitment to advancing the health and well-being of Medi-Cal members,” Lopez said in a statement.
The insurer has previously argued that the assisted living benefit hasn’t demonstrably reduced emergency room visits or hospital stays among enrollees. The program falls under CalAIM, a sweeping state effort to modernize Medi-Cal and curb costs by better managing care for patients who frequently rely on emergency services. Lopez said the company will continue reviewing outcome data to determine which services provide the most value to members.
Providers reached by CalMatters confirmed their contracts with Health Net have now been extended through the close of the year.
Despite the reprieve, advocates warn the underlying problem remains unresolved. Hagar Dickman, director of long-term services and supports at Justice in Aging, said the state’s intervention only delays a looming crisis. “Thousands of older Californians are still set to lose their housing on January 1st,” she said.
Dickman noted that allowing insurers to eliminate housing-related benefits creates a particularly dangerous situation, since most assisted living residents have no other place to live. She also pointed out that state continuity-of-care protections may not apply if a member switches to a different insurer that still covers assisted living — meaning the new plan could simply refuse to pay for that member’s care.
“It’s disingenuous to say there are protections and then say the protections don’t apply,” Dickman said. “So the option is skilled nursing or homelessness.”
Pauline Shatara, deputy director of California Advocates for Nursing Home Reform, echoed those concerns, saying the state’s corrective measures fall short of a real fix. “It doesn’t sound like we found a solution to help pay for these people to remain where they are,” she said.
Original source: CalMatters
