CalOptima Health is best known for providing health insurance for 950,000 members, or about a third of Orange County’s population.
What’s less known is that the Orange-based public agency, the largest County Organized Health System (COHS) in California, is expanding into areas like job training, where it’s launched a five-year, $50 million program to increase the local healthcare workforce, starting with local colleges.
“If we help with workforce development, there will be caregivers and social workers to take care of our members,” CalOptima Chief Executive Michael Hunn told the Business Journal.
“It’s substantial. Our board has been thoughtful in approving it.”
The push into job training is part of a recent expansion where the insurance agency, formed in 1993, is tackling social issues like homelessness, cancer screening, drug overdoses, illegal immigration and medically tailored meals.
Medi-Cal Ties
CalOptima gets its funding from Medi-Cal, the state’s public health insurance program that covers low-income people including children, seniors and the disabled.
Statewide, Medi-Cal insures about 14.9 million members, or a third of California’s population. In fiscal 2022-23, Medi-Cal spent $135.4 billion. Most of its funds are from the federal government’s Medicaid program.
CalOptima, which provides healthcare coverage for Orange County residents who are eligible for full Medi-Cal, has an annual budget of around $4 billion.
Hunn said its typical member is an individual making less than $20,000 a year or a family of four with less than $40,000 a year.
CalOptima has a network of 9,900 primary care doctors and specialists in Orange County.
Hunn, a former chairman of the board for the Hospital Association of Southern California and a former CEO of Providence Health & Services Southern California Region, was named CEO of CalOptima in 2022.
The Issues
Hunn highlighted several areas where CalOptima is expanding:
• Starting Jan. 1, California began providing health insurance to all immigrants.
“In Orange County, about 40,000 to 70,000 individuals will now be eligible for medical insurance regardless of immigration status,” Hunn said.
The state government will approve their applications, send them to CalOptima and pay for the extra costs, Hunn said.
• It’s spending $50 million to provide cancer screening in four major areas: breast, cervical, colon rectal and lung cancer. It recently released applications to provide $15 million in funding.
“We’ve gotten a tremendous amount of engagement from our cancer centers,” Hunn said, citing UCI Health, City of Hope, Memorial Healthcare and Hoag Memorial Hospital Presbyterian.
• It approved $15 million to distribute 250,000 doses of naloxone, a nasal spray that can restore breathing during an opioid overdose while waiting for emergency personnel.
“Everyone should have access to naloxone,” Hunn said. “A person can inadvertently overdose. We’re now distributing naloxone at community events.”
• The board last year approved $161.7 million for its homeless initiative by partnering with major builders and nonprofits in Orange County for permanent affordable and transitional housing.
It’s currently tracking 1,175 units being built throughout Orange County. For example, it granted $3.8 million to the Anaheim Housing Authority to convert 89 units at a former Motel 6 site into permanent housing.
It gave $4.1 million to the Salvation Army Orange County to complete the construction of 72 units of supportive housing and the Wellness Center at the City of Hope.
“We have a clear model that housing is health,” Hunn said. “It’s a big deal. We are really pleased.”
• It’s approved up to $25.5 million to provide mental health crisis support at schools throughout Orange County.
The amount includes $10 million to OC schools to hire staff, $8.4 million to Hazel Health for a telehealth platform and $2.1 million to CHOC for 10 WellSpaces, sites that offer quiet respite for students in need.
• In the past two years, it’s spent $102.2 million on CalAIM that gives grants to 14 community programs to help its members in areas such asthma remediation, “sobering centers” and home modifications. It has provided 4.9 million “medically tailored meals” to about 45,500 members.
“We’ve invested a lot of resources” in CalAIM, Hunn said. “It’s the most innovative program in Medi-Cal.”
4 Prime Hospitals Exit CalOptima’s Network
Prime Healthcare’s four hospitals in Orange County reported a collective 12% decline in revenue to $298.4 million for the year ended Sept. 30.
Now, CalOptima Health, which provides health insurance for the poorest in the county, decided to remove the four from its network, effective Feb. 5.
The four hospitals—West Anaheim Medical Center, Garden Grove Hospital Medical Center, La Palma Intercommunity Hospital and Huntington Beach Hospital—are on the Business Journal’s annual list of hospitals.
About 25 of Orange County’s 45 hospitals are in the CalOptima network.
“We’re a health plan, and every year health plans add or drop some hospitals to their networks,” CalOptima CEO Michael Hunn told the Business Journal.
CalOptima Health employs a public-private partnership where publicly funded health care is delivered by private health networks, such as Optum, AltaMed, CHOC and Prospect.
Such care provides the clients with primary care doctors who oversee their health, such as annual exams and flu shots. It’s also a way to reduce a person’s need to use emergency rooms.
The main sticking point was that the four hospitals didn’t use CalOptima’s medical groups for managed care, Hunn said.
“We believe very firmly that our members do best when they are in a managed care model,” Hunn said. “It’s really important that they are not using the emergency room as their primary care.”
The termination means patients no longer can have scheduled visits or be admitted to these four hospitals. They will be able to use the emergency rooms at the hospitals, which are reimbursed at different rates, Hunn said.
Prime Healthcare, which was founded in 2001 by Dr. Prem Reddy, has expanded to 44 hospitals and more than 300 outpatient locations nationwide.
“Their network is not adequate, and they have struggled to transfer and find beds for their patients, resulting in agonizing wait times and deteriorating conditions for their members,” Prime Healthcare spokesman Fred Ortega told the Business Journal.
