Network Adequacy Laws in Medi-Cal Managed Care Plans

Executive Summary

Medi-Cal managed care plans are capitated, meaning they receive a set payment per enrollee per month in exchange for providing services.The plans contract on a “comprehensive risk” basis, which means they accept the risk of incurring a loss if they spend more on services than they receives through the capitated payments, but they will make a profit if providing services costs less than the payments. These arrangements give plans an incentive to limit coverage of services for their enrollees in order to maximize profits. Thus, strong legal protections are needed to ensure that enrollees have access to high quality, medically necessary services.