Molina Proposes Medi-Cal Transfers

Molina Medical Centers is proposing to transfer its Medi-Cal contracts in Riverside, San Bernardino and Sacramento counties to Maxicare Health Plans Inc. in a deal that would preserve Molina’s hefty stake in the health insurance system for California’s poor. Under the agreement, Los Angeles-based Maxicare would officially administer the contracts, but Molina would provide the medical care for more than 200,000 Medi-Cal recipients in the three counties. The contracts are estimated to be worth more than $1 billion over five years, said Gene Froelich, Maxicare’s chief financial officer. The deal, which would take effect July 1, was proposed by both companies in a letter of intent sent Friday to the state Department of Health Services. It is intended to resolve a dilemma faced by Long Beach-based Molina, which had failed to meet a federal patient-mix requirement for Medicaid HMOs. The arrangement is subject to approval by state and federal regulators. PacifiCare Health Systems, which earlier this month had proposed a similar arrangement with Molina, has opted not to continue negotiations. A spokeswoman said the company has decided to focus its resources on its acquisition of FHP International of Fountain Valley.