The California Department of Health Care Services (DHCS) selected Woodland Hills-based Health Net Inc. earlier this month to participate in its “dual eligibles” pilot program, under which Los Angeles County residents who receive both Medicare and Medi-Cal would be enrolled in a managed care plan.

The three-year demonstration is subject to approval by the Centers for Medicare & Medicaid Services. The other plan chosen by DHCS in the Los Angeles area is LA Care.

“Dual eligibles” are the state’s sickest and poorest residents and cost an estimated $20 billion in health care expenses, partly because their care is largely disconnected. California has approximately 1.1 million people enrolled in both government systems. Their care accounts for nearly 25 percent of Medi-Cal spending.

“Currently, most dual eligible beneficiaries access services through a complex system of disconnected programs that often leads to beneficiary confusion, delayed care, poor care coordination, inappropriate utilization and unnecessary costs, issues we are addressing with this proposal,” DHCS Director Toby Douglas said in a prepared statement. “The goal is to design a seamless system that helps dual eligible beneficiaries get the health care services they need and improve health outcomes in a more fiscally efficient manner.”

The proposed three-year project would enroll a portion of California’s “dual eligible” beneficiaries into integrated care delivery models. DHCS expects the move could save the state’s general fund $678.8 million in 2012-13, and $1 billion in 2013-14.

The pilot is funded by the Affordable Care Act. Health Net and the other plans chosen to participate will receive a blended monthly payment from Medicare and Medi-Cal to provide their enrollees all needed services. When the program begins in January 2013, beneficiaries will have a single health plan membership card and a care team to help coordinate their services.

Analysts have said Health Net stands to gain significantly from the opportunity—potentially billions in new revenue a year.

“Health Net believes that this pilot will provide better care coordination more efficiently and cost-effectively for the ‘dual eligibles’ population,” Steve Tough, president of Health Net’s government programs said in a prepared statement. “This could help improve health outcomes, care experiences and quality of life for thousands of ‘dual eligible’ beneficiaries.”

“With our strong foundation in Los Angeles and San Diego Counties and strong relationships with provider groups, we believe that Health Net is well positioned to participate in this integrated care delivery pilot,” he added.

Health Net said it is the largest provider of state-sponsored health plans in California, serving more than one million members through its Medicaid and Healthy Families programs. As of December 31, 2011, Health Net had approximately 468,000 Medicaid members in Los Angeles County.

Judy Temes