Advisory Opinion to Kopit (06-14-95)

June 14, 1995

William G. Kopit, Esquire
Clifford E. Barnes, Esquire
Epstein Becker & Green, P.C.
1227 25th Street, N.W.
Washington, D.C. 20037-1156

Dear Messrs. Kopit and Barnes: 

On behalf of your client, California All Health ("CAH"), you have requested an advisory opinion as to the legality under the federal antitrust laws of CAH's formation and proposal to bid for certain contracts to provide comprehensive medical services to beneficiaries of California's Medicaid program, Medi-Cal. CAH is a joint venture of six health maintenance organizations ("HMOs") doing business in California -- CIGNA, United Health Plan, Kaiser, FHP Healthcare, Blue Cross of California, and Blue Shield of California. As is explained more fully below, it does not appear that the formation and operation of CAH, as proposed, is likely to violate any law enforced by the Federal Trade Commission. 

On September 30, 1994, the California Department of Health Services ("DHS") issued a Request for Application ("RFA"), amended December 14, 1994, inviting applicants to submit proposals to act as prepaid health plans under the Medi-Cal program in twelve California counties. Applicants were free to apply for the contract in any one or more of the counties. In each county, if possible, Medi-Cal will provide services through only two plans: the "mainstream plan" operated by a private managed care entity awarded a contract under the RFA, and the "local initiative," organized by the county government in each region.

All applicant prepaid health plans are required to be managed health care organizations licensed and regulated under the State's Knox-Keene Act, Cal. Health & Safety Code