O.C. to Seek HMO-Like Plan to Cut Health Costs for Poor

SANTA ANA â€”  Orange County supervisors agreed Tuesday to embark on a wholesale restructuring of the local health care system for the poor and disabled, aimed at saving taxpayers millions of dollars and improving care for Medi-Cal patients.

If the state approves the plan as expected, Orange County would become the largest county in California to move toward what would essentially be a public-sector health maintenance organization, or HMO.

“I’m really very excited that this day has come--it’s the wave of the future,� declared Supervisor Harriett M. Wieder, who helped develop the proposal. “We’ll be blazing a path.�

The start of the new health care system is at least two years away. The state has pledged $567,000 in seed money for the project, but it could cost up to $5 million to put it into effect. Local officials say finding that money, and finding enough doctors to join the program, could prove to be obstacles.

The new health care plan is the result of two years of study, which was prompted by concerns that the county’s growing number of poor were getting little or no medical attention, in part because of the inadequacies of the state’s Medi-Cal system. Indeed, a report given to the county this week by a private consultant concluded: “Orange County, the wealthiest area in California, has a poor health care system for its indigent populations.�

By bringing more local control to the system, officials hope to solve the problem.

At a time when Orange County is looking for ways to “downsize� government and privatize services, the new system moves the county in the opposite direction. The program would create a new local bureaucracy to control and distribute about a half billion dollars in annual Medi-Cal payments, a task now handled by the state.

Doctors and hospitals that accept Medi-Cal--their number is dwindling locally--now apply for reimbursement from the state for each service rendered, a cumbersome process that has drawn heavy criticism from physicians. Under the new system, providers instead would collect from the local authority a set monthly fee for each Medi-Cal patient treated.

Advocates for the poor said they would reserve judgment on the plan until they know how much these payments would be.

“That’s what this all rides on, and that’s a totally unknown factor right now,� said Nancy Rimsha, an attorney with the Legal Aid Society of Orange County. “If (the county) is going to use this to save money, then the level of care could actually decline.�

But county officials say the new system would benefit Medi-Cal clients because it should encourage them to seek preventive and regular medical treatment. Hopefully, that will cut down on trips to the emergency rooms for treatment that is often unnecessary and costly to both the state Medi-Cal system and to the hospitals that provide the service.

At the same time, officials predict more doctors and hospitals will be available to treat the poor than under the current system because it will cut down on Medi-Cal’s notorious delays and paperwork gluts. If this streamlined process ends up saving money, officials say, they may then be able to raise reimbursement rates for health-care providers.

Santa Barbara and San Mateo counties have similar programs, while Solano and Santa Cruz have plans in the works. But Orange County, with more than 250,000 Medi-Cal patients in 1991, is by far the biggest county in the state to consider the idea. And as a result, state officials say they will be keeping a close eye on it.

“The program in Orange County will be a real good indicator for the rest of the state,� said Lorenza Valvo, an official with the California Medical Assistance Commission who has worked on the project.

The Medical Assistance Commission, which negotiates Medi-Cal reimbursements to health care providers, has given Orange County preliminary approval for the new system, and Valvo said final approval should come at the commission’s Oct. 14 meeting.

Before giving its final blessing, the commission wants to see evidence that the plan has support from both the political and medical communities locally. That support appeared evident at Tuesday’s Board of Supervisors meeting, as politicians and health care leaders enthusiastically endorsed it.

Dr. Richard F. Kammerman, past president of the Orange County Medical Assn., told supervisors the plan offered “the greatest single opportunity to fundamentally restructure and improve our health care delivery system for the medically indigent.�

And John Cochran, representing the Hospital Council of Southern California, called the proposal “a significant milestone.�

But Board of Supervisors Chairman Roger R. Stanton sounded a cautious note. He said that the plan held “great potential� but noted that the board was only “approving the concept.�

“We’re not talking about doing this for sure,� Stanton said in a later interview. “There’s a lot of ifs here, and it still remains to be seen whether there are more pluses or minuses.�

His biggest concerns, he said, were whether enough doctors would join the program to make it work and whether the money could be found to get it started.

He predicted that the county government and the private medical community would have to find between $3 million and $5 million to implement the program. “That’s a big investment given these (economic) times,� Stanton said.

But a study by a private consultant for the project estimates that the new system could save as much as $175 million in Medi-Cal costs in its first five years of operations. These savings would be generated chiefly by better managing and funding of services from the local level and by encouraging preventive and primary health care to reduce later costs.

For instance, county officials say that avoiding one nonessential emergency room trip would save enough money for five or six regular visits to the doctor.

How the Plan Would Work

A plan approved in concept Tuesday by the Orange County Board of Supervisors would mean more local management of health care for the poor, disabled and others who rely on Medi-Cal benefits. This is how it would work:

* The procedure for eligibility would not change. The state would continue to determine eligibility standards, with the county implementing them.

* Instead of paying Medi-Cal benefits directly to doctors and health-care providers, the state would give the money to a newly created commission to be appointed by the Board of Supervisors.

* The amount of this funding would have to be negotiated, but county officials expect it would start at a figure comparable to the $465 million that the state spent on Medi-Cal payments in Orange County in 1991.

* The new local authority would then distribute funds to health care providers participating in the Medi-Cal program. While providers now typically get paid for each individual service or visit, they would instead receive a monthly fee set for each Medi-Cal patient they treat.

* Medi-Cal clients would have a limited choice in doctors who could provide a range of preventive and ongoing health care. Officials say this would improve upon the piecemeal system today that results in patients making costly and often unnecessary visits to emergency rooms in times of crisis.