California's ambitious effort to save billions of dollars by changing how the state's costliest patients get treated is on the ropes.
The Obamacare program was designed to reduce medical costs by putting more of the nation's 11 million most challenging and expensive patients into tightly managed care.
But the rollout in California — one of the first states spearheading the effort — has been marred by widespread confusion, enrollment glitches and a revolving door of health officials. Sixty percent of eligible patients have rejected the program, and state leaders are demanding to see financial savings in a year.
Most of the patients suffer from multiple chronic conditions, such as diabetes and Alzheimer's. They range from younger, disabled adults to older Americans in nursing homes. Nationwide, some $300 billion is spent annually on these patients who qualify for both Medicare and Medicaid.
In Long Beach, Bertha Poole, a 62-year-old quadriplegic, has been on Medicare and Medi-Cal since 1996. She likes her doctors and isn't eager to join a new program.
"Most people don't want to even consider leaving their doctor," she said.
Other patients like Daniel Caldera Jr. welcome the extra attention they say they get in managed care. The 58-year-old Chino man is a disabled veteran and has landed in the hospital twice in the last year. He's enrolled in the new state program with CareMore, a unit of insurance giant Anthem Inc.
His new doctors quickly diagnosed a blocked coronary artery after he complained about shortness of breath while taking out the trash. "I was literally a ticking time bomb," he said.
California's program, known as MediConnect, calls for turning about 450,000 of the state's 1.2 million dual-eligible patients over to HMOs run by Anthem, Health Net and other insurers. The prospect of increased profits from taking on the poorest, sickest patients has captivated Wall Street and sent company shares soaring.
But the rollout has been far rockier than expected and raised concerns about the state's approach.
"These numbers are falling far below what the state was hoping for, and it puts pressure on them to increase enrollment rates," said Kathryn Kietzman, an expert on this population and a UCLA health-policy researcher. "The stakes are high for California, and these changes are potentially a big deal nationally if they can get it right."
State officials are confident they can overcome a rough start. In January, the state reported that 60% of eligible patients had turned down the program in Los Angeles and five other participating counties. That's nearly double projections. Mari Cantwell, chief deputy director at the California Department of Health Care Services, said 123,000 patients are enrolled, and their experience has been positive.
"Once people enroll they are generally finding the program does work for them," Cantwell said. "This is a tremendous opportunity to bring together two systems of care that have been very separate for a long time and operated under different rules."
Cantwell said the state is expanding its outreach to promote the benefits of the program and address any concerns. Critics have attributed some of the program’s missteps to changes in department leadership. But Cantwell insisted that hasn’t been a factor in the state’s performance.
As part of the Affordable Care Act, the Obama administration is pursuing similar tests in several other states, including Massachusetts and Illinois. But the outcome in California is crucial since nearly half of the 300,000 people enrolled in these pilot projects are in the Golden State.
"We are seeking innovative new ways to improve outcomes and get a better value for our investment," said Tim Engelhardt, acting director of the federal Medicare and Medicaid coordination office.
In 2013, the Obama administration approved the pilot project in California. State officials hailed the MediConnect program as a milestone for California's most vulnerable patients by addressing their medical, mental health and long-term care needs in one place.
The government pays health plans a monthly amount drawing from Medicare and Medi-Cal to give enrollees all of their services. Patients carry a single health plan card and a team of professionals coordinates all aspects of their care.
That could be a huge improvement compared with conventional fee-for-service medicine in which doctors and hospitals rarely communicate and have little financial incentive to keep a patient healthy. It also seeks to alleviate the administrative hassle of dealing with two separate government bureaucracies. Much of the savings are expected to come from reduced hospital stays and keeping people in their homes rather than a nursing home or another institution.
However, from the outset, consumer advocates and doctors warned that the state's initiative was too big and overly complicated. They said it put too many patients at risk of having their care interrupted and losing access to essential treatments and medications. The L.A. County Medical Assn. and other groups tried and failed to get a state judge to halt enrollment last summer.
Critics faulted the state's enrollment process, which automatically placed patients in the program unless they opted out. Some people didn't find out their insurance network changed until they were at the doctor's office or pharmacy.
"It's a huge change in coverage, and they don't know what happened," said Stephanie Lee, a supervising attorney for Neighborhood Legal Services, which runs the independent ombudsman office for MediConnect in L.A. County. "The No. 1 concern for most people is, 'Can I continue to see the healthcare provider I want to see?'"
In some cases, the switch can put patients at serious risk. An El Monte cancer patient had her catheter supplies abruptly cut off. A Burbank woman said a major neck surgery was nearly canceled because the state hadn't received her opt-out information. The ombudsman stepped in to help resolve the problems.
Government officials and consumer groups say physicians are urging patients to stay out, which is boosting the opt-out rate. They contend that patients with so many medical needs can be lucrative to treat, and doctors may not want to give that up.
"Many parts of the provider community have been very negative to this program and they have conveyed that to their patients," said Janet Heinritz-Canterbury, consumer outreach coordinator for the Personal Assistance Services Council of L.A. County.
Dr. William Averill, a Torrance cardiologist and board member at the L.A. County Medical Assn., said doctors are looking out for their patients.
"If the state had listened to doctors in the trenches giving this care, this scenario wouldn't have happened," Averill said. "Both the scope and pace of the program exceeded what they were able to deliver."
Michael Schrader, chief executive of Orange County's Medi-Cal managed-care plan called CalOptima, said some doctors are upset because they are being asked to do more work for roughly the same pay. They are expected to develop individualized care plans and collaborate more with other providers.
Schrader said CalOptima, which might start MediConnect enrollment in July, is hiring more care coordinators to ease that burden. "Stemming the opt-out rate will require broader physician participation," he said.
Despite the rough start, some health policy experts say it's too soon to give up.
"It's been messy in California, but I really think those savings are there," said Robb Cohen, a consultant at the Gorman Health Group in Washington. "There are billions of dollars on the table."