Further fee cuts force a Medi-Cal exodus

By Evan Halper

March 24, 2008 3:44 AM PT

Times Staff Writer

After San Diego ear, nose and throat physician Ted Mazer recently billed the state’s medical insurance program for the poor for a tonsillectomy, he got a check for $168, too little to cover surgical costs. The balance came out of his pocket.

Now legislators have cut the rates even further, leaving Mazer resolved to shut his doors to new Medi-Cal patients. Almost every other specialist in his field countywide has already done the same, he said.

“I am the last guy I know of still taking [Medi-Cal] on a regular basis,” he said. “I am seeing patients from the Riverside and Orange County lines all the way down to the border.”

Statewide, many other doctors report that they too are abandoning Medi-Cal, even those who had stuck with it for years out of a sense of professional responsibility.

In response, San Francisco Mayor Gavin Newsom is expected to announce in Sacramento on Tuesday that a coalition of local governments and healthcare providers plans to file suit to force a rollback of the 10% cut in fees paid to doctors that was approved by legislators in February.

Patients and their caretakers say the scarcity of Medi-Cal doctors is already potentially dangerous.

It took downtown Los Angeles resident Liliana Ramirez more than six months to get an appointment with a physician willing to fit medical braces on her 7-year-old son, Angelo, a Medi-Cal recipient with spina bifida. Now, Angelo needs a urologist to treat a bladder problem, and Ramirez has spent weeks trying to get an appointment, she said.

“It feels like a gamble with his health,” Ramirez said. “There is fluid going back to his kidney. And he only has one kidney, which is already halfway gone. . . . I am grateful for the system, but it is getting harder and harder to get in to see a doctor.”

Half the state’s doctors were refusing Medi-Cal patients eight years ago, just after rates were last increased. Refusal rates were sharply higher among certain specialists. Medical costs have risen since then, but state officials have stopped assessing whether enough doctors are participating in the program.

Numbers no longer work

Reimbursement rates, doctors say, already are so low that a patient office visit nets only $24. Some clinics say the numbers simply don’t work anymore. The result: Thousands of patients guaranteed healthcare under state law can’t get in to a doctor’s office, so they don’t go or they sit for hours in an emergency room.

Experts warn that things may get much worse.

Chris Perrone, an analyst who tracks Medi-Cal issues for the California Healthcare Foundation, said Medi-Cal risks are becoming so unattractive to doctors that the program could soon “fall off the edge.”

When lawmakers began to address the state’s multibillion-dollar budget shortfall, Medi-Cal was the first program to be targeted with major cuts because of its size.

Funded jointly by the state and federal government, Medi-Cal is California’s second-biggest expenditure after education. It is projected to cost $38 billion next year, with about $15 billion drawn from the state’s general fund. The program serves 6.7 million poor, elderly and disabled people.

The projected savings from the cuts, say state officials: more than $500 million annually.

The Legislature’s nonpartisan budget analyst, Elizabeth G. Hill, had advised against the cut because it could discourage so many doctors from taking Medi-Cal that patients would be forced into emergency rooms, where treatment is far more costly. The state will also lose hundreds of millions of dollars in matching federal funds.

“This is not being done lightly,” said Sandra Shewry, director of the state Department of Health Care Services. “It is not a preferred policy direction so much as responsible management, given the resources of the state.”

Shewry said Gov. Arnold Schwarzenegger had no choice after lawmakers earlier this year rejected his proposal for universal healthcare, which would have included a substantial boost in rates paid to Medi-Cal doctors, funded by billions of dollars in new fees.

A ‘hidden tax’

Indeed, during the universal healthcare campaign, Schwarzenegger described Medi-Cal rates as so low that they contributed to a “hidden tax” on insured Californians, who were in effect subsidizing those with little or no coverage.

Cutting those rates even further is not a long-term solution, administration officials said, but the only immediate alternative was worse: cutting hundreds of thousands of Californians off Medi-Cal and scaling back benefits for those remaining.

The 10% rate reduction won’t take effect until summer, but its consequences are already being felt.

“We will very likely be forced to close unless we can get some other outside funding,” said Maureen Strohm, residency director for the USC-California Hospital family medicine residency program at California Hospital in downtown Los Angeles, which treats more than 4,000 patients. The cuts will leave a hole of hundreds of thousands of dollars in the clinic’s budget, Strohm said.

Aside from treating patients others won’t see, Strohm’s clinic plays another vital role for the community: It trains family physicians who then serve in low-income areas. The state is facing a shortage of such physicians as new doctors, confronting medical school debt and other costs, opt for more lucrative practices. Strohm’s clinic alone provides enough graduates each year to care for more than 10,000 patients.

Doctors at clinics with the resources to remain open say they have either stopped accepting new patients or expect to soon do so, as they have as many as they can handle. “There comes a point where you just have to say we can’t be responsible for any more people,” said Eric Ramos, medical director at Del Puerto Health Center near Modesto, a clinic that stopped taking new patients a few months ago. “There are a number of areas around here where nobody is accepting new patients.”

Patterson resident Nona Hughes, 42, a furniture maker and mother of two who has back problems, said she called every doctor in the Modesto region listed in the Medi-Cal enrollment book. None has room for her.

“They all say they are full,” she said. “Where am I supposed to go?”

Joseph Leonard, a primary care physician in private practice in San Diego, said he stopped taking new Medi-Cal patients years ago. Treating the few holdovers in his practice, he says, has become an administrative nightmare. His referrals are routinely refused by specialists because they are unwilling to work for the rates the state pays.

“I don’t know of a single neurologist in the area who will see a Medi-Cal patient,” Leonard said.

Jason Brown, 36, a patient of Leonard’s who has debilitating seizures, has been turned away by a dozen of them, according to Brown’s sister-in-law, Karie Brown, who is helping to care for him.

“I’ve spent countless hours calling facilities and doctors,” she said. “I cannot find anyone who will see him.”

Jeffrey Luther, a primary care physicianwho treats Medi-Cal patients at a clinic at Long Beach Memorial Medical Center, said he knows of only one cardiologist in the area to whom he can send Medi-Cal patients. In the town of Winters, outside Sacramento, family doctor Carla Kakutani can’t find a urologist to treat an 8-year-old boy in need of circumcision after some infections.

Family doctors who treat Medi-Cal patients are spending much of their time on the phone with specialists, “begging and pleading” for appointments, said Paul Sucgang, a primary care physician at Dreamweaver Medical Group in San Gabriel.

“I do a lot of calling in favors,” he said.

Whether the Medi-Cal cuts signed into law by the governor will save as much as the administration projects is an open question.

Shifting the costs around

A 2005 study commissioned by Blue Cross found that hospitals were making up for the low rates paid by Medi-Cal and Medicare by shifting the costs to private insurance companies, which then passed them on to consumers. The estimated cost to the average family with Blue Cross: $950 per year.

“The costs just get shifted around the system,” said Ann O’Malley, a senior researcher with the Center for Studying Health Systems Change in Washington, D.C.

Experts warn that costs to taxpayers could go up by substantially more than will be saved through the budget cuts, as patients turn to emergency rooms. In pushing the governor’s unsuccessful universal health plan, administration officials had estimated the cost of treating people in the ER at three to four times that of treating people in a physician’s office. “It’s ludicrous that every time we have someone who needs to see an orthopedic surgeon for a broken arm, our only option is to send them to the emergency room where they have to sit for four hours,” said Ramos, the Modesto-area physician. “It is a huge waste of money, it is a huge waste of resources, and it is not good patient care.”

evan.halper@latimes.com

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Medi-Cal payments

California’s health insurance program for the poor reimburses doctors at some of the lowest rates in the nation. Even Medicare, the federal government’s health insurance program for the elderly and disabled, pays substantially higher rates. Here is a sampling of payments before the recently approved Medi-Cal rate cuts.

Routine office visit

Medi-Cal: $24

Medicare: $38

Treat finger fracture

Medi-Cal: $74

Medicare: $165

Place a catheter into vein

Medi-Cal: $81

Medicare: $1,372

Chemotherapy treatment (of central nervous system)

Medi-Cal: $131

Medicare: $373