Katz, Wary of of Medi-Cal Project, Seeks Reassessment

Assemblyman Richard Katz said Friday he will ask the state’s legislative analyst to assess the financial feasibility of a proposed Medi-Cal pilot project in the San Fernando Valley area so that the area’s legislators can better determine whether it should be stopped.

Katz (D-Sepulveda) said he is asking for the analysis because of the state’s acknowledgement that the experiment, called Expanded Choice, will not save money initially. Also, a top state official said Friday, there is no hard data to back the state’s contention that the experiment will slow the rise of Medi-Cal costs in the Valley area.

Katz, who wants the analysis completed before the Legislature reconvenes in January, said the state’s vacillation on the cost effectiveness of the project is disconcerting.

“Originally it was estimated that the program was going to save $5.5 million. Now we’re hearing it is not going to happen,” he said.

The assemblyman stated his intentions following a public meeting he sponsored at the Sepulveda Recreation Center. The meeting attracted representatives of other Valley-area political leaders and about 200 residents.

Little Support

As has happened at many of the Expanded Choice hearings, none of the about 40 people who spoke, except state officials, favored the project. Opponents represented such Medi-Cal beneficiaries as the elderly, the developmentally disabled, the blind, the speech-impaired and those with multiple health problems.

Under Expanded Choice, most Medi-Cal recipients would receive their care from health maintenance organizations rather than from their own physicians. The state has claimed that the experiment will provide better access, since only one in four Valley-area physicians now accepts Medi-Cal patients, who make up about 7% of the area’s population. However, opponents say the program will disrupt the care people are now receiving from their own doctors and will endanger the health of people with medical problems requiring more expertise than HMOs can provide.

State officials originally said Expanded Choice would shave $5.7 million, or 5%, off the cost of health care for 87,000 Medi-Cal recipients in the San Fernando and Santa Clarita valleys in 1986. Instead of spending about $113 million next year in the area, the state was to spend more than $107 million for those beneficiaries.

However, in recent weeks, officials of the California Medical Assistance Commission have conceded that savings for 1986 would be less, or non-existent. The commission officials now say the financial goal is to slow the rise of Medi-Cal costs.

“The commission has not made the claim of long-term substantial savings,” Jim Foley, director of the pilot project, told the crowd.

Change in Reimbursements

Foley said the state would not save $5.7 million in the Valley area during the first year because of a one-time change in reimbursements to health-care providers.

The state now pays a physician three or four months after treatment of a Medi-Cal recipient. Under Expanded Choice, the state will pay HMOs each month for the care they will be giving patients in the subsequent 30 days. The resulting loss of interest payments will eat up the 5% savings, Foley said.

When asked later why that qualification was not made initially, Foley said, “We didn’t point that out, but it wasn’t intentional. . . . It hasn’t been a hidden issue.”

Foley also said there is no documentation to back up the commission’s contention that rising Medi-Cal costs will be retarded by the experiment. He said the state has no way to calculate precise savings until yearly contracts with health maintenance organizations are negotiated. However, he said, the state believes it will have more control over costs with the system.

The state Department of Health Services, however, used savings projections to obtain permission from the federal Health Care Financing Administration to embark on the Medi-Cal experiment in the Valley area and San Diego County. In its 1984 application, the state maintained it would save millions of dollars. The federal government granted a waiver based in part on the estimated savings, documents obtained by The Times indicate.

According to federal law, no state can operate a health-care delivery experiment that restricts the rights of recipients to choose their own physicians unless there is a guarantee it will be “cost effective.”

Foley, however, said the state has clarified the economic realities of Expanded Choice with federal officials, who have no problem with the revisions.

No one from federal agency’s regional office in San Francisco could be reached for comment Friday.

Mike Parks, an attorney with the National Health Law Program, said he questioned whether the state’s waiver is still valid because the savings figures in the state’s application are not correct.

“If it doesn’t save money, then there shouldn’t be a waiver,” Parks said.