UCI Will Stay in Medi-Cal Despite Expected Losses

Times Staff Writer

UC Irvine officials decided Wednesday to renew their hospital's contract with the state Medi-Cal system, ending months of threats that they might quit the state program and plunge health care for Orange County's poor into chaos.

Chancellor Jack W. Peltason said he was pleased with the one-year contract because it improves deficit-ridden UCI Medical Center's reimbursement rate from the state. Even so, the new contract is expected to leave the university hospital with millions of dollars in losses this fiscal year.

Further, Peltason warned, though a contract has finally been signed, "I want to make it very clear that the crisis in health-care access for the indigent in Orange County is not over."

He said that state Medi-Cal officials must still persuade more of the county's 38 acute-care hospitals to take indigent patients. "If that objective is not achieved, the crisis will worsen," Peltason said.

Officials from the California Medical Assistance Commission, which negotiates Medi-Cal contracts, could not be reached for comment Wednesday.

Received Commitments

But Peltason and other UCI administrators said that before they renewed the contract, they received commitments from CMAC, county supervisors, state legislators and state Health and Welfare Agency Secretary Clifford L. Allenby that they would work together to rebuild Orange County's Medi-Cal network.

"We have a gentlepersons' agreement that the network issue will be addressed," said Mary A. Piccione, the medical center administrator who led UCI's negotiations.

The university hospital, which is located in Orange, cares for about 65% of Orange County's poor but has only 6% of the county's hospital beds.

Besides UCI, only 12 of Orange County's 38 acute-care hospitals have Medi-Cal contracts. But if UCI had dropped out of the Medi-Cal network, administrators from at least two of the 12 had vowed that their hospitals would quit the program too.

In addition, a UCI decision to quit Medi-Cal would have made it difficult for thousands of Medi-Cal patients to find non-emergency treatment, advocates for the poor had warned.

Around the county, health care leaders reacted to UCI's decision Wednesday with a mixture of surprise and relief--surprise because some had become convinced that UCI would quit the program, and relief because they believed that the few remaining Medi-Cal hospitals would have been inundated with patients.

'Good for Health Care'

"It's good for health care in Orange County and good for the patients," said David Archer, chief operating officer of AMI Medical Center of Garden Grove, which had threatened to pull out of Medi-Cal if UCI did.

"As everyone has said, it would certainly bring about a crisis within Orange County if they did not come to an agreement. We all would not be happy to face that crisis," he said.

Thomas E. Uram, director of the Orange County Health Care Agency, praised UCI officials' "endurance and negotiating ability." Uram also said that he believed UCI's unprecedented tough stance had persuaded Medi-Cal officials to give other hospitals improved contracts.

But at the Hospital Council of Southern California, Vice President Jon Gilwee agreed with Peltason that health care for Orange County's poor was still in a crisis.

UCI's decision to remain with Medi-Cal "preserves the network--but not a very good one," Gilwee said. "The Medi-Cal program still funds only 65% of the cost of delivering services" and a poor person's access to non-emergency services in Orange County is severely limited now, he said.

He noted that all hospitals have been struggling with major losses in regard to indigent care; in Orange County, the losses totaled $240 million last year.

Began Talking in January

UCI officials began negotiating with Medi-Cal for a new contract in January.

By March, they told the UC Board of Regents that they might quit the state-financed health insurance program to save their hospital from financial disaster. Indigent patients were inundating their medical training programs and crowding out patients who could pay, UCI officials contended. The medical center lost $11.6 million in the 1988-89 fiscal year and was rapidly heading toward bankruptcy, officials warned.

In late July, UCI officials got support from the regents to terminate the Medi-Cal contract.

Still Peltason, Piccione and her deputy, Herb Spiwak, kept talking to CMAC officials.

Helpful in persuading UCI to renew the contract, Peltason said, were meetings that he and Vice Chancellor Walter Henry had Friday with each of the county supervisors. "Nobody made a commitment to do anything specific," Peltason said, "but there's a concern and willingness" to share the burden of health care for the poor.

By law, details of state Medi-Cal contracts are confidential and Peltason and Piccione declined to provide any information Wednesday. They did say that one element of the contract, which runs from Sept. 16 of this year to Sept. 15, 1990, was an increase in the medical center's reimbursement rate. (At one point, UCI leaders told the Board of Regents that they were seeking a 17% increase).

Called a Key Element

Another key element, they said, was the commitment from CMAC that other Orange County hospitals would be brought into the Medi-Cal system.

The new contract has not yet been signed, but Piccione said Wednesday morning that she informed CMAC officials that "we agree to agree."

She said the medical center would be closely monitoring the number of Medi-Cal "patient days" (overnight stays) at the hospital, currently about 50,000 a year. "Reduction in the number . . . will signal that the (Medi-Cal network) is being restored," she said.

Piccione also noted that the hospital's "obstetrical diversion" policy, in which maternity patients are asked to find other hospitals when UCI is full, would continue despite the new contract. Severe overcrowding in the maternity ward continues despite the diversion policy, she said. The maternity ward, which is licensed for 250 deliveries a month, expects to handle 600 this month.

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