Medi-Cal Fails to Cover AIDS Costs, Critics Say

Private hospitals are caring for a dwindling percentage of people with AIDS in Southern California, in large part because the state health insurance program that should be paying for their care covers only a small fraction of the costs, officials said Friday.

As a result, patients dependent upon the state’s Medi-Cal program for the indigent are being forced into overcrowded public hospitals. Their care can end up costing the state more than it would otherwise, as well as siphoning off county resources from programs such as obstetrics.

“It’s a grotesque waste of resources,” said state Assemblyman Burt Margolin (D-Los Angeles), who held a legislative hearing on the subject in Los Angeles on Friday. “And it produces bad medical care for the patients.”

There were also criticisms of Medi-Cal’s reimbursement rates for outpatient care.

One AIDS specialist, Dr. Victor Beer, testified that he and his partner gave up on the Medi-Cal program after it declined to cover more than one-quarter of the cost of an office visit, and paid $1,500 of the $36,000 in bills Beer submitted in a single year.

Beer said he and his partners have continued treating their Medi-Cal patients, writing off the losses rather than trying to bill Medi-Cal. But when those patients require hospitalization, he said he has no choice but to refer them to public hospitals.

“We have an imploding system and we’re asking the county to bear an increasing burden,” Beer said.

The proportion of all AIDS patients admitted to private hospitals, including university hospitals, dropped from 73% in 1986 to 68% in 1988, according to the Hospital Council of Southern California. The public hospitals’ share expanded from 27% to 32%.

That shift from private to public hospitals is expected to continue as a growing percentage of people with AIDS find themselves dependent upon Medi-Cal. Nearly half of all AIDS patients in the state are now covered by Medi-Cal, according to the latest state figures.

Hospital officials insist that increasing reliance on public hospitals is occurring not because of any fear of treating people with AIDS, but because Medi-Cal program administrators ignore the extraordinary costs incurred in caring for AIDS patients.

“Hospitals are reimbursed by Medi-Cal at a set rate for all patients,” Stephen W. Gamble, president of the Hospital Council of Southern California, testified at the hearing. “Therefore, the more AIDS patients a hospital treats, the more it will lose.”

Furthermore, Medi-Cal frequently denies coverage for patients prescribed experimental drugs and patients without AIDS but with AIDS-related conditions. It also does not cover much of the cost of home health care, even though it has been proven more economical and more humane.

“The Medi-Cal program is doing everything possible to try to deny payment,” said Richard Cordova, administrator of County-USC Medical Center. “They are not looking at how to solve the problem. They are looking at how to save a dollar.”

Several hospital officials and physicians contended that private physicians and private hospitals with AIDS wards can care for AIDS patients more economically than public hospitals. For that reason, they suggested the state ends up paying more under the current system.

John Rodriguez, the state Department of Health Services official responsible for Medi-Cal, defended the program, noting that funding for AIDS care has risen dramatically to $67 million this year despite the program’s historical commitment to “cost containment.”

However, he conceded that the program’s tightfisted approach discourages physician and hospital participation: “Clearly, our reimbursement rates are not high enough. I think honestly it has an impact on a provider’s decision whether or not to participate in the program.”

Throughout the hearing, hospital officials and others repeatedly argued that the Medi-Cal program must become more flexible: It should reimburse both doctors and hospitals at a higher rate for taking care of people with AIDS, they said.

They also called for a waiver of the traditional system under which hospitals’ Medi-Cal contracts cover all medical and surgical services. Instead, they asked that private hospitals wanting to care for AIDS patients be allowed to negotiate contracts just for AIDS care.

Similarly, the president of the Visiting Nurse Assn. of Los Angeles said Medi-Cal’s poor reimbursement rate for home health care has left her agency facing massive losses on AIDS cases and uncertain whether it can continue caring for all the Medi-Cal patients referred to the agency by County-USC Medical Center.