New Plans for Health Care Stir Debate : Medi-Cal: State offers San Diego County chance to enroll in one of two pilot projects, one managed by the county, one by private health care concerns.

Local health and hospital officials are quietly exploring ways to revamp the Medi-Cal program used by 300,000 county residents--a move that could shift to local authorities the $500 million that the state pays each year for San Diego Medi-Cal patients.

The endeavor would revolutionize the way Medi-Cal patients receive care. It also would pit doctors and hospitals against each other in competition for a share of a big pot of money that could become available in two years.

“A lot of people who have vested interests are going to fight,” said Dr. Bob Reid, chairman of the county’s Access to Health Care Commission, a group whose members include representatives from local hospitals, the insurance industry, employers and the Greater San Diego Chamber of Commerce. “You’re talking about big money.”

In an effort to give Medi-Cal patients better access to health care, the state is offering counties the opportunity to enroll in one of two pilot projects, one managed by the county, one by private health care concerns. Both projects emphasize “managed care,” a system that resembles a health maintenance organization, or HMO, in which patients are treated by specific doctors and hospitals.

“Medi-Cal patients now spend 10 to 20 phone calls trying to get a physician who will treat them. With these programs, they are going to have much better access,” said Byron Chell, general counsel with the California Medical Assistance Commission, which negotiates Medi-Cal rates with hospitals and is offering the pilot programs.

Increasing numbers of experts also say the managed care system is the cheapest, most efficient way to tend patients.

“Arguably, you could reduce the 18% to 22% inflation rate in Medi-Cal with this type of managed care approach,” said Jim Lott, president of the Hospital Council of San Diego and Imperial Counties.

Today, Medi-Cal patients can select any doctor or hospital that accepts Medi-Cal patients. That system has its limitations, experts say.

Some specialists, put off by low reimbursement rates and burdensome paperwork, routinely refuse Medi-Cal patients. Patients are sometimes turned away until their illnesses are considered serious--a circumstance that leads to overuse of costly emergency rooms, Lott said. And low-income pregnant women frequently don’t get the prenatal care that might better their health and that of their unborn children, he said.

With the current Medi-Cal program, Sacramento pays about $500 million each year to tend San Diego County Medi-Cal patients. But the two pilot programs under consideration would shift funds from state to local authorities. Beginning Jan. 1, 1994, areas with these pilot programs in place will be required by law to provide care for all Medi-Cal patients in their area, Chell said.

Under one pilot plan, county officials would receive state funds to create a health authority, an entity that would set up a program and administer the money that Sacramento normally pays local doctors when they tend Medi-Cal patients.

Under a second plan, hospital or HMO officials would control the purse strings. With this plan, which has not yet been tried, hospital and HMO officials would bid for geographic regions, contracting with the state to care for all Medi-Cal patients in their area. Large health care chains--such as Sharp Healthcare--would clearly have an advantage under this plan.

Both plans represent an attempt to put dwindling funds to better use while improving patients’ access to doctors and streamlining the bureaucracy. But the big question looms: Who will control the purse strings?

“Whatever happens, everybody is going to have to give up a little bit,” Reid said. “I think this is a win-win situation. But there are going to be a few people left out.”

Some county officials say they have more expertise in directing large programs, making a health authority the way to go. But with equal vehemence, some hospital officials say they could run a system more efficiently than the county.

“The current state Medi-Cal program runs at less than 7% administrative costs. A local program--if you look at comparable county programs--use approximately 20% of the dollars needed to run the program,” said Lott of the hospital council. “That would mean (if the county ran the program) there would be fewer treatment dollars.”

County and hospital officials have agreed that more information is needed before one pilot program can be selected.

So last month, the county’s Access to Health Care Commission chose the accounting firm of KPMG Peat Marwick to analyze how each plan would affect San Diego.

Commission members intend to solicit funds from private and state sources to pay for the $243,000 study, which is expected to be finished in the fall, Reid said.

State officials have been touting the success of pilot programs in San Mateo and Santa Barbara counties, both modeled after the county health authority system. (A similar program launched in Monterey, however, was killed after it failed during the early 1980s.)

San Mateo County’s program has been in place since 1987. Its Health Plan of San Mateo has grown from serving 27,000 patients in 1987 to 37,000 this year.

“San Mateo has been very successful. We have increased patients’ access to doctors. People have relationships with their physicians. And we have got more doctors taking more Health Plan patients than previously took Medi-Cal,” said Mike Murray, executive director of Health Plan.

San Mateo also is saving money, Murray said proudly. The Health Plan costs $5 to $7 less per member each month than Medi-Cal, Murray said.

Murray points out some advantages of the Health Plan:

* To woo some specialists, such as obstetricians and gynecologists, the Health Plan pays 20% more than Medi-Cal pays.

* The number of in-patient hospital days has been reduced by 30%.

* Use of emergency rooms has been reduced by 15%.

* Doctors offer extended office hours, and pediatricians keep their offices open Saturdays.

In addition, with the Health Plan, officials can implement special incentive programs. To entice pregnant women to obtain monthly health care, officials offer a woman a grocery gift certificate after she has attended four prenatal sessions. After seven months, if the woman has attended her monthly sessions, she is given a car seat or stroller.

Could such a program be established in San Diego County?

“I have no crystal ball,” said Dr. G. William Cox, director of the county’s Department of Health Services. “I would like to see an overhaul (of the system) but we have a history of tending the weeds at the edge of the garden and doing some tinkering.”

So far, only a Sacramento hospital has volunteered to implement a geographic managed care pilot program, said Chell of the California Medical Assistance Commission. The health authority pilot program has been more popular, drawing interest from several counties, including Santa Cruz, Solano, Orange and San Bernardino.

When state officials met with county health and hospital officials in San Diego last month, San Diego’s response was hesitant, they said. Most hospital and health officials told the commission members that they wanted to delay enrolling in the program until the county had studied its options.

“We didn’t get the type of response that we had gotten from other counties,” Chell said. “We didn’t get, ‘Come on in here, we’re ready, willing and able.’ ”

Several facilities, including UC San Diego Medical Center, Children’s Hospital and Paradise Valley Hospital, might lose money if the pilot programs are implemented, hospital officials said. The state currently pays $26 million each year to these facilities because they tend a large share of the county’s Medi-Cal patients.

“Our disproportionate share payments would be jeopardized,” said Fred Harder, president of Paradise Valley Hospital, where Medi-Cal patients make up half the admissions to the hospital.

In testimony before the commission March 18, Jan C. Spencley, director of government and contract relations at UCSD Medical Center, said it and other facilities with a history of tending Medi-Cal patients should help shape the new program for the county.

Spencley and Harder both told the commission that San Diego should move forward cautiously.

“We are inevitably moving in the direction of managed care. But let’s do it carefully rather than rushing into a demonstration project that no one is prepared for,” Harder said.