Managed Health Care Coming, State Official Says : Medicine: She hears doctors’ concerns about quality of services under proposed new system. Prop. 187 restrictions, she says, are on hold.

The head of the state’s Health and Welfare Agency told Orange County doctors and nurses Wednesday that incremental, state-by-state health reform is “probably the way to go” now that sweeping national reform has foundered--and that California is leading the way with its pursuit of managed care.

During a brief visit to Chapman General Hospital in Orange, Sandra R. Smoley fielded a wide range of questions, from how physicians and patients will fare under managed care to Medi-Cal reimbursement problems and implementation of Proposition 187.

“Nothing is changed. . . . Everything is status quo,” Smoley, the secretary of Health and Welfare, said, in answer to a doctor’s question about whether the anti-illegal immigration measure means they cannot provide prenatal care to undocumented women. “We’re waiting for the courts to move forward.”

Smoley, a former nurse, said there eventually would be “clear-cut . . . directions from the state” on how the measure is expected to be enforced. Most on the minds of audience members, however, was how they and their patients might be affected by health reform. Some said they feared patient’s choice of physicians and the overall quality of care could be compromised in a system in which cost-cutting is the driving force.

Dr. Christopher Lyon, an ophthalmologist, said a “major criticism” of managed care is that it financially rewards primary-care physicians, who act as “gatekeepers,” for limiting referrals to specialists. Lyon also said he is concerned about certain physicians being excluded from managed-care networks, thus decreasing patient access to treatment.

“The fact of the matter is, there is a movement to managed care,” Smoley said. “It is going to increase access and increase choice. That is the wave of the future. . . . What we’re doing in California does fit into that system.”

She said the state is looking to expand “health insurance purchasing cooperatives” composed of small employers, so they can negotiate better rates from managed-care providers.

Lyon said later that he believed Smoley’s remarks on managed care were “diplomatic” and what he expected from a “state bureaucrat”--but that his concerns remain.

“What’s most on our minds is the viability of private practice in this state” for those who choose not to join managed-care networks, said Lyon, surrounded by nodding colleagues in the physicians’ cafeteria.

One physician told Smoley he is bothered by high administrative costs generated by the insurance companies that run managed-care programs.

Smoley said that issue has attracted attention in Sacramento, and that while proposed legislation to limit these overhead costs recently failed, there is now a requirement that insurance companies disclose these costs to the public.

“I think that’s a positive step,” Smoley said, because the information can be useful when managed-care contracts are negotiated.

Doctors complained to Smoley that Medi-Cal reimbursements are unreasonably low, and that the program does not cover important medications.

Some physicians said after the meeting that they are hopeful the massive reform of Medi-Cal in Orange County under the OPTIMA program--which will involve bringing about 300,000 low-income patients into managed care networks beginning next July--will improve the reimbursement process.

Mary Dewane, executive director of OPTIMA, who attended the meeting with Smoley, said her agency is interested in doing what is necessary to obtain specialists’ services, which are seriously lacking in the existing Medi-Cal program.

One physician, however, left the meeting openly dissatisfied, saying his concerns about Proposition 187 were far from allayed.

“My concern is that doctors should practice medicine and stay away from politics,” said Francisco Jimenez, director of Chapman’s Pan-American Clinic, which accepts Medi-Cal patients. “I became a physician to see sick people. I should not be obligated to report on a very private--and sacred--relationship between a doctor and a patient.”

Under Proposition 187, publicly funded non-emergency health care would be denied to illegal immigrants.