CalOPTIMA’s Rocky First Year Offers Lessons for Other Counties

It will be years before Orange County’s massive experiment with managed health care for the poor, elderly and disabled can prove itself.

The experimental program, dubbed CalOPTIMA, has enrolled 240,000 residents on Medi-Cal since it began Oct. 1. So far, the program has been long on ambition--including a commitment to meet the complex health-care demands of the county’s culturally diverse, needy populations--but short on results.

“This whole year has been chaotic,” said Carole McNichols, who administers several provider groups that serve the agency’s clientele. CalOPTIMA “was a huge undertaking. They were under the gun to get it off the ground and they weren’t ready for it.”

CalOPTIMA represents Orange County’s attempt to meet Gov. Pete Wilson’s mandate that urban counties shift their Medi-Cal programs from traditional fee-for-service medicine into managed care. The agency, started three years ago, contracts with doctors, hospitals and other providers to give care at a flat rate for every Medi-Cal member.

Medicaid experts say CalOPTIMA’s experience bears watching as 12 other California counties prepare to transfer their Medi-Cal recipients into managed care.

Communication glitches, problems with data collection and reporting, and organizational confusion have dogged CalOPTIMA’s start-up year. Turmoil may continue, too, as about half of the 40 health plans and provider groups that coordinate and give care scramble to consolidate this year, or go out of business.

Experts say CalOPTIMA’s ability to learn from its early blunders will determine whether it has staying power. “What’s critical to its success is how CalOPTIMA responds to the results of its first year of operations,” said Richard Potter, assistant director of Arizona’s managed care program for Medicaid.

CalOPTIMA is working hard to undo mistakes, observers say.

Consider Dr. Gerardo Canchola, a Santa Ana physician who says he’s lost thousands of Medi-Cal patients--and $100,000 a year in income--since the program began. He serves a Latino clientele and suspects illiterate patients who don’t speak English misunderstood CalOPTIMA’s instructions for choosing their own doctor and got assigned elsewhere.

“OPTIMA assumed all these people would get their envelopes and read through the material and be able to understand the rules,” he said.

The agency has offered to call all his former patients to find out what happened, he says. Even if many return to him, however, they won’t come back in time to enable the group of bilingual physicians he’s associated with to sustain itself as an independent subcontractor with the agency.

Officials say the old system restricted patients’ access to primary health care by forcing them to hunt for doctors and other providers willing to serve them. Patients often relied instead on routine care through costly emergency rooms.

State officials say the shift to managed care should help contain Medi-Cal costs and improve patient access. At CalOPTIMA, officials say, access already has vastly improved because each recipient has selected, or been assigned, a specific health plan and primary physician.

“We know that 240,000 people have a doctor and a health plan and a system in place for them,” said Mary K. Dewane, CalOPTIMA’s chief executive.

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However, that doesn’t mean patients necessarily get the care they need, critics say.

Davida Gregory, a foster parent in Irvine, says she cares for six mentally handicapped young women in their teens and twenties. When OPTIMA began, the young women lost the primary care doctor and various specialists who’ve been overseeing their care for years and were handed to physicians unfamiliar with them.

“Some of these young people have multiple conditions, take drugs for one condition that can sometimes negatively interact with another,” said Gregory. “If we don’t have a physician who can coordinate things and is aware of all of the medical and psychiatric problems, then we can really have trouble.”

In Gregory’s case, CalOPTIMA persuaded the family’s health plan to subcontract with the family’s original primary physician.

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Physicians, meanwhile, say CalOPTIMA’s information and communication systems make it extremely time-consuming to find out whether they can get reimbursed for care they give. When a patient seeks care, a physician’s staff must call CalOPTIMA to find out which plan is covering the patient, then make a separate call to the plan to find out which primary care doctor has been designated.

Susan Lutsky, who manages her husband’s medical practice, said, “Eligibility is a crapshoot on a day-to-day basis.”

There’s little hard evidence yet that CalOPTIMA is accomplishing the goals of containing health-care costs and improving access. Hospital industry sources suggest that emergency room visits by Medi-Cal recipients are down as much as 30% since CalOPTIMA began. But CalOPTIMA’s operational snafus have caused it to quit keeping tabs on a better, more direct indicator of care: the number of face-to-face encounters between patients and their doctors.

Medicaid experts wonder how the agency can contain health-care costs with its inordinately vast array of provider groups and health plans.

Critics focus, for instance, on how much of the agency’s $378-million annual budget the bureaucracy itself is absorbing, compared with the amount spent on health services.

The agency itself, which employs about 245 staffers in Orange, consumes 6% of the budget--a respectably low percentage when compared with many commercial HMOs, officials say. But Dewane allows that health plans contracting with CalOPTIMA are taking another 9% to 15% on top of that.

“We’d like to see no more than 12% ever” from each individual health plan, she said.

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The agency’s commitment to give all health-care providers a chance to participate in the business is both a strength and weakness, say policy experts. The agency was careful to give doctors who traditionally treated Medi-Cal recipients on a fee-for-service basis a shot at competing with big-time HMOs, which are paid on a flat rate. That meant patients got an impressively long list of plan options to choose from, while OPTIMA got stuck with a huge number of contractors to oversee, says Rachel Block, director of federal government’s managed care programs for Medicaid.

Doctors and patients are now bracing for consolidation this year of roughly 20 plans that have failed to achieve the required minimum 2,500-member enrollment in their first year of operation. And agency officials say they’re taking pains to ensure a smooth transition.