Delay in County Changeover to Managed Care Ordered

Federal regulators have instructed the state to immediately suspend plans for automatic enrollment of poor people in managed care in Los Angeles County, saying the new process--the largest and most complex undertaking of its kind in the country--may be too confusing for Medi-Cal beneficiaries.

The U.S. Health Care Financing Administration wants the state to hold off because instructions to patients on their health care provider choices are confusing and HCFA has doubts about the ability of the contractor to handle enrollment and educate patients.

Also, one of the county’s two major Medi-Cal managed care plans, set to start up Tuesday, does not yet have a license to operate.

“We are gravely concerned about the impact these implementation problems will have on beneficiaries,” Elizabeth C. Abbott, HCFA’s regional administrator in San Francisco, wrote in a letter to the state this week. The suspension will last until the state “can satisfactorily demonstrate . . . that the system has stabilized in the county and beneficiaries are being provided with complete, timely and accurate information about their managed care choices.”

The decision means that patients who do not choose a managed care health plan, for whatever reason, will remain on the old form of Medi-Cal instead of being assigned, as planned, to managed care “by default.”

Hundreds of thousands of defaults may eventually occur in Los Angeles County, where more than a million patients will be ushered into managed care over the next year.

Patients have a choice between LA Care--a partnership of one public and six private plans--and the HMO Foundation Health.

LA Care is scheduled to start up Tuesday without getting any new default assignments; Foundation’s start-up in May is unaffected by the federal decision.

The federal move is a setback for the California Department of Health Services, which has aggressively pushed the managed care model in Los Angeles and 11 other counties as a remedy for a traditional Medi-Cal program afflicted by runaway costs and fewer patient choices.

Managed care involves paying plans fixed monthly rates for patients, as opposed to fees for each service.

Joseph Kelly, the administrator overseeing Medi-Cal managed care in California, said he is confident that the state will be able to promptly allay federal concerns, although he took issue with the doubts expressed over the state’s enrollment contractor.

“I disagree with that as being a problem,” he said.

“Enrollment problems are a thing of the past.”

Kelly said LA Care, the plan that does not yet have a license, will be licensed by the state Department of Corporations on Tuesday, and information given to patients will be made more straightforward.

He stressed that LA Care will proceed with plans to enroll patients who choose, or who in the past have chosen, to be in managed care plans.

Still, the news presents a possible problem for the county of Los Angeles, whose Community Health Plan is a partner in LA Care. More than any of its six private plan partners, Community Health had been counting on the automatic enrollments for financial stability.

“We had an agreement with them to assure they would get 165,000 members,” said Anthony Rodgers, chief executive officer of LA Care.

“That was to protect their financial situation. Without default [assignments], they only get choosers,” and beneficiaries may not choose the county over private plans.

Rodgers said that if the delay in the default process continues beyond a month or so--which he does not anticipate--the seven partners in LA Care could lose “millions of dollars.”

He said LA Care’s solvency is not in danger because it has $3.4 million in the bank, but it now may face unexpected marketing costs to promote the plans.

Rodgers questioned the timing of the federal action, saying regulators already had indicated their approval of LA Care’s approach.

“They waited until the last minute,” Rodgers said. “To have this done by a directive from Washington . . . we just wish we could have had a dialogue.”

HCFA’s action follows formal protests in the past two months by the Los Angeles County Medical Assn. and a coalition of consumer groups, which argued that the state’s program in Los Angeles and elsewhere is poorly planned and puts patients’ lives at risk. Critics had asked the state to slow down or even stop and reconsider its approach.

“I think it’s really good” that HCFA stepped in, said Dr. Richard Johnston, president of the medical association. “A lot of people could have been hurt” otherwise.

Enrollment snafus in Medi-Cal managed care plans have troubled various counties over the past year.

Some patients were assigned away from longtime providers, mis-assigned, sent wrong information, sent information late or in the wrong language, or sent no information at all. Critics estimated that in Alameda County, as many as eight in 10 patients initially did not choose plans and had to be automatically assigned.

The state has blamed many of the problems on a former contractor, Benova Inc. of Portland, which until December handled its Medi-Cal sign-ups.

The Department of Health Services hired a new contractor, MAXIMUS, in January after Benova’s contract expired and recently sued Benova for breach of contract.

“A lot of things are different [now],” Kelly said last week. “We . . . have a much more efficient enrollment process, monitored on-site on a daily basis.”

Benova officials contend that state funding and planning for the immense project fell far short of what was needed. “The state continues to blame Benova for all of the problems associated with the implementation of the Medi-Cal managed care program,” said Colleen A. Cain, Benova’s president and chief executive officer, in a March 25 letter to The Times explaining the company’s position.

“In fact, management and decision-making within the Department of Health Services are at the root of the problems.”

Johnston and consumer groups have worries beyond enrollment. The physician specifically citedlow payment rates to the plans, which he said may result in withholding needed services from patients. Rates in Los Angeles County are to be about $75 per patient per month.

“What the state is doing is setting the [capitation] rate to their budget. What needs to be done is to set the cap rate to human health care needs,” Johnston said.

For their part, state and LA Care officials say they have taken pains to include the medical association, consumer organizations and others now leveling criticism in all stages of Medi-Cal managed care planning in Los Angeles County. Kelly said many of their ideas have been accommodated.