O.C. Largely Healing Service to Poor Patients

Recovering from a rocky beginning, Orange County’s cutting-edge, HMO-type health system for the poor and disabled is winning increasingly favorable reviews from patients and doctors, doubling the number of physicians who take such patients while reducing hospital stays and emergency-room visits.

Known as CalOPTIMA, the system replaced Medi-Cal in the county three years ago this month. It was part of a state mandate to shift the urban poor to managed care, the ubiquitous system that serves most Americans who have private health insurance.

But in making the move, Orange County also created something unique in the nation: An umbrella agency that contracts not only with established HMOs to treat patients but also with independent doctor/hospital groups that eliminate the HMO middleman.

The idea was to have a single agency oversee benefits for more than 200,000 poor and disabled people while upgrading Medi-Cal’s second-class health care system. It would tap into the county’s entrepreneurial spirit to rein in costs but still improve health care. It would also balance the competing interests of doctors and hospitals.

Though CalOPTIMA’s critics have dwindled since its complaint-plagued start, some involved say it is too early to tell if CalOPTIMA will match its promise. Others say the system, which this year will spend about $503 million in federal and state tax dollars, has yet to resolve the problems of delivering specialized care to the poor and disabled.

Yet even the cautious give CalOPTIMA high marks for caring about people’s medical needs.

“They are really trying to do something good . . . but I think we have yet to see if this is really going to work in the long run,” said Nancy Rimsha, a Legal Aid Society lawyer who works with Medi-Cal recipients.

CalOPTIMA’s chief executive officer, Mary Dewane, says the agency, which employs 259 people, still needs to improve--for example, it should create a way to measure how well its 17 available health plans are doing in caring for members.

Dewane also acknowledges that there remain problems in serving some of the disabled, but she says the agency has “laid the foundation” of an effective program and will build on that.

“We are in our infancy,” she said. “Many people thought this program would never get off the ground.”

Getting More Doctors on Board

By some measures, CalOPTIMA already is delivering on some of its promises.

A principal goal was to make it easier for patients to get treatment. For years, many physicians in the county had refused Medi-Cal business; finding specialists to treat the poor was especially difficult.

“Doctors did not want to do it [before] because reimbursement was very poor,” said Dr. Jon Kramer, an Anaheim Hills pediatrician.

That problem has been eliminated. About 5,000 physicians are in the program--85% of the county’s physicians.

That compares with about 1,900 who took Medi-Cal in 1993, according to the Orange County Medical Assn. and state data. In addition, 3,300 specialists are in plans that treat CalOPTIMA clients, compared with about 1,150 five years ago under Medi-Cal.

Kramer said that now, if a disabled child he is treating needs a specialist, “I don’t have to ask for a favor or go searching for a specialist.” Instead, Kramer refers to a specialist within his health plan.

The key to improved access is CalOPTIMA’s competitiveness. The agency’s rates match those of private HMOs. As a result, physicians and medical groups competed fiercely for the business.

“It is a large, public, paying program in terms of dollars and is important to the financial viability of the players,” said Sam Roth of the county medical association.

By providing members with their own doctors, CalOPTIMA has made headway against another seemingly intractable problem: poor people who relied on expensive emergency rooms as their primary source for medical care. Hospitals are not permitted to turn away anyone seeking care because of their inability to pay.

Almost from the outset, emergency room visits by Medi-Cal patients were cut almost in half, said Dr. Stephen Groth of the Society of Orange County Emergency Physicians.

“Before, we saw large numbers of Medi-Cal patients with minor problems . . . colds, fevers, rashes-- problems that are easy to take care of in the primary care setting,” he said. “Since CalOPTIMA, we have seen virtually none of those minor, elective, walk-in type of problems.”

The system also reduced patient days at the county’s nine busiest hospitals from 138,575 in 1993 to 73,143 in 1997.

“That is extremely good news, assuming all admits and decisions are appropriate,” said Roth of the medical association. “And we believe that to be the case.”

While doctors agreed that treating minor illnesses in emergency rooms wasn’t cost-effective, the drop in the number of poor patients seeking those emergency services caused some hospitals to lose business. At UCI Medical Center and Children’s Hospital of Orange County, for example, the combined patient days fell by more than half from 1993 to 1997.

But CalOPTIMA helped out those Orange hospitals by making them the first choice for patients who had not selected a health plan, said John Gilwee of the Health Care Assn. of Southern California, a hospital trade group. That response earned the goodwill of the county’s hospitals.

“We have been able to identify problems and they have been responsive in hammering out the possible solutions,” Gilwee said.

But the bigger question remains: Are members receiving better medical care under the program? Are hospital days down because patients are treated by primary care doctors or because they are being denied care?

Upgrade in Care Hard to Assess

Assessing patient care is a complicated task. Experts nationwide agree that there is no widely accepted system for evaluating medical care. In addition, assessments by state agencies are way out of date, and even those do not address the quality of medical care.

The state Department of Health Services does annual audits of CalOPTIMA and other publicly funded plans in the state. However, the only medical audit completed for CalOPTIMA covers its first year. The one for the period ending June 1997 will not be published until next year.

CalOPTIMA also is moving to get a better handle on the treatment its patients receive. This month, the system announced it would require its health plans to collect data on such things as how long new patients go before seeing a doctor and whether they are getting immunizations, mammograms, prenatal care and other routine treatment in a timely manner.

Dr. Hugh Stallworth, director of public health for the county, praises CalOPTIMA’s efforts, but offers no endorsement, saying it’s too soon to know.

“We don’t have enough data to say that where the rubber meets the road, where the provider takes care of the patient, they are giving the appropriate care in a timely manner,” he said.

Patient advocates say CalOPTIMA members actually can be better off than those covered by private insurance. For one thing, members have more appeal routes. Not only can they complain through their individual health plans, but they can appeal to CalOPTIMA before turning to the state agency that hears complaints from all Medi-Cal clients.

CalOPTIMA is the nation’s largest “county-organized health system,” in which government funds for public beneficiaries are funneled to a single agency. It in turn oversees their care, from matching people with health plans to paying for drugs. More common is the system in Los Angeles County, where the state handles enrollment and provides beneficiaries a choice of two entirely separate managed-care systems, a locally run organization and a commercial HMO.

CalOPTIMA serves about 210,000 clients, including 56,000 who are elderly, blind or disabled, through 17 subcontracting health plans. Five are commercial HMOs, and 12 are physician/hospital groups that function in a way unique to Orange County. Nearly 70% of members choose these locally run physician/hospital groups. Nowhere else in the nation do such local groups contract directly to care for patients without working through an HMO.

This aspect of the program is widely seen as a demonstration project for delivering medical care without the HMO middleman, especially since HMOs increasingly are quitting public-aid programs.

“It is a laboratory,” said Elizabeth Abbott, western regional administrator of the U.S. Health Care Financing Administration, which oversees federal Medicare and Medicaid programs. “There is a very decent chance of this being a very wonderful model,” and if it fails, “it diminishes our options in health care delivery systems.”

A System That Controls Itself

CalOPTIMA, like managed-care programs elsewhere, emphasizes preventive medicine, such as immunizations and checkups by physicians, to reduce illnesses that lead to costly emergency room visits and hospitalizations.

The program is not geared to cut spending but to reduce its growth. By law, Sacramento and Washington spend no more today on these benefits than would have been paid under the old system, regulators say. The agency spends just under 6% on administration--about $27 million proposed for fiscal year 1999. But that is far less than the 15% to 25% the state permits some public managed-care systems.

Good intentions notwithstanding, CalOPTIMA stumbled badly during its first two years.

Complaints included patients being assigned to the wrong primary care doctor or health plan, physicians overwhelmed with paperwork, a problem-plagued information system that required costly fixes, and disabled patients having poor access to critical medical equipment. Some accused the agency of greed and a callous attitude toward patients.

Patients generally applaud the system now, though some said they had to weather the stormy start-up phase or be persistent to get their needs met.

Typical of those is Joe Filia, 38, of Anaheim, who has had AIDS since 1991. During 1996, Filia said, he could not get CalOPTIMA to pay for new anti-AIDS drug cocktails prescribed for him or get approval to see a specialist.

“Those kind of things aren’t impediments any longer,” he said. In fact, he lauds the agency for reacting quickly to AIDS patients’ complaints by making available the expensive antiviral drugs, which can cost $1,800 a month.

“Without them, the survival rate for AIDS patients would be very low,” he said.

Julia Sutton was a single mother on public benefits when she was switched from Medi-Cal to CalOPTIMA. She needed knee surgery and struggled to get approval from her new health plan, she said.

“As soon as I contacted CalOPTIMA, a six-month problem was solved within one week,” she said. She has since joined the agency’s watchdog Member Advisory Committee, which represents the interests of patient groups.

Other early difficulties were caused by the state’s decision to assign the disabled, who often have highly specialized needs, to CalOPTIMA. In most other counties, including Los Angeles, most disabled patients still use Medi-Cal, under which doctors bill the government for the medical care they give patients.

Some of CalOPTIMA’s skeptics, however, say the problem isn’t so much the agency itself but the weakness of all managed-care systems, which they say has not yet proven superior to Medi-Cal. Under CalOPTIMA, doctors receive a lump sum to accept a patient, then provide whatever medical care is needed.

“I think [managed care] works fine for people who are well, but for people who have unique and chronic needs, it can present many barriers to treatment and supplies,” said Rhys Burchill, director a local agency that protects disabled people’s legal rights. Patients need approval before seeing a specialist or getting medical equipment.

Burchill said it has been hard for these patients to get approval to see a specialist who knows how to treat certain disabilities.

“Some people spent 20 years finding [their] doctor, and [with CalOPTIMA] we have to run from plan to plan finding a doctor who cares,” she said.

Davida Gregory, who cares for five disabled adults in an Irvine group home, is considering moving one of her charges out of the county, where fee-for-service Medi-Cal would allow the woman ready access to seizure specialists at UCLA Medical Center.

“We feel her life is endangered,” she said.

The woman, 26, is partially blind and has cerebral palsy, an uncontrolled seizure disorder and mild retardation. Gregory, who has cared for the woman for 15 years, said services are now maddeningly elusive.

“We know how the Medi-Cal system works because we had it here for so many years and, for all its faults, if you were resourceful, you could find treatment,” she said. Gregory acknowledged that CalOPTIMA “works pretty well” for those with less complicated problems.

Dewane, a former director of Medicaid managed care for the federal Health Care Financing Administration, said CalOPTIMA is among the first managed-care systems to handle a large disabled population because commercial HMOs do not enroll the disabled in such large numbers.

“The disabled community is a complex one to serve and present the knottiest problems,” she said. “I think that there was a small, sophisticated group under fee-for-service and it worked for them because they were tenacious, but CalOPTIMA has designed a program that better serves all of the disabled community and not just those tenacious few that spent years looking for a doctor.”

Other issues loom. One proposal--opposed by groups serving the disabled--would enroll members in plans for six or 12 months instead of 30 days, limiting their flexibility in switching doctors. There also is discussion of consolidating health plans that have fewer than 5,000 members. That is sure to cause disruption.

Rimsha, the legal aid lawyer, will have a good vantage point to watch the agency’s progress. She recently received $400,000 as part of a statewide grant to be ombudsman to those who receive public health benefits, including those served by CalOPTIMA.

She expects to learn shortly whether complaints about managed care “are real problems or perceived problems” and whether CalOPTIMA “can deliver on its promise.”

“The question remains whether the for-profit [health plans] can make the money they feel they need to make,” she said, “and whether the patients can receive the health care they need.”

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Overhauling a Health System

More than twice as many doctors are available now under Orange County’s CalOPTIMA program, compared with its previous Medi-Cal program in 1993.

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Number of doctors in program 1993 1998 Primary care doctors 750 1,700 Total physicians 1,900 5,000* Specialists 1,150 3,300

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* (85% of the county’s doctors)

Sources: Orange County Medical Assn., CalOPTIMA and California Department of Health Services

Preventive Approach Saves Money

One of the goals of CalOPTIMA was to encourage more preventive medicine and reduce inpatient care at hospitals. It also assigned a primary care physician to each person on Medi-Cal, replacing a system in which poor people frequently used expensive hospital emergency rooms as their primary source of health care. Hospital-based care dropped 47% from 1993 to 1997.

Medi-Cal Patient Days for Selected O.C. Hospitals

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Hospital 1993 1997 Children’s Hospital of Orange County 23,562 7,945 UCI Medical Center 60,265 31,328 Western Medical Center-Santa Ana 14,654 13,926* Fountain Valley Regional 15,324 5,466 Hoag Memorial Hospital Presbyterian 3,361 1,862 St. Jude Medical Center 5,587 2,454 Western Medical Center-Anaheim 4,208 2,616 Garden Grove Hospital and Medical Center 9,133 6,396 Mission Hospital Regional Medical Center 2,481 1,150

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* Estimated

Source: Office of Statewide Health Planning and Development, CalOPTIMA