County Eyes Managed Care to Cut Cost of Treating Indigents

A 38-year-old community college student who works part-time spent a week in Fountain Valley Regional Hospital and Medical Center recently recovering from a heart attack.

He got there by calling 911 after chest pains raged out of control. His substantial bills were paid by a county program called Medical Services for Indigents, or MSI.

The student had plenty of warning; he is a diabetic with a history of hypertension and high cholesterol. He could have avoided the trauma and the treatment, said a nurse who is treating him now, if he had a regular doctor and prescription medicines to control his conditions.

But without insurance, he was caught in a cost bind common to thousands of uninsured adults who are too old for Medi-Cal and too young for Medicare.

The county, too, faces its own bind over the program and how best to serve the 19,000 to 29,000 people who have used it annually in recent years. The state requires the county to pay for critical medical care for the uninsured.

The latest effort to solve the problem has county officials and the medical community trying to revive stalled plans to put MSI patients into an HMO-like managed care system to restrain costs, while providing patients with their own doctor and access to specialists and preventive medicine.

Widely considered costly and inefficient, Orange County’s MSI program will spend nearly $43 million in fiscal 1998-99, officials say. That’s in part because those eligible generally seek care only when they are injured or very sick.

“We have a system that is emergency-room based, where a majority of MSI people are seen first in an ER, and that is the most expensive setting,” said Jackie Cherewick, president of the Orange County Coalition of Community Clinics. “We have to turn the system around and create an outpatient-based program for MSI.”

County officials would like to turn the entire program over to Cal-OPTIMA, which three years ago brought managed care to 200,000 Medi-Cal recipients. That, in fact, was one of the reasons behind creating Cal-OPTIMA.

But Cal-OPTIMA officials and health care professionals have grown increasingly wary of the idea. They are afraid that the success of Cal-OPTIMA in vastly improving Medi-Cal in Orange County could be put at risk by trying to swallow the MSI program whole.

“We want an incremental approach,” said Cal-OPTIMA spokeswoman Kathleen Crowley. “We do not think it would be responsible to move [all the MSI patients] wholesale into managed care.”

In the coming weeks, the county and Cal-OPTIMA will begin tricky negotiations over creating a 1,000-person pilot program designed to test whether managed care--with a physician assigned to oversee the care of each patient--would be a better way to serve the MSI population.

Last summer, the county rejected a Cal-OPTIMA proposal for a similar pilot program, but that concept has gained new support in recent weeks, county officials said.

“We did an analysis of that and submitted it to the county executive officer [Jan Mittermeier] and she came back a month ago and said, ‘See if you can negotiate and make this 1,000-patient pilot work as a test,’ ” said Larry Leaman, interim director of the county Health Care Agency. “In essence, we want to crawl before we run.”

So who are MSI patients? Generally, they are the working poor between 21 and 64, as well as unemployable adults who are often homeless, students not covered by family insurance, and unemployed people living alone.

“They will be the lady who works in the dry-cleaner shop or doughnut store, the 50-year-old working poor,” Cherewick said. “The student who gets hurt skiing.”

In recent years, the county has tried to cope with growth in the program by tightening eligibility qualifications, in part by setting the income maximum at twice the federal poverty guideline--about $17,200 a year for a working, single person. That is about what a full-time worker earns at $8.27 an hour.

In addition to the economic criteria, the county pays only for medical services “to protect life, prevent significant disability or prevent serious deterioration of health.”

Each year, the program covers care for 3,000 to 9,000 people who are chronically ill, patients with problems such as hypertension, asthma and diabetes. But many of them do not know they are eligible and, like the community college student with a heart attack, they end up in critical condition in a hospital.

Otherwise, most of the client population shifts among the low-income uninsured who have a surprise illness or injury: people who break a leg, have a heart attack or stroke, get hurt in a car accident or get burned at home, for instance.

Many are treated at hospital emergency rooms; a few eventually get care at community clinics. The bills go to the county, with eligibility determined every six months by the county Social Services Agency.

Everyone involved acknowledges that it would be wise to put the chronically ill on managed care, though there is sharp disagreement over how many “chronics” are cared for annually. The county has no firm figure yet--and only recently began tallying that information.

But the thornier problem remains whether managed care would work for those who qualify temporarily because of an injury or surprise illness.

“Using the managed care setting for this part of the MSI population is very much like trying to put a square peg in a round hole,” said Jon Gilwee, spokesman for the hospital trade group Healthcare Assn. of Orange County.

A key player in the discussions will be the Health Care Agency’s new director, Donald Oxley, who took office Monday.

Talks were expected to start shortly after his arrival, several participants said.

Among the key issues are: how to pay Cal-OPTIMA for the 1,000-person pilot project, how long it should run and when it would start, as well as a host of other items ranging from how to select the pilot patients to which hospitals and doctors will participate.

Many of these disagreements are very basic. For instance, the county prefers paying a flat fee for each person in the program, while Cal-OPTIMA wants to be paid on a fee-for-service basis, arguing there is not enough information about how often MSI patients will visit their primary care physician or need specialist care.

“We will have to see,” said Herbert Rosenzweig, director of medical services for the Health Care Agency. “We will learn more as we review what is happening under the current situation and under a pilot project. We will have more information to make a rational decision.”

Cherewick argues that it is long past the time for the county to improve care for the MSI community.

“The county has the responsibility to care for these people,” she said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Program Problem

Expenditures for Orange County’s Medical Services for Indigents program have been rising even though the program is serving fewer people due to an improved economy and tightened eligibility. The county would like to place MSI under a managed care system to restrain costs, while providing patients with their own doctor and access to specialists and preventive medicine.

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Total Expenditures (millions) 1993-94 $43.7 1994-95 44.2 1995-96 38.2 1996-97 39.7 1997-98 42.9

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Clients Served 1993-94 26,294 1994-95 28,693 1995-96 28,151 1996-97 26,374 1997-98 19,789

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Source: Orange County Health Care Agency