CalOPTIMA Funding Boost to Increase Fees for Providers : Health care: $42-million influx should help keep more doctors and hospitals in program for poor and disabled.

CalOPTIMA, the agency that provides health care to many of Orange County’s poor and disabled, has won a $42-million increase in annual funding from the state--money that officials say will help patients countywide by keeping doctors and hospitals in the program.

The money will be used to provide on average a 19% boost in fee and fixed payments to doctors and hospitals, said CalOPTIMA officials, who formally accepted the new rates this week. The higher rates take effect Oct. 1 and are set for two years.

Consumers, hospitals and physicians applauded the increase, saying it would contribute to improving health care for 210,000 people served by the quasi-public agency that took over Medi-Cal in the county four years ago.

The agency plans to distribute nearly all of the money to providers rather than to the agency’s administrative costs or other expenses.

“That’s the way it should be,” said Nancy Rimsha, a directing attorney with the Legal Aid Society, who serves as a CalOPTIMA consumer representative. “We are very pleased overall because there will be better services and more physicians available for Medi-Cal patients.”

The fee increases will vary from 8% to 30% across the broad categories of physicians, specialists and hospitals who serve CalOPTIMA beneficiaries, according to figures supplied by CalOPTIMA. The increases come after four years of nominal or stagnant payments to providers.

Patient advocates and others said they hope the increases will attract more physicians to the program in South County, where CalOPTIMA’s 12 independent health plans have relatively few member physicians.

At a time when private physician and health care provider groups are under financial pressure, the increases will encourage doctors and hospitals to stay in the CalOPTIMA system, said several experts.

“This is a positive thing,” said Jon Gilwee, spokesman for the hospital trade group Healthcare Assn. of Southern California. “It helps keep the system going.”

CalOPTIMA clients are largely the poor and disabled who are insured through Medi-Cal. With a budget of nearly $550 million, the agency is by far the largest player in the county’s public health-care sector and one of the biggest in health care overall.

Mary Dewane, chief executive officer of CalOPTIMA, said the organization tried to allot the increase between physicians and hospitals based on actual costs and patient use drawn from four years of experience. Previously, the agency had to rely on actuarial assumptions, officials said.

The state and county created CalOPTIMA in the early 1990s. It began providing managed care services to all Medi-Cal beneficiaries in Orange County in late 1995.

One goal, which has largely been achieved, was to increase the number of physicians and hospitals treating Medi-Cal patients and steer those patients to less costly outpatient care. Today, about 85% of the county’s 5,000 physicians participate in the plan. Formerly Medi-Cal patients would use emergency rooms or so-called Medi-Cal mills for basic care because many doctors would not accept the state-paid insurance.

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The plan approved Tuesday continues pushing this goal by shifting a larger piece of the overall health-care pie to physicians who are providing an increasing portion of services.

“I see this as a net gain for physicians,” said Sam Roth, spokesman for the Orange County Medical Assn. “The good news is clearly the hospitals and physicians and health plans have received rate increases averaging 19%. The even better news for physicians is that within this new rate structure they are getting a greater share of all dollars.”

The existing split had doctors and hospitals sharing reimbursements almost evenly at 49.9% for hospitals and 50.1% for physicians. The new split is 46.6% to 53.4%.

Though hospitals saw their share decrease, there was little complaining since their reimbursement for a day in the hospital was increased from $930 to $1,050--about 13%. Hospitals, however, report the average cost of a hospital day was $1,599 in June 1998.

On the physician side, specialists saw their reimbursements rise 8.3% and family care doctors 30%. Family care physician reimbursement had lagged that for specialties.

Roth said the increase of payments to doctors, especially specialists, would contribute to keeping physicians participating in CalOPTIMA.

“We are going to keep pressure on to continue to bolster physician rates,” he said, adding that it is particularly difficult to maintain access to specialists for the poor.

Though CalOPTIMA provides insurance coverage under a managed-care umbrella for 210,000 people, there are still more than 425,000 people in Orange County without any health insurance, including the working poor, indigent adults between 21 and 64, and about 90,000 children, according to a report released this spring.