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Orange County, Calif., Medical Center Withdraws From Insurance Program

Posted on: Saturday, 16 July 2005, 00:00 CDT

Jul. 15--Up to 20,000 low-income residents of Orange County may lose insurance coverage for services at UCI Medical Center after the hospital's decision to withdraw from the MediCal program at the end of this year.

UCI notified CalOPTIMA, which runs MediCal in Orange County, that after Dec. 31 it will no longer be a primary provider of hospital services for the agency. It cited "growing financial losses" from its participation.

The university's hospital in Orange, along with two affiliated doctors clinics in Anaheim and Santa Ana, is one of 11 health networks in CalOPTIMA's managed-care system, which serves about two-thirds of the county's 300,000 MediCal recipients. The UCI network provides care to about 20,000 participants in the MediCal program. The hospital's decision also affects about 1,900 patients in the Healthy Families program for children, which CalOPTIMA runs.

In a letter communicating the hospital's decision to Cal-OPTIMA, UCI vice president Susan Rayburn cited "payments that are not adjusted for risk and are not keeping pace with the growing costs of providing care." Kenneth Bell, CalOPTIMA's chief medical officer, acknowledged the agency's financial problems. "I don't know of any public health-care agency that is not underfunded," he said.

"But CalOPTIMA is noted for having the lowest administrative cost of any health-care agency in the state. And the reality is we are always trying to make sure that the money we do spend gets the best care for our patients."

A conflict between the financial interests of UCI Medical Center and those of Cal-OPTIMA prompted UCI Chief Executive Officer Ralph Cygan to resign as a member of the agency's board, effective immediately. "There's a massive underfunding of the program that needs to be addressed," Cygan said.

He said Orange County hospitals treating elderly, blind and disabled patients receive about 72 percent of the amounts reimbursed for those services in other counties, where MediCal is still run as a fee-for-service program. For family care, Orange County hospitals get about 78 percent of the fee-for-service amount. "And, the fee-for-service Medi-Cal rates never came close to covering costs in the first place," Cygan said.

"Losing 10, 11, 12 million dollars is a significant hole one has to fill," he said. Overall, UCI still posted a profit of $42 million last year, and $33 million in 2003. But Cygan said that a recent change in the way California hospitals are paid for providing care to the poor is creating new financial uncertainty.

In addition to UCI, Children's Hospital of Orange County has also told CalOPTIMA that it will withdraw from one of two MediCal provider networks in which it participates. That one, United Care Medical Network, has about 20,000 enrollees. About half of them are children, who will probably continue to use CHOC, said Kerri Ruppert, the hospital's chief financial officer. The other half are adults, who don't go to CHOC anyway.

Ruppert said CHOC will remain as the primary hospital in another CalOPTIMA network, the CHOC Health Alliance, which serves about 80,000 MediCal and Healthy Family patients.

CalOPTIMA's Bell downplayed concerns about a fraying of CalOPTIMA's provider community. "All of health care is in the midst of many, many changes. ... We're still way ahead of where we were when we started," he said.

In an effort to prevent patients from having to switch doctors, UCI is negotiating a deal with another group, Monarch Healthcare -- also a Cal-OPTIMA provider network. The doctors at UCI clinics would join Monarch and thus be covered under CalOPTIMA's umbrella. The primary hospitals for those patients would be Huntington Beach Hospital, West Anaheim Medical Center and La Palma Intercommunity Hospital.

But it's not a done deal, and there are still "a few hurdles," Cygan said.

UCI also intends to remain accessible to those patients for the kind of specialized care -- such as certain types of brain and heart surgeries -- that isn't available at other facilities.

A desire to focus on that kind of complex, advanced care is another reason UCI cited for the decision to terminate its direct participation in CalOPTIMA. Cygan said overcrowding has been a major distraction. By farming out more routine cases to other hospitals, he said, UCI can focus on what it does best.

Bell said CalOPTIMA has promised to pay higher rates for the kind of advanced care UCI wants to do -- an increase that CHOC's Ruppert put at about $5 million.

But Rayburn, in her letter to CalOPTIMA, made clear that UCI will be studying the new rates very closely. While the hospital wants to stay open to MediCal patients, she wrote, "we can no longer subsidize the CalOPTIMA program."

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Copyright (c) 2005, The Orange County Register, Calif.

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Source: The Orange County Register

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