KPC Will Close Clinics on Wednesday
KPC Medical Management, Southern California's largest for-profit medical group, is likely to close its clinics on Wednesday, "disrupting care for 300,000 patients and presenting the first major test of the state's new managed care regulations," the Los Angeles Times reports. According to KPC president Donald Smallwood, the medical group will provide "minimal" care to its patients on Monday and Tuesday, and will "probably" close its doors Wednesday. KPC's demise follows a months-long effort by state regulators and affiliated health plans to sustain the management company. In September, a "coalition" of health plans agreed to bail out the KPC with $30 million and increase the monthly reimbursement for HMO members (Bernstein, Los Angeles Times, 11/20). However, the deal quickly "unraveled," and KPC on Friday accused the health plans of "virtually forcing KPC into bankruptcy by failing to hold up their end of the bargain." According to the California Medical Association, the plans withheld a "large proportion" of the monthly rates and retroactive rate increases they had agreed on with KPC -- totaling $22 million, the Orange County Register reports. Jack Lewin, CEO of CMA, said, "A hundred percent of the reason for the current problem is that the health plans are not paying the ... rates they promised. It has the appearance of an orchestrated effort to force [KPC] into bankruptcy, so that some other doctors will accept lower rates, improving the bottom lines of the health plans involved." The health plans declined to comment (Wolfson, Orange County Register, 11/18). Several health plans pulled out of KPC on Friday, following three days of "long, tense negotiations" with the medical group and regulators (Wolfson, Orange County Register, 11/18).
Meanwhile, doctors employed by KPC have few remaining medical groups to choose from, as many of the state's groups have gone out of business or filed for bankruptcy protection in the past two years; KPC's patients may lose their current doctors and be forced to switch to new providers. Daniel Zingale, head of the state Department of Managed Health Care, said that patient care "will probably be disrupted for some KPC patients as health plans struggle to connect them with new doctors and as physicians try to join new medical groups." Zingale said, "These kinds of things are never good for patients. At best, they provoke a lot of anxiety among patients, and at worst, they actually compromise care." Jamie Court, head of the Santa Monica-based advocacy group Consumers for Quality Care, said KPC's demise "could really be the beginning of the end, unless the state steps in and starts regulating the payments between HMOs and doctors. Failing to do that could be catastrophic for consumers." But Gov. Gray Davis (D) and the Legislature have declined to give the Department of Managed Care the right to regulate financial interactions between health plans and medical groups (Los Angeles Times, 11/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.