LOS ANGELES: CAN TWO-PLAN SURVIVE?
Los Angeles County, with approximately 10 million residentsThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
living within its borders and a fragmented health care system in
a nearly constant state of crisis, is an instructive model for
examining the challenges and realities of health care reform.
The L.A. health care system was facing the possibility of a total
collapse in 1995. This financial crisis led to a federal bailout
of the system that included an extensive 1115 Medicaid
demonstration waiver to allow the county to restructure the way
it delivers care from an inpatient, acute-care focus to an
outpatient, community-centered preventive care focus. At the
same time, the state pursued a 12-county 1915(b) Medicaid waiver
that would allow for the mandatory enrollment of Medi-Cal
recipients into managed care. This waiver led to the development
and implementation of California's Two-Plan Program, under which
Medicaid enrollees are given a choice of two plans: a commercial
HMO or a county-run HMO.
IT'S ALL IN THE TIMING
While Los Angeles County is only months away from the
scheduled full implementation of Two-Plan, the move has been
fraught with difficulties, as both HMOs and consumer advocates
have complained that the county is not ready. In addition, the
Health Care Financing Administration has repeatedly delayed final
approval of the plan because of its concerns about the state's
ability to conduct sufficient beneficiary outreach. The plan,
which was originally scheduled to get off the ground in June,
will not start before January 1, 1998, at the earliest.
According to Jeanne Finberg, senior attorney at Consumers Union,
Two-Plan in L.A. has "the same problems that have happened in the
rest of the state ... only more intensely and it's more
complicated." Finberg points to the number of plan partners and
sub-contractors as a major complicating factor in the L.A.
version of Two-Plan. L.A. County Health Director Mark Finucane
said, "I think what has happened with Two-Plan in L.A. is it's
bearing the brunt of the reservations that I believe HCFA has
about the state of California's management of the Two-Plan
process. They have expressed their reservations about the
oversight of the Two-Plan model from the state. They were
worried about their perception of inadequate provider
participation, the confused default process and I think they are
concerned about the participation of traditional providers,
meaning those who traditionally serve the Medicaid population."
FROM THE HMOS
Tony Rodgers, CEO of L.A. Care, the county plan operating
under the Two-Plan model, said, "The only issue for L.A. has been
that it's so large and there are so many complex issues that HCFA
wanted to make sure that those issues were addressed before
allowing Two-Plan to be implemented." Rodgers sees the lower
than expected number of eligible individuals for the Two-Plan
model as a problem. However, he pointed out that in L.A. it's
less of a problem than in other counties, as L.A. still expects
to enroll about 1 million people. Rogers also expressed concern
about the reimbursement rates under Two-Plan. He said, "I think
what has really made the rates ... really unacceptable is that
there is a cost of transitioning people into managed care. The
rates are so low that there is concern that providers will be
able to stay in business very long after the rates are in place.
I would think that unless we can increase these rates we are
going to lose a number of providers who have been serving this
population for a number of years."
GOING UP?
According to HCFA's Richard Chambers, the state will review
reimbursement rates in October and would, in all likelihood,
increase them, though not by much. According to Chambers, while
other counties have implemented Two-Plan, the local initiatives
have had to borrow large sums of money in order to become
operational, to their surprise they have been generating
sufficient revenue to pay back the loans much sooner than
expected.
MORE PROBLEMS
There are also concerns about access to care. Lynn Kersey
of Maternal and Child Health Access said that as Two-Plan was
implemented in other parts of the state, "We saw a huge
disruption in care and providers losing their patients." She
points out that in addition there "are various levels of choices
that have to be made by people who are not used to that level of
complexity." Kersey calls the two-plan structure an "artificial
construct" which offers two duplicate systems "under the guise of
choice." She said, "You could have accomplished the same thing
with one administration and ten plans under it." Kersey points
out that the state has regulated the amount of money that can be
spent on administration and foresees many conflicts over who will
get those limited funds as they "go down the chain."
EVERY THORN HAS A ROSE
Tony Rodgers pointed out that Two-Plan has gone a long way
toward resolving its difficulties in Los Angeles. The new
enrollment broker, Maximus, which replaced the troubled Benova,
was described by him as "much more capable," noting that it had
geared up much more quickly than Benova. As far as the future of
LA Care is concerned, Rodgers said, "A lot will depend on the
state's ability to meet the requirements that HCFA has laid out
on it as part of the waiver. Those include beneficiary
education, provider education and making the system more user
friendly for the members who will ultimately have to make choices
for themselves and their families." Rodgers believes that the
fact that LA Care has been able to assign its 190,000 enrollees
to participating plan partners is ample proof that it's a viable
entity. Mark Finucane believes that Two-Plan is a "better way to
provide care and it should improve." He said it makes "the
health care more predictable and more preventable." Lynn Kersey
also believes that with the organization of LA Care there will be
"some public accountability, ... consumer input and oversight
that would not necessarily be there with ten separate entities."
Meanwhile, Richard Chambers said, "HCFA will assure that before
the fee-for-service option is removed in LA County ... the
provider networks will be in place and we will have monitored and
insured that they are actually there" (Courtright, 8/15). NEXT
WEEK: American Health Line looks at L.A.'s 1115 waiver.