Sacramento County, HMO's, and IPA's

Complications in the transition to health care reform By Michael Monasky Health and Environmental Correspondent If you're poor a...

Complications in the transition to health care reform

By Michael Monasky
Health and Environmental Correspondent

If you're poor and need health care in Sacramento County, you have few options. The County Medical Indigent Services Program (CMISP) is a fiscal ghost of its former self. Only one of the six former county clinics remains in operation.

The state of California applied for a waiver of the MedicAid rules from the federal government. Section 1115 of those rules allows expansion of the program to otherwise ineligible persons in specified pilots. California's pilot allows applicant counties to transition from indigent medical services to the MedicAid standard that will be imposed January 1, 2014, by the Affordable Care Act, aka ObamaCare.

County governments across the state are scurrying to meet the impossible deadlines imposed by the MedicAid 1115 waiver. Portions must be in place by July 1, just a few days away. What throws a monkey wrench into the works is the lack of coordination between health care plans and the actual providers of health care, like doctors, clinics, and hospitals. Health care plans have a proprietary interest in their marketing data and contracts with other entities. Doctors are at the tail end of the process. In the middle is the Independent Practice (or Physician) Association (IPA).

IPA's are not new, and in fact most health plans like Kaiser and Molina, and hospitals like Mercy, Sutter, and UC Davis, have a built-in IPA. Doctors can carry membership with many IPA's and accept payment from many health plans. However, the health plans and IPA's are not supposed to communicate with each other due to market competition rules imposed by state and federal law. That market competition sets reimbursement rates between doctors and the IPA's.

The problem comes from lack of oversight because no one claims responsibility in the end. Doctors are responsible for their patients: the IPA's are responsible for their doctor-providers; the health care plans are responsible for their contracts with IPA's; and the state of California Department of Managed Health Care Services (DMHC) regulates the HMO's. In the end, there are either too many audits or none at all.

Providers complain of inadequate reimbursement for what they do. Doctors get less than 80% of usual, customary, and reasonable (UCR) fees from MediCare, the federal old-age plan. Each state has its own reimbursement rates for MedicAid, aka MediCal in California. MediCal pays about 65% of the MediCare rate, or about half of UCR fees for doctors.

The idea of an arm's length relationship between parent health care plans and adolescent IPA's was to meet the requirements of regulations in a period of austerity and cuts to reimbursement rates. At a meeting on Friday of the Sacramento County MediCal Managed Care Stakeholder's Advisory Committee, the health plans asserted: “In an era of inadequate State rates [read: austerity cuts to federal and state medical reimbursement rates], [health care]plans look for opportunities to align incentives and operational functions with local IPA's...” The carrot and the stick of the IPA's are intended to keep doctors congruent with health care plan bottom lines.

Neither health care plans nor IPA's have to reveal their profits and bottom line ledgers to the public; it's a secret with the state. Health care plans and IPA's do not reveal their reimbursement rates, just as hospitals do not have standard pricing for health care goods and services.

Seniors and persons with disabilities have recently been integrated into the managed care system with mixed results. Participants in the California Healthy Families program are next. It remains to be seen, in this morass of secrecy and complicated business relationships, whether health plans and IPA's will be able to recruit enough physicians to deliver care at such low rates of reimbursement to serve such a large and needy population.

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