Managed care — hailed by health and government officials as an effective means for lowering the cost of health care for Medicaid patients and a trend that states are clamoring to initiate — has been operating in some California counties with some success for more than 10 years.
Santa Barbara and San Mateo counties were the first in the state to go with managed care more than 10 years ago, according to Barbara Masters, vice president of the California Association of Public Hospitals and Health Systems. “Everyone else is fairly new.”
There are three different types of managed care systems in the state.
Under the County-Organized Health System, Medi-Cal (the state’s version of Medicaid), patients have a choice of signing up with a physician under contract with the local health authority or with one of the county’s clinics. This system operates in Santa Barbara, San Mateo, Solano, Orange and Santa Cruz counties.
Medi-Cal beneficiaries in Sacramento County obtain their care within a Geographic Managed Care System, so named because the state contracts with a number of HMOs in a certain geographic area to provide services. San Diego County is in the process of implementing this system.
The Two-Plan Model gives patients a choice between a commercial plan or a local initiative — a partnership of community-operated health plans. Alameda and San Joaquin currently use this approach. Ten additional counties will be on board by mid-1997.
In 1983, Santa Barbara County became the first county in the state to enroll its now 40,000 Medi-Cal recipients in a managed care system.
Roger Heroux, assistant director of health care services for the county, favors a locally managed system like the COHS over working with a “faceless state bureaucrat.”
“It’s much improved over what we had,” he said, “and more customer-focused than what [customers would] get from the state.”
People are comfortable going to the local health authority to solve a problem because they’re familiar with the staff, added Bob Freeman, the health authority’s director of planning and external affairs. “We’re accountable [for] the type of job we do.”
Freeman says the county has saved 10 percent of what the state spends in a traditional fee-for-service system. The traditional system forced patients to find care wherever they could, and if they couldn’t, they’d end up in an emergency room — a costly practice, he pointed out. Managed care participants are given access to continuous health care, Freeman said.
Getting started was a struggle, Heroux conceded, because physicians viewed it as another government program being dumped on them.
Masters also praises the local approach to managed care, particularly the Two-Plan Model for its safety net component.
The local initiatives ensure that care will be provided to the medically indigent, she said, which is part of a county’s overall mission. “County health systems understand the needs of that population,” she explained, such as language and cultural barriers.
“Managed care does carry risks,” she admitted, such as insufficient funding for the providers. “The risk has been shifted to the provider.”
Because local plans are not-for-profit, she added, they recycle money back into the system, while it’s unclear how much profit HMOs will pocket, rather pay providers or spend it on administrative fees.
The 12 counties chosen for the Two-Plan Model are home to most of the 5.4 million Medi-Cal beneficiaries in the state, according to Ken August, spokesperson for the California State Department of Health.
The state doesn’t expect to see managed care save money in the short-term, he allowed, but because of its emphasis on preventive, continuous care, “it’ll stem the rising tide of health care costs.”