Medicaid Managed Care Expands In California As State Adds Many Seniors And Disabled

Nearly 400,000 of California’s older and disabled population will receive a birthday gift this year that they may not have asked for: membership in a state-sponsored managed-care plan.

They’re now covered by Medicaid, the state-federal program for the poor that is called Medi-Cal in California. Starting this month, California is requiring them to join a state-paid Medicaid managed-care plan, which will coordinate their services and direct them to particular doctors and hospitals. Each person affected by the change must enroll by the end of the month in which their birthday falls.

This abrupt change in policy reflects a broadening consensus in the state that managed care – which in California is offered both by for-profit health plans and local, public plans – is more efficient, both for patients and the state.

There’s also a financial incentive for the state: by placing this population in managed care, the state hopes to save $180 million a year, money that will help pay for a major expansion of Medi-Cal. Under an agreement reached with the federal government last year, 500,000 more people who previously earned too much to qualify will gain coverage.

Although most other Medi-Cal recipients are in managed care, for years there had been strong resistance to including seniors and people with disabilities whose health problems are more challenging.

“There were big concerns about the readiness of plans” to take on difficult patients like those with disabilities, said Toby Douglas, director of California’s Department of Health Care Services, which runs Medi-Cal. But he said the plans have improved and the public now holds “a stronger belief that managed care can be a good thing if done right.”

Some patients, including those in nursing homes and those who also get benefits from Medicare, the federal program for seniors, will still be able to choose traditional Medi-Cal. That version of the program pays doctors and hospitals directly for caring for patients. Managed-care plans receive monthly sums to cover all the health costs of their members.

Even longtime critics of Medicaid managed care have warmed to the idea of expanding it. Alex Briscoe, director of the Alameda County Health Care Services Agency, describes himself as “a recent convert.”

“If you’d asked me five years ago, I would have told you managed care was immoral,” he said, because plans limit patients’ choice of doctors and stand to profit by denying health services. But he said he sees no alternative today, as patients in traditional Medi-Cal are effectively denied timely access to care because few doctors are willing to see them.

For patients who aren’t enrolled in managed-care plans, Medi-Cal pays doctors only $24  for a typical office visit – the same rate it paid a decade ago. That’s far too little to cover the cost of running an office, doctors say.

By contrast, Medicaid plans, such as Alameda Alliance for Health, a public, nonprofit plan in Briscoe’s county, pay higher rates to doctors that agree to work with the insurer. The plan can pay those rates because its members – who have more ready access to primary care doctors – require fewer high-cost services, said chief executive Ingrid Lamirault. “Having their condition controlled is much more inexpensive than having people come in and out of the hospital,” she said.

Also, as doctors’ fees in traditional Medi-Cal have stagnated, government payments to the Alliance for covering disabled adults have nearly doubled since 2001. Federal law requires states to pay Medicaid plans a “sound” rate.

The Alliance contracts with a limited number of providers, including about 300 primary care doctors. But “at least you know that network exists,” said Anthony Wright, executive director of Health Access. The consumer advocacy group opposed past attempts to require seniors and disabled people to enroll, but shifted its focus to fighting for stricter regulation, backing, for instance, a rule that health plans make appointments for members within 10 days.

Despite the challenges of taking on thousands of sick members, commercial managed care plans welcome the new business.

“There’s risk here for sure, but this is our business,” said Jeff Flick, an executive for the insurance giant WellPoint, which runs Medi-Cal plans through its subsidiary, Anthem Blue Cross. Anthem’s plans have adopted new tactics to restrain costs, Flick said, like allowing members to call a doctor 24 hours a day with questions. It has cut down on ER visits, he said.

Anthem, which runs plans 10 in counties, including Alameda, has attracted 40,000 seniors and disabled people in Medi-Cal who voluntarily enrolled. In the 16 California counties where managed care is available, more than 380,000 seniors and disabled people have chosen to join one of the two or more plans offered.

In a sign that WellPoint anticipates similar business to emerge in other states, Flick was promoted earlier this year from an Anthem post to become vice president for product innovation at the parent company. His mission will be to export the money-saving ideas for high-cost patients pioneered in California to other markets.

But, some managed-care skeptics remain. While Elizabeth Landsberg, a lobbyist for the Los Angeles-based Western Center on Law and Poverty, acknowledges that the Medi-Cal plans have shown improvement, she still doubts that they are ready to take on the sickest patients.

“Our key concern has always been continuity of care,” she said. Patients may lose their doctor if that physician doesn’t have a contract to work with their new health plan. The state requires plans to continue paying doctors and other providers for up to a year as new members transition into managed care, but Landsberg worries that patients and doctors may not even know about such protections.

“The thing we’re most worried about,” she said, is that patients newly enrolled in managed care may be surprised to find they can’t see doctors who used to treat them.

An earlier version of this story misstated the number of people affected by the change.


cweaver@kff.org