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The Medi-Cal Waiver: Signficant Changes for Patients, Providers and Public Hospitals

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(Sacramento, CA)
Friday, October 8, 2010

Late Thursday night, California lawmakers approved a large expansion of indigent health care services. The expansion comes through the Medi-Cal waiver bill, which in many ways, is akin to a five year, 10 billion dollar road map for the program. The funding comes from the federal government.

This waiver shifts seniors, children with disabilities, and other special need indigent patients to HMO-style, managed care programs. Currently, Medi-Cal pays most of these patient's claims in what's known as fee for service.

Lawmakers passed the Medi-Cal waiver as a federal deadline of October 31st loomed. Governor Arnold Schwarzenegger, and U.S. government regulators, still need to approve the waiver.

The waiver bills were passed with little opposition, with the notable exception of Hector De La Torre (D-South Gate). The Assembly Health committee member says there are few guarantees in the waiver bill that patients who are switched to managed care providers will be able to keep their current doctors and specialists.

On Thursday, De La Torre took the Assembly floor and told his colleagues that despite the pressure to approve the waiver, he couldn't vote for the bill. 

"Now, under the guise of a budget deal, we are being asked to vote on this thing. I can't do it, because those protections are not here for those patients," De La Torre argued.  

"We can't let the perfect be the enemy of the good."

Assembly Health Committee Chair Bill Monning  (D-Carmel) spoke in favor of the waiver on the floor. He rebuffed De La Torre's criticism, telling his colleagues, "We can't let the perfect be the enemy of the good."

"If we do not support this bill, California is going to go into a deeper debt crisis and the victims will be the very people my friend wants to protect," Monning told his Assembly colleagues.

For much of this session, as the bill went through Monning's committee and others, the bill lacked specifics and substance. Much of the testimony on what was essentially a waiver 'shell-bill' concluded with speakers waiting to reserve judgment until more details were available.

It was only later in the session, as an earlier deadline loomed, that hard facts emerged.

One of those key details: That the shifting of patients from fee for service to HMO style care would save the state an estimated 200 million dollars a year.

An Expansion to Every County as a Bridge to 2014

Another significant change is that the waiver would send more money to all counties so they can cover more indigent people until Medi-Cal is expanded dramatically in 2014, when the full federal health care law passed earlier this week takes effect.

Currently, 10 counties offer health care plans. The waiver would give the option to the other 48 counties to offer similar plans, if they chose.

One of the concerns for Ingrid Lamirault is that if the waiver passes, there could be a shortage of doctors who accept Medi-Cal via the HMO's. Lamirault is the CEO of the Alameda Alliance for Health, a county based health care manager. Lamirault estimates there could be an increase of at least 25,000 people in the AAH network looking for local doctors that accept the plan.  

"[We are working to] convince [doctors] to contract with us and to be part of the network with us and the Medi-Cal network and the network for indigent care. And then look for efficiencies in the system so we can find out what the real gap is," Lamirault said.

Meanwhile, because each county will have flexibility to implement the program, state officials are unclear just how many enrollees could end up joining the program.

Public Hospitals Could Benefit

If the waiver works and more people become insured, lawmakers are hopeful public hospitals will also benefit from the waiver. These facilities often receive 50 cents from Medi-Cal for every dollar spent on patient care. However, they often get nothing from uninsured patients who show up in their Emergency Rooms. The hope is that more insured patients will equal more reimbursements for the hospitals.

Lamirault also says costs for hospitals, and health plan managers like AAH, will decrease as coordinated care improves. If more people have coverage, then they will see a doctor before health problems become catastrophic---and costly.

"I don't know if there will be health care savings immediately, once the waiver is implemented," Lamirault said. "But the immediate benefit is that there should be better access and better coordination of care, and a smarter use of how money that's already in the system is being used."

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