Center for Studying Health System Change

lthough Orange County is seen as a relatively affluent community, almost 300,000 residents rely on Medi-Cal for their health coverage, and respondents report that the uninsured population is large and growing. Respondents generally identified distinct provider systems serving the Medi-Cal population and the indigent population. Many providers participate in the Medi-Cal program through CalOPTIMA. Indigent care is heavily concentrated at UCIMC, which purchased the county hospital more than 20 years ago and has shouldered much of the indigent care burden ever since. Publicly owned or publicly funded community health centers operate in some communities, but funding has been very limited and several have either closed recently or are reportedly about to close. Some hospitals (e.g., Hoag and St. Joseph’s System) also support community clinics. Public health and mental health responsibilities are supported in part by the Orange County Health Care Agency, but Orange County ranks among the lowest in the state for categorical health funding for public and mental health care services.

MEDI-CAL

For Medi-Cal beneficiaries, care has been mainstreamed through the implementation of CalOPTIMA. Most hospitals and community health centers and some physicians accept Medi-Cal patients through the private plans or physician-hospital consortia with which CalOPTIMA contracts. In general, respondents praise CalOPTIMA for improving care by assigning each beneficiary to a primary care provider and broadening the Medi-Cal provider network.

Despite CalOPTIMA’s explicit attention to preservation of traditional safety net providers, some community health centers have faced decreases in Medi-Cal volume, making it more difficult for them to subsidize care for the uninsured. In addition, respondents expressed concern about the limited number of Medi-Cal beneficiaries who have chosen the UCIMC physician-hospital consortium, and worry that UCIMC’s ability to subsidize care for the indigent has been compromised. UCIMC must maintain an adequate level of Medi-Cal volume to continue to receive the disproportionate share revenue it relies on to subsidize indigent care. Respondents also expressed concern about the participation level of specialists. While access to specialists reportedly has improved considerably under CalOPTIMA, respondents report that not enough specialists participate in the CalOPTIMA Direct program.

CARE OF THE INDIGENT

The viability of the safety net for the uninsured appears to be much weaker than for the Medi-Cal population. Local funding for indigent care through the MSI program has been minimal. Other sources of funding, including disproportionate share revenue, and cross-subsidization from other payers, have decreased in recent years. Demands on the MSI program are projected to grow, particularly as the federal welfare reform law, which eliminates Medi-Cal eligibility for some populations, is implemented and Orange County continues to experience immigration of low-income populations.

At the same time, competitive pressures are affecting providers’ ability to deliver uncompensated or undercompensated care. As noted, the county-run MSI program is being transferred to CalOPTIMA to apply managed care contracting strategies and improve the program’s administration. Opinions vary on this planned transfer. While most respondents anticipate positive results because of CalOPTIMA’s managed care expertise and existing provider network, a few respondents expressed skepticism that CalOPTIMA would be able to improve the MSI program markedly without significant additional funding. CalOPTIMA says the MSI program needs $45 million in addition to its current $35 million budget, but a funding source has not been identified. Respondents also expect the indigent population to grow more quickly than funding for the MSI program.

UCIMC provides much of the indigent care, especially specialty care, along with Children’s Hospital of Orange County, the community health centers and some individual physicians. Most other hospitals reportedly accept indigent patients in their emergency rooms, as required by law, but do not provide much referral care to the indigent population. Two free clinics target the poorest uninsured Orange County residents, including those who do not qualify for the MSI program. Concerns about the future of the local safety net for the uninsured center on UCIMC’s mounting financial pressures and the impact of UCIMC’s possible for-profit affiliation on its policy of providing indigent care.