THE CONFLICT: RURAL MEDI-CAL (6/2002)
During the 1990s, many Californians, including a great deal of poor and elderly Medi-Cal recipients, were assigned to HMOs for their healthcare. Today those same HMOs are “pulling out” of rural areas, citing financial losses associated with serving these sparsely populated, largely poor communities. Is rural California, the fastest-growing part of the state, headed for a healthcare crisis?
Roughly 25% of Americans live in rural areas. Rural areas tend to have higher poverty rates as well as more elderly and less healthy residents. In California, the elderly are the fastest growing age group. In the early 1990s, the number of elderly living in rural areas increased nearly 10%.
While the numbers of elderly and poor Californians living in rural areas is increasing, the number of healthcare providers in these same communities is declining.
Almost half of all Californians get their healthcare through an HMO, a firm that controls access to medical attention and products via a primary medical professional in exchange for a fixed payment per month. Even the state’s Medi-Cal program, along with other Medicare services across the country, offer HMO options to its recipients. As of 1998, 39 percent of California’s senior citizens are signed up with HMOs.
That same year, 49 of California’s 58 counties had at least one Medicare HMO option but by 2001, only 35 counties still had that choice. HMO withdrawals in other counties have forced at least 100,000 additional seniors to switch insurers.
These “pullouts” have inspired charges of “geographic redlining” and claims of a growing crisis in rural health. Spread out and largely sustained through agriculture, these communities are unable to retain medical professionals and paraprofessionals without the financial grounding provided by large HMOs.
In 1997, in an effort to a keep HMOs in rural areas, the U.S. Congress agreeed to increase Medicare payments to HMOs and other private insurances. But this bonus has not stemmed the tide of medical services migration out of rural areas.
Because so many rural residents are poor and these same areas are increasingly unattractive to large HMOs that could otherwise cover the higher operating costs of working in such communities, the California state legislature is hoping it can save the day (or, perhaps, tomorrow) by using increased Medi-Cal payments to reverse or, at least, stop the exodus of medical professionals from remote areas.
Introduced in February of 2002 by Senator Charles Poochigian, (R-Fresno), SB 1644 would increase payments made to medical professionals who serve a disproportionately large number of poor residents in rural communities. It is currently being reviewed by the Commission on Health.
Senator Charles Poochigian (R-Fresno) represents Fresno, Kern and Tulare counties in the San Joaquin Valley. The San Joaquin Valley is predominantly rural, agricultural, Hispanic and has the highest poverty rate in the state. Along with Senator Dick Monteith (R-Modesto) who represents Central Valley farming communities, Poochigian is hoping that his bill, SB 1644, will alleviate the decreasing healthcare options of rural Californians.
The California Department of Health Services has warned that it does not have the resources to provide the analysis mandated by SB 1644 due to budget cuts it endured in the early 1990s. Instead, it suggests that the legislature can increase the fees paid to rural doctors without requiring the research stipulated by Poochigian’s bill. The agency runs the Rural Health Services Development Program which funded 71 clinics throughout California.
The California Dental Association, California Medical Association, and Central Valley General Hospital are a few of SB 1644’s major proponents. The medical professionals represented by these organizations must contend with increased insurance costs and a growing number of uninsured patients. Squeezed between a rock and hard place, few can afford to stay in rural communities where demand is great but compensation is often not available. Other proponents include the California State Rural Health Association, advocates for improving rural health.
The American College of Obstetricians and Gynecologists is opposed to the current wording of the bill because they feel it should be individual doctors and not regions who benefit from the increased in Medi-Cal payments. Their members represent 67% of all Medi-Cal participants.
HMOs like Kaiser Permanente, HealthNet and PacifiCare were eager to take on Medicare patients in California in the mid-1990s but have recently begun to pullout of rural areas leaving thousands in the lurch and without coverage. While still the most common healthcare insurance service in the state, HMOs are slowly ceding their popularity to Preferred Provider Organizations, which offer more choices but are even rarer in rural areas.
Those in favor might say:
According to the bill’s sponsors, “California’s Medi-Cal program reimburses physicians and dentists at rates that are…significantly lower than other large states… [or] approximately 50 percent of the federal Medicare rate.” If Medi-Cal payments are not comparable to those of other insurance plans and there are entire communities where most patients will pay with Medi-Cal, then these same communities will soon be without doctors and dentists. California cannot afford its rural communities living and working without proper medical attention.
Those against might say:
Rather than basing a new payment schedule on the number of Medi-Cal program subscribers in a given community, doctors should be compensated by the number of Medi-Cal patients they serve. Otherwise, the medical professionals who see the most Medi-Cal patients, gynecologists and obstreticians, may not receive adequate compensation if they happen to work in a facility that, as a whole, does not treat as many Medi-Cal patients as another institution in another region.
Excerpts from SB 1644: This bill requires that the Department of Health Services consider the adequacy of Medi-Cal reimbursement rates for physicians and dental services in communities that serve disproportionately higher Medi-Cal populations when conducting its annual review of Medi-Cal reimbursement… This bill seeks to address Medi-Cal’s low reimbursement rates and the impact of these rates on the health care delivery system.