california Health Care Almanac regional markets issue brief june 2013 Ready or Not: Are Health Care Safety-Net Systems Prepared for Reform? Introduction responses to changes in state policy and planning for health Under the federal Patient Protection and Affordable Care reform. Act (ACA), large numbers of people will become eligible for Almost all safety-net providers in the study reported Medicaid (called Medi-Cal in California) in 2014. Designed concerns about sufficient funding and workforce to care for to identify newly eligible California residents and to ready newly insured people and for those who remain uninsured. local safety-net providers — primarily public hospitals and At the same time, these safety-net providers are bracing community health centers — for the influx of newly insured for potential competition for insured patients from other patients, the state’s federal Bridge to Reform Medicaid providers and a consequent reduction in revenue. In response Section 1115 waiver program has jumpstarted preparations to these concerns, as federal and state policymakers launch for this coverage expansion. Even with new federal Medi-Cal expansion and the health insurance marketplace resources to help safety-net providers prepare, however, (Covered California), they may wish to improve coordination communities with weaker safety-net systems are lagging with community safety-net leaders to focus resources and in reform preparations. As a result, low-income people in assistance to those communities that are currently further those communities may be left without health coverage and behind in preparing for national reform. timely access to health care services. Even well-prepared communities will need time and assistance to help people The ACA and California’s Bridge to Reform gain health care coverage. In 2008, the Center for Studying Health System Expanded Medi-Cal Coverage Under the ACA Change conducted a study of local safety-net systems in six Starting in 2014, the ACA allows states to expand Medicaid California communities: Fresno, Los Angeles, Riverside/San eligibility to all legal residents with incomes up to 133% Bernardino, Sacramento, San Diego, and the San Francisco of the federal poverty level (FPL), or $15,282 annually Bay Area. (See Appendix A for key safety-net organizations (2013 level) for an individual. About one-third of states are and programs in each community.) predicted not to expand Medicaid eligibility. But the issue In 2011–12, a second round of the study was conducted has never seriously been in doubt in California, despite to determine how local safety-net systems have changed concerns about long-range costs and questions about when in the interim. In addition to capturing general changes and how the expansion would occur. Governor Jerry Brown in safety-net funding, capacity, and financial viability, agreed to the expansion in his proposed 2013 –14 budget. the second round of the study explored safety-net system Medi-Cal eligibility for children and pregnant women The second main component is funding for counties to already matches or exceeds the 133% FPL threshold, but identify uninsured people likely to be eligible for Medi-Cal the ACA expansion will make Medi-Cal available to more in 2014 and to enroll them in Low-Income Health Programs parents (currently eligible only if income does not exceed the (LIHPs) that provide them with a medical home and poverty level) and to many childless adults who are currently Medi-Cal-like benefits. (See sidebar.) Both these waiver ineligible at any income level if not disabled. Of California’s components rely on safety-net providers: public hospitals, approximately 5.6 million uninsured residents, the state estimates that approximately 1.4 million will become eligible for Medi-Cal under the ACA, with between 750,000 and Main Components of Bridge to Reform Waiver nearly 1 million of these individuals enrolling in the program The two cornerstones of California’s Bridge to Reform section 1115 waiver are Delivery System Reform Incentive Payments by 2019.1 Additionally, the state expects that more than (DSRIP) and Low-Income Health Programs (LIHPs). The waiver 2 million people with incomes between 133% and 400% of also requires the state to transition seniors and persons with FPL will purchase subsidized private coverage through the disabilities who have Medi-Cal-only coverage into managed new state health insurance marketplace by the time of its full care arrangements, and to establish a pilot program to test implementation in 2019. 2 several models of organized systems of care for children with special health care needs. Bridge to Reform Waiver DSRIP payments are provided over five years to California public hospitals — University of California hospitals and California has been preparing for the ACA-spurred Medi-Cal county hospitals — to identify and meet milestones related to expansion for several years. From 2007 to 2010, the state improved capacity, infrastructure, care delivery processes, and held a waiver from the Centers for Medicare & Medicaid quality outcomes. California’s DSRIP is one of the few Medicaid Services (CMS) that provided federal matching funds to waiver programs in the country that pays for provider activities 10 counties to enroll low-income people in Medi-Cal-like beyond direct patient care. Generated by a federal match to county dollars, initial payments in 2011 were based on a coverage programs. In November 2010, the state received the hospital completing a plan detailing changes it would make, more expansive Bridge to Reform waiver from CMS, which with subsequent payments based on meeting the performance allowed all 58 counties to begin the transition of uninsured targets in that DSRIP plan. people to Medi-Cal. LIHPs identify low-income uninsured people likely to be The broad purpose of the waiver is to identify people eligible for Medi-Cal as of 2014 and provide services through expected to be eligible for Medi-Cal in 2014 and to start temporary county programs with Medi-Cal-like benefits. providing care to them in advance of full implementation of Counties can include people with incomes up to 200% of FPL, although people between 133% and 200% of FPL receive health reform. Key goals are to prepare safety-net providers to fewer benefits — for example, no mental health, podiatry, or care for more people, to mitigate a massive sudden demand nonemergency medical transportation services.3 Resources to for care in 2014, and to help uninsured people adjust to create these county-level programs come from federal dollars participating in organized systems of care. matching counties’ existing funds for caring for low-income The first main component of Bridge to Reform is populations. As of February 2013, 51 of the state’s 58 counties had implemented a LIHP, and as of March 2013, approximately Delivery System Reform Incentive Payments (DSRIP) to 575,000 people statewide were enrolled in a LIHP, meeting the safety-net hospitals to help improve their infrastructure and state’s initial goal.4 care processes so that they may better and more easily serve more people and improve health outcomes. ©2013 California HealthCare Foundation 2 county governments, community health clinics, and other a state hospital fee program and through increases in federal local providers that focus on care for low-income people. grants to FQHCs.6 Role of Counties in ACA Medi-Cal Expansion Local Strategies to Serve Low-Income People County governments in California play a prominent role The safety-net systems studied were generally trying to under health care reform. Local communities are a natural expand capacity to address a growing demand for care as place to focus reform efforts, particularly in a state as large, more people lost private coverage, particularly as a result populous, and diverse as California. State law makes counties of the 2007– 09 recession and the anemic recovery, and so responsible for providing health care to “medically indigent” became uninsured or obtained Medi-Cal coverage.7 Safety- residents who are ineligible for Medi-Cal. Also, managed care net providers were already benefiting from the Bridge to for Medi-Cal enrollees is arranged by county.5 (See sidebar.) Reform waiver’s increased funding to improve capacity and processes. The waiver also gave safety-net providers the opportunity to develop relationships with patients before they gained Medi-Cal coverage so that these patients and County-Based Medi-Cal Managed Care Models Of California’s 58 counties, 30 have implemented Medi-Cal the new Medi-Cal reimbursement would remain with the managed care using one of three models. The model chosen safety-net provider. Often with help from the waiver, local by each county dictates the type and number of health plans safety-net providers implemented several common strategies with which the California Department of Health Care Services to help enroll people into Medi-Cal or other coverage in the contracts to serve that county’s Medi-Cal enrollees. The most near future and to provide health care services to this growing common models are the County Organized Health System (COHS) and the Two-Plan Model. In a COHS, the county runs group, including: a single health plan that covers all managed care enrollees. In ▶▶ Strengthening local leadership to help provide needed the Two-Plan Model, enrollees can chose between a county- operated plan (known as a “local initiative”) and a private services and to set a broad plan for the safety net to health plan. There is also a little-used third model, Geographic prepare for reform Managed Care (GMC), in which there is no local public plan, but several private health plans compete for Medi-Cal enrollees. ▶▶ Expanding outpatient care capacity, both in hospitals GMC is used in just two counties: Sacramento and San Diego. and in CHCs, to treat people early and thereby prevent more serious health problems ▶▶ Implementing LIHP to identify and establish Many counties already have a relatively extensive set relationships with uninsured people and to provide of safety-net providers — which typically include public them with care in an appropriate, organized manner hospitals, certain private hospitals, and community health centers (CHCs), including federally qualified health centers ▶▶ Enhancing collaboration among county officials, (FQHCs) — dedicated to serving low-income people. safety-net providers, and others to improve integration Traditionally, the state and counties have financially in hopes of providing more people with comprehensive supported safety-net providers, but in recent years, strained and cost-effective care state and local budgets have prompted cuts. At the same time, however, the federal government’s support for safety- Based on the degree to which each of the six communities net providers has grown through federal matching dollars to is implementing these strategies, findings suggest that the ©2013 California HealthCare Foundation 3 San Francisco Bay Area and Los Angeles are relatively well hospitals have a greater ability to allocate money to help prepared for health reform, San Diego and Riverside/San other providers.9 Communities with a historically strong Bernardino are moderately prepared, and Sacramento and county-based safety net include the Bay Area counties of Fresno lag in preparation. (See Appendix B.) In many cases, a San Francisco and Alameda, the Riverside/San Bernardino community’s implementation pace reflects its general safety- region, and Los Angeles: Each has a county-run hospital and net capacity. That is, communities with relatively strong a network of public outpatient clinics. They also each operate safety-net systems have advanced further while already- a local Medi-Cal health plan. The recent round of this study struggling communities have fallen further behind. found that local leadership for the safety net remains strong A community safety net’s level of preparedness for health in these communities today. reform does not necessarily correlate with the amount of An example of local leadership growing even stronger need in that community. (See Appendix C.) For example, since 2008 is that of Los Angeles. While Los Angeles has the relatively well-prepared Bay Area has less need than a long tradition of a county-run safety-net system, the Fresno in terms of proportion of residents who are in poverty, significant challenge of addressing the vast needs of this large, uninsured, or on Medi-Cal, and in poor health. Indeed, diverse, and congested county was heightened by the 2007 high need can be a barrier for counties to commit resources closure of inpatient and emergency services at the county- to make a significant difference in preparation for reform. owned Martin Luther King Jr.-Harbor Hospital in South Of the six sites, Riverside/San Bernardino has the highest Los Angeles. During this time, the county recruited new percentage of uninsured residents, and the region appears leadership for the county health department, which brought well positioned to make a good dent in the uninsured rate. new energy and approaches to improving the Los Angeles Some aspects of a community’s demographics, however, safety net, including redesigning the management structure may reduce the effectiveness of good preparation. For for county clinics, increasing collaboration with private example, communities with large undocumented immigrant providers, and adopting new technology to improve access to populations, such as Los Angeles, the Bay Area, and the specialty care. Central Valley (Fresno area), may be left with relatively high While county leadership in San Diego had been lacking numbers of people who are ineligible for Medi-Cal coverage in 2008, it has improved in recent years. The University and thus remain uninsured.8 of California, San Diego’s (UCSD) 2005 decision to close a campus in a low-income area appears to have prompted Strengthening Leadership the county to take a more active role in the area’s safety- Strong local public leadership is key to preparing the safety net system, even though community outcry led to UCSD net for reform. As found in the 2008 study, markets where rescinding plans for full closure. The county commissioned county government plays a larger, direct leadership role in a report to examine the status of the safety net, which led to care provision typically are better able to ensure financial the county implementing safety-net improvement strategies, stability for safety-net providers and access to care for low- such as helping people with chronic conditions transition income county residents. In particular, counties that own from hospital to home and to outpatient providers, and hospitals and clinics have more control over how dollars are integrating behavioral health with acute care services. A spent than counties that do not, but they also have more 10-year strategic plan — called Live Well, San Diego! — financial responsibility for rising capital and operational was also launched, with a broad goal of improving access to costs as needs increase. In contrast, counties that do not own care through increased integration of the delivery system. ©2013 California HealthCare Foundation 4 While Live Well, San Diego! is still a nascent effort, study more competitive . . . to add more people [and] to provide respondents were optimistic about the new local focus and more services to the community. . . . It’s putting us in a effort to improve health and health care. better position so we’re prepared for reform.” For example, Alameda County Medical Center’s complete renovation of its Highland Hospital campus will not increase inpatient Expanding Outpatient Care capacity, but will expand primary and specialty care on the Hospital Outpatient Care campus and throughout the county. To varying degrees, all six communities in the study are Not all efforts to increase outpatient capacity include focusing on primary and other outpatient care over inpatient facility expansions. Some involve changing patient scheduling capacity to treat people in a timely manner before medical practices and deploying team-based care principles to increase issues present or worsen. Although capacity is tight for productivity and the number of patients seen. For example, many safety-net hospitals, hospital leaders generally expect Los Angeles County is redesigning its existing clinic sites to inpatient capacity to be sufficient when coverage expands implement a patient-centered medical home model. To allow under reform in 2014 and do not plan to increase beds. for greater focus on outpatient capacity, the county has also Although the 2008 study findings indicated that counties separated management and oversight of county clinics from that own a hospital and clinics (compared to those that the county hospital. contract with providers) might be less nimble in preparing for reform, recent findings show that these counties are Community Health Center Care making considerable changes in care delivery. In part to Even the largest, most-established county health systems expand capacity and prepare for payment changes — for cannot address demand for primary and other outpatient example, assuming risk for the costs of care — counties are care by themselves. Private community health centers — emphasizing increased outpatient care and expect a resulting especially FQHCs — are expanding in the six communities gradual decline in inpatient hospital use. At the same time, to address both current and future needs. (See sidebar on county hospitals must juggle near-term demand for beds, page 6.) Largely because of greater capacity, the volume of particularly in the face of decreased inpatient capacity as they CHC patient visits increased from 2008 to 2010, ranging retool or build facilities to meet seismic requirements, as is from 6% growth in Fresno to 30% growth in Sacramento.10 the case at Los Angeles County + University of Southern The large jump in Sacramento is likely attributable to a California Medical Center, Arrowhead Regional Medical relatively recent surge in CHCs gaining FQHC status in a Center in San Bernardino, and Riverside County Regional community with historically few FQHCs. Medical Center. Many CHCs in California have benefited from recent Many major safety-net hospital systems have expanded increased federal funding — first through the 2009 American outpatient capacity. DSRIP funds are targeted, in part, Reinvestment and Recovery Act (ARRA) and then through to help hospitals expand outpatient infrastructure and to the ACA. This funding has improved FQHCs’ financial emphasize primary and specialty care access, medical homes, performance and helped support facility renovations, and care coordination. Public hospitals across all six markets information technology development, and expansion of in this study are undertaking these activities. One hospital physical space and operational capacity. For instance, as of executive explained, “We’re using a lot of our DSRIP funds June 2012, Family Health Centers of San Diego had received to expand our ambulatory [outpatient] network to be the largest ARRA and ACA grants among FQHCs in the ©2013 California HealthCare Foundation 5 the number of low-income residents that Riverside/San FQHC and Look-Alike Designations Bernardino has. Community health centers that meet a host of federal requirements under Section 330 of the Public Health Service Act Many clinics and health centers without FQHC status are deemed federally qualified health centers (FQHCs). FQHCs have turned to other strategies to stay afloat, particularly in primarily treat Medicaid and low-income uninsured people. light of state funding cuts.11 Many are pursuing traditional FQHC designation provides benefits, including federal grants to cost-cutting strategies, such as reducing staff hours or closing subsidize capital and operational costs, cost-based payments sites, and some are considering merging with larger FQHCs. per Medicaid patient visit (Prospective Payment System — PPS — payments based on previous average costs that are updated Several Bay Area free clinics and other smaller health centers annually for medical inflation), discounted pharmaceuticals, are taking these approaches. access to National Health Service Corps clinicians, and medical Another factor related to expanding primary care capacity malpractice liability coverage. A smaller number of health is the rapid development of rural health clinics (RHCs) in centers have FQHC look-alike status, which provides most of the Fresno, the most rural of the study sites. The five counties benefits that FQHCs receive but not federal grants. In managed care arrangements, FQHCs and look-alikes receive “wraparound” composing the broader Fresno region are home to 40% of all payments from the state to account for the difference between RHCs in the state. RHCs are similar to FQHCs in that they what the health plan or intermediary pays the health center and are intended to improve health care access in underserved the full payment rate to which the health center is entitled. areas and are paid similarly for Medicaid and Medicare patients. Unlike FQHCs, however, RHCs are not required to treat all patients regardless of their ability to pay (mostly six studied communities, totaling more than $22 million. uninsured patients), and they can readily add specialty and This health center, the largest of the many FQHCs in the other services without going through complex federal and county, used these funds to add several care sites, for a total state application processes. Many of the Fresno RHCs were of 16 across the county, and to expand access at existing developed by private hospitals — either built as new facilities sites through walk-in appointment availability and weekend or converted from existing physician practices — and present hours. some competition to existing FQHCs in the area.12 Many safety-net respondents noted that FQHC status is increasingly important to clinics’ and health centers’ ability Developing a Low-Income Health Program to prepare for health reform. For free clinics, the change to Local study respondents typically viewed the LIHP as a FQHC status means both broadening the mission beyond key way to identify more uninsured people, address their serving only uninsured patients without charge and having health care needs early, and provide a transition for them to to adjust to the administrative burdens that accompany Medi-Cal or other insurance coverage. The LIHP has been insurance contracting and billing. However, respondents readily embraced and implemented in most, though not all, reported that federal support for FQHCs is uneven across California counties. (See Appendix A.) These new programs communities, with state data showing a particular dearth of typically are built on existing medically indigent programs, FQHC development per capita in Riverside/San Bernardino. with many medically indigent enrollees transferred to the For example, as of June 2012, ARRA and ACA FQHC LIHP. With funding now gaining federal matching funds, grants totaled approximately $10 million in this region, the programs are able to provide more services and reach compared to almost $100 million in Los Angeles, a 10-fold more people. (See sidebar on page 7.) difference even though Los Angeles has just three times ©2013 California HealthCare Foundation 6 County decisions about implementing a LIHP and how Traditional County Health Care Programs for the many people to enroll are largely governed by available Medically Indigent California has given counties great latitude to define the scope funding and how a county calculates the trade-off between of their responsibility to care for medically indigent residents. additional federal dollars and added responsibilities. While smaller and/or more rural counties typically contract with Currently, LIHPs reach a relatively small percentage of the state-run County Medical Services Program, larger counties the uninsured population in most communities. Alameda establish and run their own indigent care programs, which vary County’s program appears to have the broadest reach, with significantly in reach.13 For example, counties can decide at what income level to provide services to uninsured people and income eligibility to 200% of FPL and about a quarter of whether to serve people regardless of their immigration status. uninsured county residents enrolled.15 (San Francisco, Alameda, and San Diego Counties received A recent change in federal Ryan White program federal matching funds under the state’s previous Medi-Cal funding for low-income people with HIV/AIDS has created waiver to assist people with incomes up to 200% of FPL.) challenges for some communities. With the Bridge to While programs typically provide comprehensive inpatient Reform waiver, LIHPs were required to assume payment and outpatient services, some limit those services only to responsibility for this population. Some counties lowered an immediate medical need rather than also focusing on prevention. The size of a county’s program is also related to income-eligibility levels after estimating that costs would be how the state distributes so-called realignment funds (state greater than initially expected. For example, in San Francisco, vehicle licensing fees and sales tax revenues) to support these estimates of high drug costs to care for a large number of programs, with some counties contending that allocations are residents with HIV/AIDS led the county to reduce income inequitable and do not accurately reflect county needs.14 Also, in eligibility for LIHP from 133% of FPL to 25% of FPL for recent years funding for medically indigent programs has been relatively flat while costs have grown, causing some counties to new enrollees. reduce the scope of their programs. Counties with less-developed safety-net systems tended to take longer than expected to set up LIHP enrollment processes and provider networks, particularly where, as in The LIHP, however, mirrors Medi-Cal more closely Sacramento, there was insufficient infrastructure to build on. than it does the medically indigent programs. In exchange Sacramento finally implemented a LIHP at the end of 2012, for federal matching dollars, county LIHPs must provide in partnership with a Medi-Cal managed care plan and two more standardized, comprehensive benefits; conduct stricter private hospital systems, Sutter and Dignity Health.16 income documentation; require legal immigration status; Fresno, on the other hand, has opted out of the LIHP and focus on establishing a broader network of medical altogether. The county’s main hospital, Community Medical homes. To pay for these services, LIHP providers typically Centers, has a 30-year agreement with the county to serve receive more funding than they would under the medically the medically indigent population. Funding to the hospital indigent program. In particular, the state’s Medi-Cal Bridge is fixed, while the costs of caring for indigent people have to Reform waiver requires each LIHP to include at least one grown. Even with new federal funding available through FQHC in its provider network, and all participating FQHCs LIHP, the combined costs for the medically indigent must receive the Medi-Cal PPS rate, which in many cases is program, which serves undocumented immigrants, plus costs considerably more than what they received from medically of a LIHP, were expected to widen the gap between available indigent programs. funds and the costs of care for the enrolled population. ©2013 California HealthCare Foundation 7 Enhancing Collaboration to expand the LIHP provider networks and to coordinate Enhanced collaboration among local policymakers, public services across providers. and private providers, and other safety-net organizations Another key development in collaboration is fledgling is important to carrying out coverage expansions and work to develop accountable care organizations (ACOs) for introducing strategies to integrate the safety net to serve more low-income people. Two ACOs are under development in people in efficient, appropriate, and comprehensive ways. Los Angeles — one focused on the high-need area of South The Bay Area stands out for advancing its safety-net focus Los Angeles (HealthCare First South LA) and the other from access to care to a broader improvement of care delivery more broadly across the county (Regional Accountable Care in collaborative ways across public and private organizations. Network). The ACOs involve establishing integrated delivery Although its LIHP is small, since 2007 San Francisco has systems among hospitals, health centers, private physicians, operated Healthy San Francisco, a large program available the county, and the county Medi-Cal health plan. Starting to most uninsured residents, which provides broader access with processes to share patient information and to improve than a typical program for the medically indigent. Funded care coordination, the intent is to move toward risk-based through a combination of local general revenue, an employer global payments that give providers more responsibility fee, and participant fees, the program’s enrollment has and financial risk for patient care, with the ultimate goal of grown to about 55,000 people with incomes up to 500% improving patient outcomes and lowering costs. of FPL. As the third-party administrator for the program, the public San Francisco Health Plan has fostered adoption Ongoing Challenges and Concerns of patient-centered medical homes to improve access to Despite early efforts to prepare for health care reform, local services and comprehensive, coordinated care. A number safety-net providers have concerns about adequately serving of improvements are in process within both county clinics low-income people, insured or not. These concerns center on and private CHCs in San Francisco, including use of same- changes in funding and other resources, competition from day scheduling so patients can see a provider as soon as they other providers, and sustaining an adequate workforce. feel they need to, establishment of formal patient panels so providers can more easily know whether the patients they are Adequate Funding responsible for get needed preventive services, and a team- Despite specific funding to care for LIHP enrollees, many based care delivery model that gives medical assistants greater safety-net providers reported feeling the strain of helping roles in improving provider efficiency and capacity. uninsured patients understand and enroll in the program, Moreover, LIHPs have encouraged, and in some without adequate resources to perform this function. These ways required, stronger collaboration among safety-net providers have similar concerns about the Medi-Cal providers. For example, the LIHP encourages integration of expansion. Providers in Los Angeles particularly have primary care and behavioral health services. San Francisco struggled with this issue because the LIHP enrollment and Alameda Counties, in particular, have made gains process is more stringent there than the previous process for in this area. San Diego and Riverside/San Bernardino its medically indigent program. In contrast, the San Diego offer additional examples of how LIHPs have improved Health Department has integrated the application process for collaboration, with public-private partnerships emerging as LIHP and Medi-Cal and increased application locations to counties contract with private CHCs and other providers 10 county-operated social service and family resource centers, which may take pressure off providers. ©2013 California HealthCare Foundation 8 Also, safety-net providers are concerned that financial choices and timely access to care. To respond to the expected support to shore up capacity to care for low-income people increase in demand and growing competition for insured is insufficient and will evaporate before the ACA transition patients, some providers are making capital expenditures to insurance coverage is completed. LIHP funds are slated to to rebuild and renovate facilities, and adding operational expire at the end of 2013, and DSRIP payments will expire expenses to expand the array of social and other support in 2015. services — for example, transportation and language Further, local safety-net providers expect to have many interpretation — they offer low-income people. patients remain uninsured in the near term or indefinitely (for example, undocumented immigrants). And although Workforce Shortages counties typically plan to keep medically indigent programs Respondents across the communities studied thought that in place to care for remaining low-income, uninsured the supply of primary care physicians (PCPs) and other residents, especially counties now covering new and clinicians was insufficient to care for the large numbers of undocumented immigrants, respondents feared state funding people who will gain public and private coverage under for these programs will dry up. health care reform. Among the six communities, the Even as people gain coverage, providers expressed concern supply of PCPs per capita is particularly low in Riverside/ that subsidies to help cover the costs of caring for low- San Bernardino and Fresno. Respondents in these two income, uninsured people and current Medi-Cal enrollees regions reported few comprehensive strategies to build could decline more than the increase in Medi-Cal revenues physician supply, with the exception of a long-term plan from newly covered patients. California hospitals, like by UC Riverside to establish a four-year medical school. hospitals across the country, face reductions in Medicaid Beginning in summer 2013, however, California PCPs will and Medicare disproportionate share hospital payments receive a two-year temporary boost in Medi-Cal payments that help offset the cost of caring for low-income and up to Medicare levels, which is significant considering that uninsured patients. Also, it remains to be seen how new Medi-Cal rates are among the lowest Medicaid rates in the state mechanisms to take into account changes in counties’ nation.18 Increases will be retroactive to January 1, 2013, and revenues and costs of caring for low-income people will may encourage greater provider participation in Medi-Cal. affect resources and health care services at the local level.17 While many safety-net providers reported that recruiting and retaining physicians have not yet been particularly Competition from Non-Safety-Net Providers difficult, they did note a need for more staff as they expand While safety-net providers expect significant increases in capacity. Many are adding nonphysician staff or “midlevels,” demand for services arising from ACA-generated coverage such as nurse practitioners and physician assistants, and using beginning in 2014, they also are concerned about losing them to the fullest extent of their training and licensure. some uninsured patients to other providers once those Yet the effectiveness of this strategy to increase capacity is uninsured patients gain coverage. To the extent that newly contingent upon the extent to which midlevels are used as insured patients do move to other providers, some safety- PCPs, either with their own patient panels or in a delegated- net providers would be left with a greater proportion of work role with physicians.19 This strategy seems to have uninsured patients and fewer resources. From the Medi-Cal gained more traction in some markets than in others. In enrollees’ perspective, however, this increase in competition Sacramento, for example, two large FQHCs have added among providers may be beneficial if it results in more midlevel practitioners to the point of having three per PCP. ©2013 California HealthCare Foundation 9 In Riverside/San Bernardino, however, providers seemed the remaining eligible individuals before 2014 is uncertain. more hesitant about extensively expanding use of midlevels San Francisco provides an example of the time and effort in new ways. needed: Although approximately half of this county’s uninsured residents are enrolled in the Healthy San Francisco Implications for Health Reform program, the program has been in place for six years and California’s significant delegation of responsibility to counties continues to work on changes in care delivery. Similarly, has considerable benefits in providing flexibility to meet local many uninsured Californians are already eligible for health care needs. The findings from six California regions Medi-Cal but are not enrolled, indicating that local efforts indicate that community activities to prepare for health care to reach people — screenings for Medi-Cal through reform can help mitigate the stress on the health care system medically indigent programs — could be improved.21 to enroll and care for people come 2014. At the same time, Outreach and enrollment strategies conducted by the considerable community variation in these efforts suggests state, local governments, and private organizations — which that some counties are struggling to overcome long-standing were outside the scope of this study — will also play a part weaknesses in their safety-net systems. Also, counties have in the rollout of health care reform. New “navigators” will be traditionally operated on their own in caring for low-income deployed by the state to help people enroll in coverage, and people. There appears to be little structure for cross-county it may be efficient for the state to coordinate these activities collaboration, which may preclude the sharing of useful with existing local safety-net structures to supplement, and strategies and resources. to avoid duplication or conflict with, existing strategies. To help ensure a minimum level of progress toward Communities lagging in enrollment will need more health reform across the state, policymakers may wish to take assistance in this regard. into account specific ways that communities are preparing Many communities likely will also need more provider for reform and how the reach of these efforts varies from capacity to meet the increased demand for care as more community to community. For example, while the LIHPs people become insured. But while the sudden availability appear to be successful in many communities, they are not of coverage to so many people may release a huge, long- an across-the-board solution to the problem of transitioning standing, pent-up demand for care, the full scope of low-income people to health insurance coverage, medical the resulting jump in demand for services may be only homes, and other appropriate health care services. Also, while temporary. Communities will need to be careful to find ways most of the county-based Medi-Cal managed care programs to expand capacity to meet large but potentially short-term have been relatively stable in recent years, Sacramento needs without overextending themselves financially through County has set up an advisory board to consider changes in brick-and-mortar or other expansions that are expensive and its program following tensions between the health plans on difficult to downsize if demand subsides. Focused leadership the one hand, and the hospitals and FQHCs on the other.20 and collaboration will be important to address this balancing Even in counties that appear relatively well prepared for task, to create the best mix of inpatient and outpatient care, the effects of health reform, many local strategies are still to develop an adequate workforce, to control the costs of nascent and require more time to develop. It’s unknown serving the expanded Medi-Cal population, and to provide how readily uninsured people will gain coverage and access care for people who remain uninsured. to care. In that regard, how well the LIHPs are able to reach ©2013 California HealthCare Foundation 10 Del Norte Regional Markets Study With support from the California HealthCare Foundation, researchers from the Center for Studying Health System Change (HSC) conducted interviews between November 2011 and April 2012 with health care leaders in six California regions to study these local health care systems. The work updated a similar study conducted in 2008. The six regions — Fresno, Los Angeles, Riverside/ San Bernardino, Sacramento, San Diego, and the San Francisco Bay Area — reflect a range of Placer economic, demographic, health care delivery, and financing conditions in California. Although Yolo El Dorado the Sacramento, Bay Area, and Fresno regions each encompassed several counties, the Sacramento Marin interviews were largely concentrated in the largest, urban cores of these regions: Bay Area Contra Costa San Francisco Alameda Mariposa Alameda County and the city and county of San Francisco for the Bay Area, and San Mateo Sacramento and Fresno Counties. HSC researchers interviewed 185 people, Madera Fresno including 167 community-level provider respondents (executives Tulare from hospitals, physician organizations, community clinics, and Kings programs for low-income people), as well as 18 health plan executives and other state-level respondents. Researchers San Bernardino supplemented the qualitative interview information Los with quantitative data on demographics, provider Angeles characteristics, and other background information. Riverside ▶▶ or the entire regional markets series, visit f San Diego www.chcf.org/almanac/regional-markets. Authors About the Foundation Laurie Felland and Dori Cross of the Center for Studying Health System The California HealthCare Foundation works as a catalyst to fulfill the Change (HSC). HSC is a nonpartisan policy research organization that promise of better health care for all Californians. We support ideas and designs and conducts studies focused on the U.S. health care system to innovations that improve quality, increase efficiency, and lower the costs inform the thinking and decisions of policymakers in government and private of care. For more information, visit us online at www.chcf.org. industry. More information is available at www.hschange.org. California Health Care Almanac is an online clearinghouse for key data and analysis examining the state’s health care system. For more information, go to www.chcf.org/almanac. ©2013 California HealthCare Foundation ENDNOTES 1 1. Two key funding changes have affected safety-net clinics and CHCs across 1. Marjorie Swartz, “Bill Analysis: Medi-Cal Eligibility,” Analysis of the board. Funding ended in 2010 for the Expanded Access to Primary California Assembly Committee on Health Bill AB 1 X1, Care program, through which the state had used general revenues to help www.leginfo.ca.gov. CHCs cover some of their costs of delivering services to uninsured people. Also, state cuts in optional Medi-Cal benefits (including adult dental care, 2.“Covered California,” Annual Report to the Governor and Legislature podiatry, and optometry) had financial impacts because CHCs continued (Sacramento, CA: California Health Benefit Exchange, January 2013). providing these benefits to the extent possible, though availability of these 3. Peter Harbage and Meredith Ledford King, A Bridge to Reform: California’s services declined for some people. Medicaid Section 1115 Waiver (Oakland, CA: California HealthCare 1 2. Joy Grossman, Peter Cunningham, and Lucy Stark, Fresno: Health Foundation, October 2012), www.chcf.org. Providers Expand Capacity, but Health Reform Preparation Lags (Oakland, 4. “Low Income Health Program Update,” Stakeholders Advisory Committee CA: California HealthCare Foundation, December 2012), www.chcf.org. Meeting (February 22, 2013), www.dhcs.ca.gov; LIHP March 2013 1 3. O’Neill, “Governor Brown Commits.” Monthly Enrollment (Sacramento, CA: Department of Health Care Services, May 23, 2013), www.dhcs.ca.gov. 1 4. Felland, Katz, and Lauer, California’s Safety Net. 5. Deborah Reidy Kelch, The Role of Counties in the Health of Californians: 1 5. This assessment is based on estimates of the total uninsured population An Overview, (Oakland, CA: California HealthCare Foundation, in the county; study researchers were unable to obtain estimates for the October 2011), www.chcf.org. subset of the uninsured population likely to be eligible for LIHP. 6. Passed by the California Legislature in 2009, the Hospital Quality 1 6. “Sacramento County Announces November Launch of LIHP,” California Assurance Fee Program (commonly known as the hospital fee program) Healthline (October 18, 2012), www.californiahealthline.org. generates additional funding for hospitals serving relatively large numbers 1 7. Edmund G. Brown Jr. Governor, State of California, Governor’s Budget of Medi-Cal patients. Hospitals pay a fee based on their overall volume of May Revision 2013-14, (Sacramento, CA: State of California, May 2013). inpatient days; after the addition of federal matching dollars, the funds Please note: The full budget is set to be in place by June 30, 2013. are redistributed to hospitals based on their Medi-Cal inpatient days and outpatient visits. Approximately 20% of hospitals are net contributors to 1 8. Kaiser Family Foundation, “Medicaid-Medicare Fee Index” (2012), the program. While the program originally only covered the period from www.kff.org. April 2009 through December 2010, it has been renewed twice to 2013. 1 9. Tracy Yee et al. “Primary Care Workforce Shortages: Nurse Practitioner Payments were first made to hospitals at the end of 2010. Scope-of-Practice Laws and Payment Policies,” NIHCR Research Brief 7. Statewide between 2007 and 2009, the portion of the population on No. 13 (Washington, DC: National Institute for Healthcare Reform, Medi-Cal increased from about 19% to 21%, the portion lacking any February 2013), www.nihcr.org. coverage increased from 13% to almost 15%, while the portion covered 20. Ha Tu et al., Sacramento: Health Providers Collaborate and Weather by commercial insurance declined from 59% to 55%. Source: California Economic Downturn (Oakland, CA: California HealthCare Foundation, Health Interview Survey, 2009. September 2012), www.chcf.org. 8. Laura Hill and Joseph Hayes, “Undocumented Immigrants” (San 2 1. Research models predict 10% to 20% of the “eligible but not enrolled” Francisco: Public Policy Institute of California, February 2013), to enroll by 2019 through the “woodwork effect,” which refers to www.ppic.org. people becoming aware of their eligibility through increased attention 9. Laurie E. Felland, Aaron B. Katz, and Johanna R. Lauer, California’s Safety surrounding the ACA generally, the availability of health insurance Net: The Role of Counties in Overseeing Care (Oakland, CA: California exchanges, and the enrollment of family members. See Swartz, “Bill HealthCare Foundation, December 2009), www.chcf.org. Analysis.” 1 0. California Office of Statewide Health Planning and Development, Annual Financial Data, (Sacramento, CA: Healthcare Information Division, December 2012). ©2013 California HealthCare Foundation 12 Appendix A. Safety-Net Structure, by Community Fresno Los Angeles Riverside/San Bernardino Sacramento San Diego San Francisco Bay Area Main Safety-Net Community Medical County hospital: County hospitals: UC Davis, plus (private) UC San Diego, plus County hospitals: Hospitals Centers (private) LAC+USC Medical Arrowhead Regional Dignity Health and (private) Children’s, San Francisco General Center (plus two other Medical Center, Riverside Sutter Scripps, and Sharp Hospital, Alameda acute care county hospitals) County Regional Medical County Medical Center Center Clinics and CHCs Community Medical County clinics plus an County hospital-operated UC Davis and Dignity Many FQHCs San Francisco and Centers outpatient extensive set of FQHCs outpatient care clinics safety-net clinics, one Alameda Counties have care center, several and private clinics plus other county county clinic, several several county clinics, FQHCs throughout facilities, several FQHCs newly designated large FQHCs, and free region plus some RHCs and non- FQHCs clinics federally qualified clinics Medically Eligibility increased Chronically ill 200% of FPL (both 200% of FPL, no longer Chronically ill under 165% San Francisco: Indigent from 56% to 200% of under 133% of FPL, counties), undocumented covers undocumented of FPL 500% of FPL Program FPL (following lawsuit) some coverage for immigrants covered immigrants Eligibility* Alameda: undocumented in Riverside but not in immigrants San Bernardino 200% of FPL LIHP Eligibility Not implementing Implemented July 2011 Implemented January Implemented Implemented July 2011 Implemented July 2011 and Enrollment 2012 (both counties) November 2012 (both counties) (as of May 2013) Healthy Way LA: San Diego County LIHP: •133% of FPL Riverside (Riverside Sacramento County: •133% of FPL San Francisco County HealthCare): •67% of FPL (plus some grandfathered (SF PATH): •250,000 enrolled •133% of FPL in at up to 200% of FPL) •25% of FPL •10,000 enrolled •36,000 enrolled (dropped from 100%) •22,000 enrolled •10,500 enrolled San Bernardino (ArrowCare): Alameda (HealthPAC): •100% of FPL •200% of FPL •30,000 enrolled •48,000 enrolled Medi-Cal Two-Plan Model; Two-Plan Model; Two-Plan Model; Inland Geographic Managed Geographic Managed Two-Plan Model; Managed Care Anthem Blue Cross LA Care (public) plus Empire Health Plan (public) Care; Anthem BC, Care; Care 1st, San Francisco and Model and CalViva Anthem Blue Cross, plus Molina Health Net, Kaiser, and Community Health Group Alameda each have Care1st, and Kaiser Molina participating Partnership, Health Net, county health plan, Kaiser, and Molina plus Anthem Blue Cross *Upper income limit noted at which enrollees may encounter cost sharing; enrollees at lower incomes do not. Source: Respondent interviews; LIHP March 2013 Monthly Enrollment (Sacramento, CA: California Department of Health Care Services, May 23, 2013), www.dhcs.ca.gov. Appendix B. Preparedness for Reform, by Community Fresno Los Angeles Riverside/San Bernardino Sacramento San Diego San Francisco Bay Area Local Leadership Low High Medium Low Medium High Outpatient Care Emphasis Medium High Medium High Medium High LIHP Development Low High Medium Low Medium Medium Advanced Collaboration Low Medium Medium Low Medium High Source: Authors’ assessment based on analysis of interview data. Appendix C. Baseline Need for Safety Net, by Community Fresno Los Angeles Riverside/San Bernardino Sacramento San Diego San Francisco Bay Area % Uninsured 16.9% 17.0% 19.5% 10.1% 12.4% 9.8% % Medi-Cal 33.7% 24.6% 21.2% 15.3% 20.2% 21.4% % Fair/Poor Health 19.8% 18.0% 16.1% 11.6% 11.9% 13.8% % Below Poverty (FPL) 27.3% 22.7% 17.0% 13.2% 11.9% 11.7% Source: UCLA Center for Health Policy Research, California Health Interview Survey, 2009. ©2013 California HealthCare Foundation 13