The Orange County Medical Association is working closely with CalOptima as the organization considers two reimbursement changes for emergency physicians and hospital contracts.

A few months ago, the OCMA requested an increase in the CalOptima Medi-Cal case rate for emergency physicians. The current case rate is $70, which has been in effect for about five years. Peter Anderson, MD, and I provided staff with reimbursement and claims information from other county Medi-Cal programs and asked the staff to review it. After conducting the research, CalOptima staff is suggesting a new case rate of $80, which is more in line with our data. If the Board of Directors approves the increase, CalOptima will require its health networks to pay the new rate to ER physicians.

The reaction from Orange County ER doctors to the possible change has been positive. Dr. Anderson and I will be talking with more emergency physicians in the coming weeks to discuss the new rate and other concerns they may have.

Further, CalOptima is considering other changes in its reimbursement model. Staff has suggested ending capitated contracts with those hospitals that spend most of their capitation payments to purchase hospital care at different facilities. They believe the change will increase the efficiency of the delivery system, improve quality of care and increase access. Staff presented the ideas to OCMA leaders at a private meeting to allow us to offer feedback on the proposed system. They indicated that the medical groups' role and the providers' role would not change.

CalOptima is seeking change because of the instability of hospital participation in the Physician Hospital Consortia model. Seven hospitals have terminated their capitated contracts, but provide the same quantity of services on a fee-for-service basis. Only two tertiary hospitals have elected to remain in a capitated contract. Money is being paid to hospitals that are brokering the care. It is unclear whether the care is being brokered as a necessity or due to other reasons, but CalOptima staff believes that the broker hospitals are benefiting from the model, while the hospitals actually providing care receive fewer funds.

The Hospital Association of Southern California believes that the brokering of care is absolutely necessary in the majority of cases. On the other hand, CalOptima believes that there would be savings in a fee-for-service hospital payment model. Those savings will be "reinvested" in provider care through various types of distribution.

A few broker hospitals object to the plan and claim that they stand to lose millions of dollars. Hospitals that meet specific thresholds, such as CHOC and Fountain Valley, have a choice to continue with a capitated rate or move to a fee-for-service arrangement. We will continue to follow the progress of the proposal.

In addition, CalOptima has worked out a long-term negotiation with the state on the 2006-07 budget that will enable the organization to break even in the Medi-Cal program. The discussions were completed after auditors came to Orange County to review the books, and it became obvious that the Orange County managed care model was in dire need of additional funds.

Michele Revelle is the executive director of the Orange County Medical Association. She can be reached at 714/978-1160 or mrevelle@ocma.org.