A communication from the Orange County Health Care Agency to MSI physicians:

As you may know, payments for Medical Services for Indigents physician services are made from a fixed pool of funds. Interim payments to physicians are made during the year and a final settlement amount is paid after all the bills have been received and processed. There is a requirement that a reserve amount be maintained to assure that the pool is not overexpended.

The agency advises that the program is experiencing much higher expenditures than initially projected for this fiscal year. After a thorough analysis, it appears many factors have contributed to the situation. The most notable were:

1. The changed patient eligibility from six months to 12 months;
2. The increased enrollment over prior years;
3. The increase in the level of claims coming into the program; and
4. The decrease in denied claims.

As a result, it has been necessary to temporarily reduce the rate of interim reimbursement. Funds left in the pool, including the reserve amount, will first be used to raise the level of reimbursement for physicians who have received the reduced interim payment amounts.

Important Points
- The MSI physician pool was increased this year by the Board of Supervisors, allowing an additional $2.5 million to be distributed to participating physicians.

- From July 1, 2006, until now, physicians have received a 21 percent higher interim reimbursement rate than in the prior fiscal year. Also, fewer physician claims are being denied this fiscal year, resulting in even higher interim payment amounts being paid this year compared with the prior year.

- Once the new MSI year begins on Sept. 1, 2007, the interim rates will be increased again to a level _sustainable for the next contract year.

Questions regarding MSI reimbursement may be directed to Dan Castillo,
MSI program manager, at 714/834-6249.

Message From the Orange County Medical Association Executive Director Michele Revelle

We are working with county staff on the MSI program and assure physicians that these actions were necessary at this time.

However, the good news is that MSI providers have received higher levels of reimbursement for 11 months of this fiscal year at 85 percent of RBRVS and more claims than ever have been approved due to OCMA pointing out wrongly denied claims and working with billing companies to resubmit those claims for payment.

We will continue to work with staff to ensure that MSI providers are fairly paid. Due to $50 million in new revenue coming to the county from a grant known as the Coverage Initiative, the scope of service for MSI patients will be broadened beginning next month. Please call me at 714/978-1160 if you have further questions or concerns.