Successful county contracting in Santa Barbara opens door for expansion, Medicar
Successful county contracting in Santa Barbara opens door for expansion, Medicare risk product
Providers sign up with 'hassle-free' plans
Since it began operations in 1983, the Santa Barbara Reg ional Health Authority has defied the oddsmakers to turn in consistently stellar performances in the management, clinical outcomes, and finances of the health plans it operates. Running successful health programs for the poor is difficult enough; Santa Barbara's ability to do it at the local level routinely garners national attention.
"I refer to it as 'Medicaid in paradise; paradise in Medicaid,'" says Robert E. Hurley, PhD, a Virginia Commonwealth University associate professor who has studied Santa Barbara's and other Medicaid systems around the country.
In addition to administering California's Medi-Cal program locally, the authority serves as the sole county contractor for the state's prenatal care program and is one of four providers in Santa Barbara for the federal Children's Health Insurance Program. In this county of about 370,000 people, about one in eight gets health care coverage from the authority.
Taking a risk with Medicare
Furthermore, the authority is on the move. It is investigating the development of a Medicare risk product and negotiating with neighboring San Luis Obispo County to extend there Santa Barbara's Medi-Cal efforts, known as the Santa Barbara Health Initiative.
"Our primary concern was access, especially access to specialty physicians," says San Luis Obispo administrative analyst Gail Wilcox. "We turned to Santa Barbara because they've had tremendous success in that area," she says.
While the outcome of the San Luis Obispo negotiations are mired in local politics over the county-owned hospital, Ms. Wilcox says there still is a pervasive belief that all Medi-Cal in the state eventually will be delivered through some sort of capitated arrangement.
The Santa Barbara Regional Health Authority is a "county-organized health system," or COHS, an entity created in 1982 by state statute and operated under several waivers from the federal Health Care Financing Administration (HCFA).
The oldest of the authority's plans is the Santa Barbara Health Initiative, the oldest Medicaid program of its type in the country. The initiative covers an average of 38,000 members each month—virtually all residents of Santa Barbara County who are certified as eligible to receive benefits under Medi-Cal, California's Medic aid program. The authority receives a capitated per-member-per-month payment from Medi-Cal that currently generates about $90 million annually in revenues.
The broad enrollment base is crucial to the authority's ability to manage care and resources, says the authority's deputy executive director. "Since we have everybody, we can reallocate resources," says Robert Freeman.
The Santa Barbara Regional Health Authority was a product of local providers' and health officials' dissatisfaction with the unresponsiveness and sluggishness of both Medi-Cal in general and the state's fiscal intermediary at that time in particular. The authority takes seriously its commitment to serving the providers who serve the Medicaid population.
"We're dealing with a low-paying program that traditionally has been a hassle to providers. We have to change a lot of viewpoints," says Mr. Freeman. "We can't pay them billed charges, but we certainly give them more money when we can, and, if nothing else, make dealing with the program as hassle-free as possible."
The physician panel, open to any licensed provider in good standing, has about 90% of the county's doctors. "That would not have existed in the fee-for-service system. We go out and recruit providers," says Mr. Freeman.
Pregnancy outcomes in Santa Barbara and a similar county-organized health system outshine those in California's fee-for-service Medi-Cal system, according to a recent analysis in Health Services Research. Even when controlling for circumstances when women did not receive care in the first trimester, women in the Santa Barbara and San Mateo plans had a significantly lower chance of having a low birthweight baby.
Because other research has shown little difference in pregnancy outcomes between capitated and fee-for-service Medicaid arrangements, researchers speculate that at least part of the reason for their findings is that Santa Barbara and San Mateo have been around long enough to work out the bugs. At the time of the study, Santa Barbara and San Mateo had been in operation for 10 and six years respectively.
Moreover, the Santa Barbara Regional Health Authority is financially sound. For the year ending June 1998, the plan had an operating margin of $4.4 million, with overall revenues over expenses of $5.8 million. A the same time, the plan had the luxury of distributing $2.2 million in reserve funds, including $900,000 to contracted hospitals, $840,000 to specialty physician care, and $75,000 to outreach for the county's CHIP initiative. Mr. Freeman says disbursement for the current year is budgeted for $3 million, contingent upon performance of the plan.
The Authority is governed by an 11-member Board of Directors, appointed by the County Board of Supervisors and comprising providers, consumers, and government. All board meetings are open to the public, a feature some public health care entities would consider a handicap. Perhaps because it doesn't have any competition for local Medicaid trade, the authority can consider such openness an asset.
"We think it's important to be accessible to the community," says Mr. Freeman. "You give the community the sense you're not this disembodied voice in a faraway town. You're a local resident."
In their analysis of risks and opportunities in Medicare capitation, authority officials identify less with commercial HMOs leaving the market than with the provider-sponsored organizations struggling to maintain clinical and financial control over their work.
The authority is unfazed by the recent shakeout in the market and the fact that Santa Barbara's Medicare capitation rate for the elderly, about $400, is not even two-thirds that of nearby Los Angeles County. Authority officials in January created a separate committee to investigate developing a Medicare risk product.
Contact Mr. Freeman at (805) 685-9525 and Ms. Wilcox at (805) 781-5011.
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