Orange County OKs Trying HMO-Type Care for the Poor : Health: Board of Supervisors approves, in principle, the restructuring of Medi-Cal patients’ services with the goal of lowering cost and improving quality.

SANTA ANA —  Orange County supervisors agreed Tuesday to embark on a wholesale restructuring of the local health care system for the poor and disabled, aimed at saving millions of dollars and improving care for Medi-Cal patients.

If the state approves the move as expected, Orange County would become the largest county in California to move toward what would essentially be a public sector health maintenance organization.

“I’m really very excited that this day has come--it’s the wave of the future,” said Supervisor Harriett M. Wieder, who helped develop the proposal. “We’ll be blazing a path.”

The start of the health care system is at least two years away. The state has pledged $567,000 in seed money for the project. But it could cost up to $5 million in administrative costs to put the program into effect, and local officials say finding that money could be an obstacle.

At a time when Orange County is furiously looking for ways to downsize government and privatize services, the new system would create a local bureaucracy to control and distribute about half a billion dollars a year in Medi-Cal payments, taking over the responsibility from the state.

Instead of relying on the current “pay-as-you-go” method of Medi-Cal services, the system would allow health care providers to collect a set monthly fee from the new county agency for each Medi-Cal patient they treat.

Advocates for the poor said they want to know the amount of these monthly payments to ease their concerns about the quality of care for Medi-Cal patients under the new system.

“That’s what this all rides on, and that’s a totally unknown factor right now,” said Nancy Rimsha, an attorney with the Legal Aid Society of Orange County, which works with the poor. “If (the county) is going to use this to save money, then the level of care could actually decline.”

But county officials say Medi-Cal clients will benefit because the new system should encourage the poor to seek preventive and regular medical treatment. That will reduce trips to the emergency rooms for treatment that is often unnecessary and costly.

They also predict that the system will cut down on Medi-Cal’s notorious delays and paperwork gluts, enticing more doctors and hospitals to join.

Santa Barbara and San Mateo counties have similar programs, and Solano and Santa Cruz counties are planning to adopt the idea. But Orange County--with more than 250,000 Medi-Cal clients in 1991--is by far the biggest county in the state to consider the idea. As a result, state officials say they will be keeping a close eye on its success or failure.

“The program in Orange County will be a real good indicator for the rest of the state,” said Lorenza Valvo, an official with the California Medical Assistance Commission who has worked on the project. “We’ll look there to see whether this might work at other sites as well.”

The state Medical Assistance Commission, which negotiates Medi-Cal reimbursements to health care providers, has given Orange County preliminary approval for the new system, and Valvo said final approval should come at the commission’s Oct. 14 meeting.

Before giving its final blessing, the commission wants to see evidence that the plan has support from the local political and medical communities.

Dr. Richard F. Kammerman, past president of the Orange County Medical Assn., said the plan offered “the greatest single opportunity to fundamentally restructure and improve our health care delivery system for the medically indigent.”