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Healthy Families' Demise Sparks Fears Of Coverage Abyss

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By Chris Levister

"We are assured and feel confident that we've put in place the primary and specialty networks to take care of these children."

That's Jane Ogle, deputy director of health care delivery systems for the California Department of Health Care Services responding to the controversial shuttering of Healthy Families.

On January 1, California started dismantling Healthy Families, a popular health care program for low-income children by shifting nearly 200,000 young people into the massive Medi-Cal program, a move many health advocates fear will disrupt their care.

And this is just the first phase of the transition away from the program. By August, the nearly 900,000 people in the program will be shifted into Medi-Cal. The move is expected to save the state about $58 million in health care costs in 2013-14 and more than $70 million a year when Healthy Families is fully phased out.

Although the children moving to Medi-Cal, the state's Medicaid program, will not lose basic health coverage, health advocates and many physicians who care for children are concerned that the young people and their families will have a hard time finding a specialist who accepts Medi-Cal patients or, for the same reason, find it difficult to find a primary care doctor.

They fear some children will even get lost in the shuffle dealing with the much larger Medi- Cal program, which covers more than 7 million people.

"We're very concerned kids will get lost in transition. We're worried about the change impacting the continuity of care for these kids," said Carmella Gutierrez, president of Californians for Patient Care, a statewide advocacy group.

"The devil is always in the details, and we don't want one of those details to be a child that gets overlooked," she said. The Healthy Families program is California’s version of the federal State Children’s Health Insurance Program (SCHIP).

Healthy Families provides low-cost health insurance to children of families whose incomes are too high to qualify for Medi-Cal, but are below 250 percent of the Federal Poverty Level (about $40,200 for a family for three).

Healthy Families covers a range of health care services including physician visits, hospital care, prescription drugs, home health, dental, and mental health services through managed care plans.

As of September 2011, 850,000 children were enrolled in Healthy Families at a cost of more than $950 million in fiscal year 2010. Healthy Families was created in July 1998 as part of the State Children’s Health Insurance Program (S-CHIP).

Originally approved for a tenyear period, S-CHIP is jointly funded by federal and state governments and administered by the Managed Risk Medical Insurance Board (MRMIB).

Faced with the state budget crisis, Gov. Jerry Brown in late June 2012 signed a bill that effectively ended the Healthy Families program.

The Brown administration argues that moving Healthy Families kids into Medi-Cal will save the state millions largely because the state pays doctors significantly less in Medi-Cal than in Healthy Families.

Medi-Cal also provides better coverage for some kinds of treatment, such as mental health care, with lower premiums.

But critics say those advantages are illusory — the state's low rates have driven so many doctors and hospitals out of Medi-Cal that it's becoming increasingly difficult for patients to obtain treatment, particularly in rural areas.

To avoid potential chaos created by making the change all at once, the state Department of Health Care Services is dividing the move into four groups.

The first group includes children who are least likely to experience any disruption in health care because they are in managed-care plans that also offer Medi-Cal coverage.

Families will receive at least 60 days notice from the state. Because of the passage of the federal Affordable Care Act, the Healthy Families program would have disappeared anyway in 2014, with some children finding coverage under an expanded Medicaid program. Their families will be able to buy subsidized care through health exchanges being set up under the new law.

"This way, we get to move those kids early and make sure we're doing this correctly and seamlessly as possible," Ogle said.

The federal health law does provide primary care doctors with payment increases this year, but advocates argue that the funding for those increases is guaranteed for only two years. Some doctors who do not accept Medi-Cal, they say, may be reluctant to sign up. In addition, a recent state court ruling opens the possibility to additional Medi-Cal rate cuts.

The governor’s plan not only forces Healthy Families patients to move to Medi-Cal, but it also would require doctors to accept Medi-Cal’s monthly reimbursement – an average cut of nearly 20 percent.

Healthy Families doctors receive a monthly average of $103 per patient. They would receive an average of $84 per patient if they decide to make the switch to Medi-Cal, but California Medical Association spokeswoman Molly Weedn said the reimbursement often can be much less.

“Rates that physicians are reimbursed for a Medi-Cal patient are less than what a large pizza costs,” she said. “It’s really incredible that a physician can be reimbursed $18, $20 (per month).”

A survey referenced by the Legislative Analyst’s Office asked pediatricians who now provide care to Healthy Families patients, but not Medi-Cal patients, if they would be willing to make the switch. The February 2012 report said 29 percent would not and 46 percent were not sure.

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