| Article |
January 5, 2007
East Bay Business Times
by Marie-Anne Hogarth
The Alameda Alliance for Health celebrates the New Year with news of a one-time bonus for its primary-care doctors who serve Medi-Cal patients.
The bonus is a sign of newfound financial health for the nonprofit insurer, which in 2006 turned a $7 million profit after five years of operating in the red.
It's also intended as a thank -you to the doctors, who a year ago saw their reimbursement rates slashed by the alliance. The insurer will share approximately $300,000 of its surplus with the physicians, rewarding them based on the number of visits logged with Medi-Cal patients between February and June 2006.
"It will always be our philosophy that if we have a good year that we will share the results of our good year with our providers," said Alliance CEO Ingrid Lamirault.
Alameda County established the plan in 1996 as an alternative for Medi-Cal recipients to the mainstream commercial plan, Blue Cross of California.
The group quickly became an important part of the Alameda County safety net, spending its cash reserves on grants to hospitals and providing comprehensive coverage to 7,500 low-income families that were not eligible for public programs.
"What's good about the alliance," said Donald Waters, assistant executive director of the Alameda-Contra Costa Medical Association, "is that it recognized from the outset that fee-for-service medical rates are inadequate and it committed resources to making the system easier (on doctors)."
The strategy wasn't paying off when Lamirault came in as CEO in 2003, she said. She soon realized that short of drastic measures, the group was 12 to 18 months away from being unable to pay providers.
Among other turnaround strategies, the alliance slashed physician reimbursement in February 2006 from 200 percent to 110 percent of the Medi-Cal fee schedule. Medi-Cal reimburses an average of $20 per basic visit with a primary care provider, so these doctors went from getting roughly $40 to $22 per visit.
"Nobody wants to see their rates cut," said David Kears, director of the Alameda County Health Care Services Agency. "But the settlement was that if everybody plays, we are all still better off with than without the alliance."
The new bonus, which sets last year's visits at 150 percent of Medi-Cal reimbursement, isn't huge. Providers may get just a few dollars more.
However, the alliance hopes its action will encourage patient visits, which have been declining. The insurer also is educating patients on the benefits of preventive care.
"This is a two-pronged approach," Lamirault said. "The physicians are working hard to see members."
Michael Mahoney, CEO of St. Rose Hospital in Hayward, who also is on the alliance's board, said the group's troubles were the result of flat government reimbursement in the face of escalating medical costs and of lax management.
"We got away from the basic responsibilities of running a business," he said.
The alliance has since made administrative cuts and adopted practices that are the norm at many commercial plans, for instance shifting more patients onto generic drugs.
It brought on case managers to work with seniors and people with disabilities, a group that in fiscal 2004-2005 accounted for 29 percent of costs but just 9 percent of members. A year later, costs for this group had decreased by 4 percent, even though the group accounted for 11 percent of members.
But Lamirault said what was most important was focusing on the alliance's expertise in working with low-income patients and their providers. This meant cutting First Care, an insurance product for small employers. The alliance covered 400 members through the program and found itself competing with commercial providers.
The alliance also eliminated Family Care, which served people living at below 300 percent of the federal poverty level but still did not quality for public programs.
Family Care served an important population, but the program had grown too big for the alliance to handle, Lamirault said.
Thanks to the group's current financial stability, she said, it now runs Healthy Kids, which serves many of the same patients and is funded through grants from the county and philanthropy. The program is capped at 1,000 children.
Alameda Alliance for Health
Business: Nonprofit health insurer
Headquarters: Alameda
Founded: 1996
CEO: Ingrid Lamirault
Employees: 115
2006 revenue: $144 million
2006 income: $7.2 million
Address: 1240 South Loop Road, Alameda 94502
Phone: 510-747-4532
Web: www.alamedaalliance.com
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