Price of isolation: CalPERS is in bind of trying to provide reasonable rates for all of its members
(Sacramento Bee, The (CA) (KRT) Via Thomson Dialog NewsEdge) May 13--From Kelly Segura's office in Placerville, her doctor is just a couple of minutes away. So is her local hospital.
That could change this winter. Segura and her 17-year-old son face the prospect of switching doctors and a 25- to 50-minute commute for routine office visits.
"It would be horrible, especially if it's snowing. My son really likes his doctor. It's really hard to find a doctor that (you) feel comfortable with," said Segura, an accounting supervisor for the city of Placerville.
Segura and some 3,000 other El Dorado County residents are sitting in the same boat. To their health plan, these rural residents are tabbed as too expensive to cover, and Blue Shield of California wants to drop them.
The health plan also said CalPERS members in Lake, Napa and Plumas don't pay enough in premiums to cover the payout in benefits. Consequently, Blue Shield on Tuesday will ask the Health Benefits Committee of the giant California Public Employees' Retirement System to let the health plan pull out of these four rural counties.
If approved, the withdrawal will affect about 9,100 active and retired state, city and other local government workers and their families.
Blue Shield's proposal reflects an ongoing struggle of rural towns nationwide that face a constant fight to preserve competition and affordability.
Over the years, private health maintenance organizations have withdrawn steadily from money-losing rural markets to concentrate on more profitable urban centers.
A 2002 report by the state Legislative Analyst's Office illustrated the extent of the problem. From 1997 to 2002, HMO enrollment tumbled 24 percent in 30 mostly rural counties, affecting 5 million California residents. In Del Norte County, for example, enrollment plummeted 95 percent, to 164 from 3,500.
Experts blame the problem on higher costs and a rural population that tends to be older and suffering from more chronic medical conditions than their urban counterparts. Health plans also contend lower reimbursement rates by Medicare and CalPERS have helped fuel the shift, the report from the Legislative Analyst's Office said.
"The economies of scale aren't there. You don't have enough providers. You don't have enough hospitals," said Paul Smith of the Regional Council of Rural Counties. "It's a huge problem if you have HMOs continuing to pull out."
As the nation's third-largest purchaser of health care, CalPERS provides medical benefits for 1.2 million government employees statewide.
Its HMO coverage, which uses a primary doctor as a gatekeeper to oversee patient care and help keep costs under control, is offered through industry pioneer Kaiser Permanente, Blue Shield and Western Health Advantage, a Sacramento-based regional plan.
Kaiser is heavily concentrated in the urban centers while Blue Shield operates in 41 counties, including more than a dozen rural counties such as Sierra and Butte.
In the past three years, Blue Shield has seen membership shift to the rural counties -- from 11 percent of total enrollment to 15 percent. The costs in these areas are 21 percent to 63 percent higher than in urban counties, the health plan estimates.
Experts say there is no simple culprit for the high cost of health care in the rural areas. Some explanations include low patient volumes at hospitals, fewer doctors and specialists available to patients, a larger uninsured population and a population with more serious ailments.
A year ago, Segura and others got a reprieve when CalPERS trustees rejected a Blue Shield cost-cutting proposal to leave El Dorado County and 11 other rural counties. In response, the health plan launched a statewide community education campaign.
Since September, Blue Shield officials have traveled to 10 rural counties, detailing local health care costs and urging labor groups, employers and medical providers to work out plans to drive down expenses. They also sent letters to doctors encouraging them to sign HMO contracts.
At a recent Sonoma County meeting, Blue Shield officials pointed to the area's aging population, lack of urgent care centers and a high hospital admissions rate for fueling costs. Blue Shield spends 36 percent more than the statewide average to provide care to a CalPERS member in Sonoma County. Officials touted a healthy rewards rebate program and urged audience members to talk with their medical providers and employers.
"We would like to solicit your support to make these programs happen ... to reduce the cost of health-care in Sonoma County," said Joseph Safran of Blue Shield.
Blue Shield predicts these efforts will cut $4 million in costs, but that's still short of saving the four most expensive counties -- Placer, Napa, Lake and Plumas -- from the chopping block.
In El Dorado, for example, monthly health care costs an average $378.98 for each member, compared with CalPERS statewide HMO average of $251, according to Blue Shield.
Blue Shield Executive Vice President Paul Markovich said these expenses have translated into higher premiums for the rest of the plan's 356,000 CalPERS members. If these counties were dropped, members would save $30 million in additional premiums.
"This subsidy has been going on for years. It just keeps raising the rate higher," Markovich said. "Members in Los Angeles, San Francisco and Sacramento have been leaving Blue Shield for options like Kaiser and Western Health Advantage."
In El Dorado County, talks between Blue Shield and Marshall Hospital in Placerville have gone nowhere. Markovich said he is skeptical the two would agree on a reimbursement pact to preserve HMO coverage in the county.
Laurie Eldridge, chief financial officer at Marshall, defends the hospital's pricing and questions Blue Shield's financial results for El Dorado County.
"Our costs are fairly low. Our charges are fairly low. The numbers are a bit perplexing for us," Eldridge said. "We need to find some kind of solution for our community. We don't want these patients left without access to care in our community."
If Blue Shield does pull out of rural El Dorado, Segura and other CalPERS members would have to switch to Kaiser or Western Health. That means finding new doctors and traveling to hospitals or medical offices in Folsom, Roseville, Auburn or Sacramento. They can opt for a CalPERS preferred provider organization plan, which has higher out-of-pocket costs.
The change could hit some agencies hard. It also could prompt some agencies to bolt the CalPERS health program.
"If they drop the (Blue Shield plan), we're gone. We would have no local doctors," said Ted Schmidt, chief of the Garden Valley Fire Protection District, which has eight paid firefighters on staff. Right now, he and his crew see doctors at a local clinic four miles away.
Switching HMOs would mean visiting a doctor in Auburn or Folsom or traveling to an emergency room in Roseville. "We send people to Roseville (for emergencies), but by helicopter," Schmidt said.
Segura, the Placerville city employee, anticipates a run-up in sick leave and extra expenses because of the longer travel. "I just see my costs going up every year."
A study by the Maine Rural Health Research Center at the University of Southern Maine found insured rural residents spend an average of $618 a year for out-of-pocket health care expenses, compared with $512 by their urban neighbors. About 17 percent spend more than $1,000 annually.
To CalPERS and employers, experts say, the issue may center on fairness and whether they are willing to absorb the extra costs to ensure all members can have access to HMO coverage.
"It's the same issue that we face in the insurance markets: How much should healthy people pay for sicker people?" said Andy Colburn, a rural health expert who heads the Institute of Health Policy at the University of Southern Maine. "How much should we all pay in order for us to ensure services are available to all members?"
Copyright (c) 2007, The Sacramento Bee, Calif.
Distributed by McClatchy-Tribune Information Services.
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