BAD MEDICINE?; SOLO PHYSICIANS THREATENED BY HMOS' `CAPITATED' CARE.

Byline: Ben Sullivan Daily News Staff Writer

Sylmar physician Dr. Harold Cohen is one of a dying breed.

For 33 years, the geriatrics and family practitioner has resisted ``capitated'' managed care, in which doctors are paid a flat monthly fee to care for each patient assigned to them by an insurance company.

``Capitation has a tendency to undertreat the patient,'' Cohen said. ``I'm willing to discount or waive my fees, but I won't take capitated patients.''

As HMOs proliferated in the 1980s and '90s, Cohen, now 60, took on a greater number of low-income Medi-Cal patients whose government-funded insurance still reimbursed traditional fee-for-service care.

Ironically, Cohen said, he could provide a higher level of service to government dependents than to most people in employer-sponsored HMOs.

By the start of 1997, about one-third of his patients were from the Medi-Cal ranks. Now a process is under way that threatens the practices of autonomous physicians like Cohen by taking away their Medi-Cal patients and enrolling them in government-contracted HMOs.

The doctors have seen it coming for more than two years. And some have prepared for the inevitable by joining a physician network aligned with one of the HMOs.

But for die-hard independents - those who feel they can't or simply won't join an HMO - the coming year marks the end of an era, as managed care assumes the rights and responsibilities of treating Los Angeles' poor.

A brief history

As part of the Clinton administration's efforts to overhaul Medicaid, the government in January 1996 approved California's ``two-plan model'' to convert its Medi-Cal program from fee-for-service to capitated care. (Medi-Cal is the California version of Medicaid, a federal-state health plan for the poor.)

Under the model, one public and one private managed-care group are hired to treat the county's patients. In Los Angeles, Woodland Hills-based Foundation Health Systems Inc. won the bid for the for-profit plan. L.A. Care, which contracts for services with seven private HMOs, was created as the nonprofit entity. Each will initially get about half of the county's 1.2 million Medi-Cal patients.

After numerous delays, L.A. Care received government approval to operate in April and last month got the go-ahead to begin ``default'' enrollments of fee-for-service patients into its seven subcontractor plans. That means starting in January, the state will automatically assign patients to one of 3,000 L.A. Care-affiliated doctors, unless the patient has chosen one.

Physicians not aligned with the HMOs will see nearly all of their Medi-Cal patients reassigned. Only a few patients, including those whose treatment would suffer by changing doctors, will be exempt.

`Kicking and screaming'

For whatever reason - a desire for independence, an attraction to fee-for-service or a proclivity to altruism - many of the doctors who have avoided capitated managed care have also tended to see a disproportionate number of Medi-Cal patients.

``Historically, in many areas the only doctors willing to accept Medi-Cal were the independents,'' said Sean O'Brien, director of medical operations for Foundation Health Systems Inc.

Dr. Brian Johnson, a former president of the Los Angeles County Medical Association, said many of these doctors were first drawn to medicine in the 1970s through the federally sponsored Job Corps and have chosen to remain in low-income neighborhoods for the freedom such a practice affords.

The state estimates there are 150 to 200 physicians in L.A. who make their living treating Medi-Cal patients but have not signed up with one of the HMOs. The number of those who only partially depend on Medi-Cal is higher still.

Dr. Sharon McGarrity, a 43-year-old family practitioner in Los Angeles' Crenshaw district, describes her office as a ``one-woman, high-volume, fast-paced Medi-Cal practice.'' About 90 percent of her 6,000 active patients are on Medi-Cal, she said, and when they are taken from her, she will have to choose for the first time between joining an HMO - which she says she is philosophically opposed to - or relocating.

``It's like, you don't want to go to the gas chamber voluntarily,'' McGarrity said. ``If I go, it'll be kicking and screaming.''

She doesn't like the capitation rate, or fee, that L.A. Care doctors will be paid each month for the patients they treat.

Though the rate begins at about $70, after Foundation Health and L.A. Care have taken their commission and the physician networks have had theirs, the amount paid to doctors is about $9 per patient per month.

``With that I need to pay overhead, staffing, rent, phones, and then do all the testing and treatment I feel would be appropriate to maintain a high level of care,'' McGarrity said. ``You spend more money on fast food at McDonald's than what they're giving you to provide for your patients.''

It is a complaint L.A. Care and Foundation Health officials say they are sympathetic to, but one over which they have no control.

L.A. Care's chief medical officer, Dr. David Chernof, said the system is depending on physicians to put up with the low rates for now and help the organization gather ``encounter data'' on how much it actually costs to treat patients. With that information the HMOs can then appeal to the state for higher fees.

``We're pleading with providers to quickly give us full encounter data, so we can say (to the state), here's the utilization pattern, the frequency of services being provided, and that translates into fee-for-service rates of this many dollars, and you're only giving us this many dollars,'' he said.

But neither Chernof nor Foundation Health's O'Brien said they expect the rates to increase anytime soon.

Another concern to many independent physicians is a 2,000-patient cap the system imposes on participating doctors. Though intended to spread the burden of care across the physician population, the limit would cut high-volume practices like McGarrity's at least in half.

Dr. Dianne Foraste, who inherited her East L.A. practice from her father 10 years ago, said she expects to lose much of her 4,500-patient practice despite belonging to a physician network aligned with several of the HMOs.

Foraste noted that if Medi-Cal patients are evenly distributed among L.A. Care's physicians, each doctor would get just 200 patients.

``That's $1,800 (a month),'' she said. ``How am I going to stay in business on that?''

L.A. Care spokesman Keith Malone said the 2,000-patient limit is a guideline, not a strict rule, and that members can get up to 1,500 more patients for each physician's assistant they hire. Malone said he pleads with doctors like Cohen, McGarrity and Foraste to contact L.A. Care before writing off the program.

``We really want to help,'' he said.

To that end, L.A. Care sponsored a bill passed by the state Legislature and signed by Gov. Pete Wilson that provides small-business loans to doctors and other health-care professionals whose practices will be impacted by the two-plan model.

The loan program hasn't exactly wowed physicians.

``I'd retire first,'' said Dr. Joanne Ewing, who has practiced near the corner of Normandie Avenue and Adams Boulevard in Central L.A. for 28 years.

Indeed, beyond the issue of money - even as it relates to doctors' ability to sufficiently treat patients - is the matter of independence. For some physicians, the freedom to call their own shots without a managed-care bureaucracy watching over their shoulder outweighs the financial losses they will suffer by losing Medi-Cal patients.

``Medicine is about doing a good job first and paying my bills second,'' Cohen said.

Added Ewing: ``I just don't think I have the personality to sit here and try to see people who have to come to see me. I want patients who want to come to see me.''

Ewing said she keeps on hand applications that her patients can fill out to request exemption from default enrollment. She helps the patients find whatever excuse they can to stay with her, including if they or a member of their family have a ``high risk'' condition that would preclude changing doctors.

``But other than that,'' Ewing said, ``there's not much I can do.''

CAPTION(S):

2 Photos

Photo: (1--Color) Dr. Harold Cohen, examining a set of X-rays at his Sylmar office, will lose much of his practice if his Medi-Cal patients are assigned to HMOs.

(2--Color) ``Capitation has a tendency to undertreat the patient. I'm willing to discount or waive my fees, but I won't take capitated patients.''

- Dr. Harold Cohen