Public health provider.

Tony Rodgers runs L.A. Care, a nonprofit organization created to provide healthcare to Medi-Cal patients along an HMO model

After two decades working in private- and public-sector health care administration, Anthony "Tony" Rodgers was tapped in 1995 to head L.A. Care Health Plan, the nonprofit half of Los Angeles County's "two-plan model" for administering health care to Medi-Cal patients. The two-plan model is a creation of the state and the federal Health Care Financing Administration (HCFA) meant to shift Medi-Cal patients from fee-for-service treatment into managed care. In Los Angeles, Foundation Health serves as the for-profit half of the system.

From its inception, L.A. Care has faced troubles. The organization encountered repeated delays in getting its HMO license from the California Department of Corporations. Soon after enrollment began, HCFA halted transferring fee-for-service Medi-Cal patients into L.A. Care.

Coming off such setbacks, Rodgers discussed L.A. Care's prospects from the HMO's Mid-Wilshire offices.

Q: What's the status of enrollment in L.A, Care?

A: Right now we have about 190,000 members and we assign those members either by their choice or auto-assign them to a plan in our partnership. We've been getting about 6,000 members a month and our membership losses have been primarily due to eligibility loss. In other words, members no longer eligible for Medi-Cal.

Q: In other California counties, Medi-Cal patients who do not expressly choose one of the two plans are automatically assigned one plan or the other. Why have the feds halted such "default enrollments" of Medi-Cal patients in L.A.?

A: Whenever the state has implemented the two-plan model in other counties in California, there have been major problems associated with members not being educated to what was happening. So HCFA said, "Wait a minute. Before we'll let you go forward with default enrollment in L.A., you have to show us you've done the necessary beneficiary education in Los Angeles."

They also wanted to make sure the materials sent out to beneficiaries are clearer and easier for the beneficiaries to understand that they're in the languages the beneficiaries read or speak, for example. The only languages the state had had them in before L.A. was Spanish and English. With the diversity of this community you have to have it in nine different languages.

HCFA also wanted much wider distribution of materials than the state originally had anticipated, so now the state is contracting with community-based organizations to help with a much broader educational program.

Q: What did the halt on transferring Medi-Cal patients into managed care do to you guys?

A: When the two-plan model was originally designed, it was assumed there would be a rapid turnover from fee-for-service, or regular Medi-Cal, into managed care.

When they started the two-plan model, they told us to be ready for major turnover, for going from zero to 650,000 members within three months. So we designed all of our systems, hired our people and developed our processes around a very large plan. And we had a certain level of fixed costs.

We were told, and we still believe, that at some point in the future we will be at 650,000 members. But the biggest problem we have now is we don't know when that's going to start. We don't know whether to pull back, because it won't happen for a year, or whether to maintain our current operations over the next few months when HCFA, might say "Go ahead."

Q: Are you going to go broke in the meantime?

A: We don't anticipate going broke. We've reduced our hiring down to only emergency hiring. Our fixed costs only become problematic if we lose significant membership between now and when the Medi-Cal patient transfers into managed care begin. If it happens a year from now, we'll end up with a very thin operation. If HCFA decides to go forward in the next two months, we can gear up relatively quickly.

We don't have a Significant financial problem running the current operations. What we have is a problem in meeting all the contractual expectations if this goes on for a long period of time. That means everything from keeping our physician network in place at this size we don't have justification for a 3,000-physician network - to potentially having problems keeping some of the hospitals under contract under the current situation.

Q: Can a two-plan model really function in L.A.? Can a system designed for places like Kern or Riverside or San Bernardino counties function in Los Angeles?

A: The answer is yes.

The problem is, we now have a three-plan model. We never anticipated having to compete with a fee-for-service option. As long as there's a fee-for-service option to compete with, managed care cannot convert enough members to grow. It's the same as if your employer offers you an indemnity program at no extra cost instead of a managed care plan.

In Medi-Cal, fee-for-service isn't all that great, but it has the psychology of "I have my own (Medi-Cal) card. I can go to the emergency room any time I want." Managed care says, "No, I want you to see your primary care physician first."

Q: Are the flat monthly fees (capitation rates) L.A. Care pays its care providers - physicians and hospitals - realistic?

A: I would have to see a physician's practice to see if those rates are reasonable. But the problem for physicians is that if one group is willing to take a $5 per member per month capitation rate, then that's what will be offered to other groups. You have a market competition going on out there.

However, I feel in L.A. County, because of adverse selection, our capitation rates are probably lower than they should be compared to other counties. If there's any unfairness to the system it's that L.A. County is subsidizing the other counties.

We see more sick patients - more AIDS, higher-risk prenatal care, etc. But L.A. County is thrown into the same payment pool with other counties that have much smaller, healthier populations. So we end up with the same level of capitation that goes to those other counties.

We've been pushing for a county-specific capitation rate. What that means, though, is that Kern, and the other counties, will see their cap rates reduced.

Q: It's a zero-sum game.

A: That's correct. The state pool is one pool.

Q: Are there counties out there making money on this?

A: They're doing well. I believe we're subsidizing some of the other two-plan models.

Q: If things continue to be rocky, won't you be asked to leave at some point, even if as a scapegoat?

A: Is there a rumor out there I should know about? I guess the issue is whether the board of directors loses confidence that myself and my executive team are doing the best possible job under the circumstances. Are the things we can affect being adequately addressed? Are we monitoring the quality of care? Are we monitoring to ensure that the member plans are doing what they're supposed to do? Those would be the issues I think my board would focus on my office for.

Beneficiary education, getting the transfers of Medi-Cal patients into managed care started - HCFA has made it clear there's nothing L.A. Care can do about those. The state must do the job.

Q: What about when L.A. County Department of Health Services Director Mark Finucane, who sits on your board, says L.A. Care should be doing more to educate the public?

A: I found that a very interesting comment because I would have thought Mark would have known that the state won't allow us to just arbitrarily go out and educate beneficiaries. Whatever we do has to be approved by the state. If anything we've been the only plan, or at least the major contributor, to what education has been going on. But we are still constrained by the fact that we can't just run out there and do anything we want.

Anthony D. Rodgers

Employer: L.A. Care Health Plan

Position: Chief Executive

Born: Los Angeles, 1949

Education: UCLA, B.A. in economics, M.S. in public health

Hobbies: Sailing, softball and other sports

Career Turning Point: Becoming director of Maricopa Health System

Personal: Single parent of four sons