ACA brings new business to clinics, but also new competition

By Daniel Weintraub

Community clinics – the backbone of California’s health care safety net – face a whipsaw from the Affordable Care Act.

On the one hand, the law opens the state’s free health program for the poor, Medi-Cal, to more than a million Californians who don’t have insurance today. This should mean a big increase in business for the clinics, a rush they might struggle to accommodate.

But the ACA also makes private insurance available to the working poor, many of whom have depended on the clinics for their care until now. These people will now have other options.

Finally, the clinics will still be part of the counties’ network of care for those who are left out of both Medi-Cal and the Affordable Care Act, including millions of undocumented immigrants and those for whom even a subsidized insurance policy is too expensive.

“Many of the people they serve now are going to be paying customers, and those customers could potentially walk,” said Anthony Wright, executive director of Health Access California, which advocates for consumers and low-income people. “The question for the safety net providers is whether they are going to try to actively chase those people who are newly insured or focus on the remaining uninsured.”

The answer to that question should concern all Californians, not just those who run the clinics and rely on them. If the health centers lose too much business, they might not be able to sustain themselves. And any time a clinic closes, its patients would have to go elsewhere, further straining the health care system.

The clinics are not awaiting their fate passively. For more than a year they have been working to upgrade their facilities and their care to better serve their patients, whoever they might be.

The Alta-Med network of clinics in Orange County, for example, is a health system that is trying to do it all. The groups cares for Medi-Cal patients through the county’s Cal-Optima system and will be serving paying patients through a partnership with Anthem Blue Cross.

“We really have been setting ourselves up to support our patients through the ACA process,” said Mildred Pena, an Alta-Med administrator.

The chain has added doctors specializing in internal medicine to its Huntington Beach site, and plans to do the same in Anaheim. Alta-Med has also opened pharmacies inside its clinics in Anaheim and Garden Grove, allowing patients to get their medications on site rather than have to travel to a pharmacy elsewhere.

“It increases their ability to get a quick turnaround in case there are any questions, because the pharmacist has a direct relationship with the provider,” Pena said. “They are able to see the patient’s information from our charts.”

In Santa Ana, Alta-Med is moving across the street to a larger building, increasing from nine exam rooms to 21.

Most community clinics around the state are also implementing a concept known as the “medical home” – in which every patient has a team of doctors and other health professionals keeping an eye on their care. In the past many low-income people have moved from doctor to doctor, often getting duplicative or contradictory prescriptions, and often not understanding how their physicians expected them to help with their own treatment.

Alta-Med has added promotoras, or trained lay guides, to help patients understand the system. Health educators take the doctor’s orders and help the patient set realistic goals to achieve them. The clinics also have added referral coordinators to help patients arrange appointments with specialists and make sure their insurance will pay for it. They even have pharmacists on staff, separate from those who dispense medication, to meet with patients and make sure they understand all the drugs they are supposed to be taking, and when.

The goal is to get patients healthy and keep them that way, avoiding expensive hospital visits, and return visits, whenever possible.

But even as the neighborhood health centers compete for the business of paying clients, many will face a financial hit even if they succeed. For years clinics with a special designation from the federal government have been eligible for much higher reimbursement rates for seeing indigent patients as recognition for the role they play in the safety net.

Commercial health plans, though, cannot afford to pay those rates for the clinics to see private patients who buy insurance through the new online health marketplace, known as Covered California. If they did, the premiums they charge consumers would have to be higher, making their plans uncompetitive in the market.

“The clinics are struggling with this,” said Jennifer Morton Kent, executive director of an association that represents county managed care health plans that serve the poor. “They are saying to the health plans, ‘We want to work with you, we want to increase our patient base, but we want to continue to be paid the way we have been paid.’”

A likely outcome is that if the clinics want to serve private patients, they will have to agree to shift to a managed care model. Instead of being paid for every doctor visit and procedure, they will be paid a set amount per month per patient.

“They are going to have to act more like other medical groups,” Kent said. “They are just going to have to get a lot more sophisticated. This is not a sustainable model.”

Despite the high stakes for patients, the health system and the taxpayers, nobody really knows how all of this is going to play out. The state has not finalized its new Medi-Cal rates, and the commercial health plans were juggling their provider networks up until Oct. 1 when the state started brokering coverage. The uncertainty is likely to continue for at least a year or two.

“Part of the challenge is preparing for the unknown,” said Dr. Laura Mosqueda, associate dean of primary care at the UC Irvine school of medicine. UCI runs two community health centers, one in Santa Ana and one in Anaheim.

“We are quite devoted to the community we are serving and to making sure that quality and accessibility remain high with changes in the payment structure,” Mosqueda said. “But we’re not even sure what those changes might look like yet.”

Daniel Weintraub has covered California public policy for 25 years. He is editor of the California Health Report at Contact him at

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