UCI Warns It May End Pact With Medi-Cal

In a decision that could disrupt medical care for Orange County’s poor, UC Irvine declared Thursday that it may terminate “in a matter of days” its financially troubled hospital’s contract with Medi-Cal.

UCI Chancellor Jack W. Peltason, who met with University of California Regents in San Francisco, received support from a regents’ committee to get Medi-Cal to increase its reimbursement rates and get more hospitals in Orange County to care for the poor.

The Regents’ committee on hospital governance voted unanimously to support Peltason’s decision to cancel the contract if a new agreement cannot be reached soon. The full Board of Regents is expected to adopt a similar resolution today.

In comments afterward, Peltason said that UCI was still negotiating with Medi-Cal and “hoping to obtain a satisfactory answer.” But the university can only wait “a matter of days--not weeks” before it issues a notice that it will cancel the contract, he said.

Still, even when the cancellation notice is given, that termination would not be effective for 120 days, and in that time, Peltason said, UCI will continue to negotiate with Medi-Cal. “We’re prepared to talk,” he said.

UCI officials warned the Regents in March that, to save their hospital from financial disaster, they might be forced to end the Medi-Cal contract.

The 493-bed medical center in Orange treats about half of Orange County’s Medi-Cal patients, but UCI officials have complained that they are reimbursed for less than half the costs of that care. It was the only UC hospital to record a deficit in 1988-89, losing $11.2 million through June 30.

If the UCI hospital withdraws from Medi-Cal, experts on health care warned Thursday, the move would mean “catastrophe” for the poor and chaos for the county’s Medi-Cal contracting system.

Emphasizing those fears, administrators at one major Medi-Cal provider, Fountain Valley Regional Hospital and Medical Center, said that if UCI drops out, their hospital will, too.

“We’re already seeing a large number of Medi-Cal patients, so to take on what UCI is now taking . . . we cannot make up the difference,” said acting administrator Barbara Patton. Even though Fountain Valley recently signed a new Medi-Cal contract, the 287-bed hospital could still drop out of the program 120 days after it issued a notice to do so, she said.

Administrators at 175-bed AMI Hospital of Garden Grove also said they might cancel their Medi-Cal contract if UCI leaves the program.

“I would suspect (that) all the providers in the county would give notice,” said Dave Archer, AMI chief of operations, whose hospital joined Medi-Cal only two weeks ago. “I’m sure we’d all be inundated” with patients who would formerly have gone to UCI.

Under state law, all hospitals must treat emergency patients, but if their condition is not an emergency, Medi-Cal recipients must go to a limited number of contract hospitals. UCI officials contend that they take an unfair burden of Medi-Cal patients because not enough Orange County hospitals have joined the contracting system.

At the California Medical Assistance Commission, which handles Medi-Cal contracts, senior negotiator Hrant Kouyoumdjian said he was “surprised” by Peltason’s intention to terminate the contract. He also expressed surprise that “the negotiations are occurring between the commission staff and, indirectly, between the Regents.”

But Kouyoumdjian questioned whether UCI’s withdrawal would lead to “chaos” in the Medi-Cal contracting system. “That’s one scenario,” he said. “But it’s not necessarily true in light of the fact that other major providers have signed new contracts.”

However, Jon Gilwee, vice president with the Hospital Council of Southern California, said UCI’s cancellation “would really spell the end of the viability of the Medi-Cal contracting program of the county.”

Also, Gilwee warned, if UCI left the Medi-Cal system, the remaining hospitals would be flooded with patients and those patients would suffer from “compromised access” to care.

Vicky Mayster, co-chairwoman for the Orange County Task Force on Indigent Care, agreed. UCI’s cancellation would be “a major catastrophe for the indigent,” she said. “I can foresee thousands of people going without needed care or waiting until their conditions . . . have become an emergency.”

Also, Mayster said, withdrawal from Medi-Cal could be “devastating” for the UCI hospital’s teaching program that has relied on Medi-Cal patients.

In discussing a possible withdrawal from Medi-Cal, Peltason in March acknowledged that termination “would disrupt our teaching programs, threaten the health of those we serve and heighten short-term financial difficulties as we make a transition to more private patients.” Deciding to end the contract is something the university would not “do lightly,” Peltason, said then.

By law, details of Medi-Cal contracts are confidential, and Peltason met Thursday with Regents in closed session to describe progress on the contract. But in March, university officials said they were seeking a 17% increase from Medi-Cal as well as a cap on the number of patients they must treat. Peltason said Thursday that UCI is also seeking to have more hospitals share “the Medi-Cal load.”

According to the resolution approved Thursday, UCI officials will continue to seek a new contract with Medi-Cal, but if negotiations are not “satisfactory,” they will file a notice that they intend to terminate their contract 120 days from the date they notify Medi-Cal of their intent.

The resolution said: “The president (UC President David Gardner) recommends to the Regents to concur in the decision of the chancellor of UCI to give notice of intent to terminate the contract between Medi-Cal and UCI Medical Center with the effective date of termination to be 120 days from the notification if satisfactory negotiations cannot be concluded within a reasonable time.”

Explained Peltason: “Today I told them (the Regents), ‘I’m sorry to tell you, we haven’t made the progress (with Medi-Cal), and if we don’t get a satisfactory conclusion, let’s start the 120-day clock.’ ” The Regents concurred with him.

Only one Regent, Yvonne Braithwaite Burke, initially balked at the resolution, saying she didn’t think the public was aware of the seriousness of the situation. But after being told of extensive press coverage of UCI’s plight, she eventually voted for it.

One observer was interested but not distressed by UCI’s stance Thursday.

Thomas E. Uram, director of the Orange County Health Care Agency said he believes that UCI’s possible withdrawal from Medi-Cal “may put a burden on some other hospitals” but “no one will be denied access. . . . All emergencies will be taken care of.”

He described the university’s negotiations as “a struggle between the state and the university. I back what they’re doing as far as fighting Medi-Cal for all they can get. I think I’d be playing my cards the same way they are,” Uram said.

Staff writer Larry Gordon contributed to this story from San Francisco.