Medical Assn. to Cite High Private Health Plan Costs : Medicine: Study will show such programs are up to five times more expensive to administer than state-run system. The physicians organization is seeking legislation to cap profits for Medi-Cal managed-care providers.

Renewing its fight to limit the profits of managed health care plans, the California Medical Assn. will release a study today showing that private plans are up to five times as costly to administer as the traditional state-run Medi-Cal program.

The study is linked to legislation sought by the CMA that would cap administrative costs and profits for Medi-Cal managed-care providers at 8%.

The CMA, which represents 38,000 physicians, has long fought managed-care companies over profits and physician reimbursements, believing that more money now going into corporate coffers would be better spent on doctors and patients for direct health care.

The new study is comparable to one on HMO profits and administrative costs done by the CMA last year. But it differs in that it compares their administrative costs to the state’s and holds up a somewhat surprising model--the state Department of Health Services, which administers the nearly $16-billion Medi-Cal health care program for welfare recipients and low-income Californians.

Most Medi-Cal patients now get traditional fee-for-service medical care, in which they find a doctor who provides treatment and bills the state for his services. But the state, to cap soaring costs and provide what it says may be better care, has already moved 1 million Medi-Cal recipients into managed-care plans--which charge a fixed amount to provide care as needed--and would like to place nearly 2 million more into such plans by the end of 1996.

For years, physicians complained about the red tape and low payments for patient care in the Medi-Cal program, and large numbers of doctors refused to take state patients.

But the new study holds up the administrative costs of Medi-Cal as “a taxpayer bargain” compared to managed care.

Using state figures, the study said the cost of administering the Medi-Cal program to more than 5 million Californians comes to only 2% of total costs of the program. That compares to an average of 13% for private health maintenance organizations in California, the CMA said.

The administration costs of 12 HMOs analyzed ranged from a low of 2% for Kaiser Permanente and 3% for Blue Cross of California to highs of 28% for Coast Health Plan and 17% for Foundation Health.

Release of the study was timed to coincide with a hearing by the state Senate Health Committee in Sacramento on Wednesday. Two CMA-sponsored bills will be heard then. One of them, carried by Sen. Mike Thompson (D-St. Helena), would cap profits and administrative costs of managed care firms contracting with the Medi-Cal program at 8%, allow patients who are being treated by a physician before joining the plan to stay with that doctor even if he or she is not in the plan and give the state new powers to regulate certain aspects of private health plans, such as marketing techniques.

Last year, the CMA introduced a bill that would cap health plan profits and administrative costs at 15%, but that proposal was withdrawn under heavy opposition. An early opponent to the CMA bill was one of the largest HMOs in the state, PacifiCare of California.

Dr. Sam Ho, medical director for PacifiCare, disputed the CMA findings. He said that a variety of patient services are provided under the umbrella of administrative costs, including access to preventive care and wellness programs not covered by traditional fee-for-service medicine.

“The traditional medical system long espoused by the CMA has not provided these services,” said Ho, arguing that patients get better medicine under managed care plans. “Comparing managed care to the old system is like comparing an empty basket to a full orchard.”

Danielle Walters, a spokesperson for the CMA, said the proposed legislation would increase the dollars going into patient care for Medi-Cal recipients.

“Even under our bill, it allows administrative costs to be up to 400% of what the state is now paying. We think that is reasonable,” she said.