Serving some of the most vulnerable populations in Los Angeles County, L.A. Care Health Plan has had to confront many of the downstream effects of the coronavirus pandemic. Chief among those has been an increase in food insecurity, according to CEO John Baackes. The large public insurer increased support for members who lost their jobs as a result of the pandemic. Baackes spoke with Modern Healthcare Managing Editor Matthew Weinstock. The following is an edited transcript.
MH: Can you talk about the impact that COVID has had on your membership—2 million-plus in the underserved population? And the impact on Medi-Cal members?
Baackes: The most important thing to remember is that of the 2.2 million people we represent, a large number are people of color. And just as we’ve seen across the country, the pandemic seems to have fallen harder on African Americans, and particularly Latinos. We’re also seeing that with our Asian members. We’ve had a higher infection rate and death rate among those members than the general population. That’s of grave concern to us. We want to make sure that they have access to care … that’s our main issue in terms of the impact of COVID.
Regarding the number of unemployed people that were expected to storm the doors to get Medi-Cal, we have not seen that yet, and neither have many of the other plans similar to ours around the state. We did a little delving into that and found that back in 2018, UCLA did a study of the Medi-Cal population in Los Angeles County and found that 800,000 of the 3.2 million were working full time, meaning they had 21 hours of employment a week or more.
And 300,000 were working part time, meaning they worked less than 20 hours.
So if 1.1 million of our members already had earned income, my supposition is they were the first to go because these are probably people who work in the service side of things, either as waitstaff in restaurants, kitchen staff, housekeepers, nail salon workers, and those (positions). They already had Medi-Cal.
That supports another statistic that’s happened here—we’ve seen a 200% increase in CalFresh applications, which is California’s version of food stamps. That says to me that many of the newly unemployed were among our members because they were in these service sector jobs that were the first to go. They had the insurance, but they didn’t have income, so they applied for food stamps because they needed food.
Watching the demand and the impact of food insecurity is another big issue. We have a community link that people can use to access social services that they’re entitled to. We’ve seen something like a fivefold increase in the number of inquiries about, “How do I get food?”
I’d say those are the biggest impacts for us so far—our members are suffering because they are disproportionately hit by the virus because of their economic conditions, and it’s also showing up in the demand for food supplements during this crazy time.
MH: You were doing a lot on social determinants even before COVID. Can you talk about how you’ve had to ramp up even more, especially on food insecurity, for your network?
Baackes: We’ve always tried to do what I would call a set of experiments, where we would pay for certain social safety-net services as part of somebody’s care plan, and then collect the data so we can build a body of evidence that shows if we invest in social services, we’ll reduce healthcare costs later.
We have about $10 million a year that we’ve been able to set aside for community health investment grants over the years, and we’ve redirected almost all of that for this year to homelessness or food insecurity. A number of grants have gone to organizations to make sure we can house as many people as possible, particularly the most vulnerable who are on the streets, and to support certain safety-net programs.
One grant was to Project Angel Food, which provides home-delivered meals to people who can’t get out. It generally starts with people with end-of-life illnesses. We have funded 150 of those people on that waiting list of our members to get food for a year. It’s a drop in the bucket, but it’s the kind of thing we do.
We also study utilization after they receive food in this kind of manner, to see what impact it has on their use of healthcare services. And we’re involved in a number of other funded demonstrations like that, attempting to show that investments upfront in the social determinants to mitigate them is going to pay off later in less healthcare expense.
MH: How are you supporting that financially?
Baackes: As I mentioned, we have generally set aside $10 million a year of our retained earnings for these community health investment funds, so that money was already allocated for this year. In terms of financial impact on a plan like ours, the state of California has decided that they will take a 1.5% retroactive rate cut on the premium we’ve been receiving since July 2019. We’re in an unusual 18-month rate period, (but will) go back to 12 months beginning January 2021. (The state) went back and said, “Well, we’re in dire straits,” and they are clawing back that money beginning in September.
That’s the only impact we’ve had, and our reserves have been able to absorb that. We have not had to go back to any of our providers, doctors, hospitals, skilled-nursing facilities or anyone and claw back any of their payments. That’s why you have reserves, for times like this.
However, new rates will come out in January, and the state has to budget for the fiscal year that began July 1, and they penciled in federal aid … if Congress does not pass a fourth stimulus bill and goes home in August without it, we’re going to be right back at the table in Sacramento talking about up to $14 billion in cuts, which will be cuts in benefits and cuts in reimbursement that will necessitate us renegotiating with our providers if they have to do that without this additional federal aid.
We know that there are going to be new rates in a little over 5½ months. We have no idea what they will be yet because it is dependent on federal aid.
MH: How do you plan for that kind of uncertainty?
Baackes: Because our fiscal year begins in October, we’ve drawn up a budget and we’ve done a three-year projection assuming there will be cuts of the nature that were discussed during the state’s budget run-up. And it’s going to be a grim three years. We will probably, at least in one of those three years, lose money. But again, that’s what you have reserves for, to get through a crisis like this.
We’re battening down the hatches, if you will. All of our workforce is off-site now. They have been since the middle of March, and they’re happy to be working from home and feel safe and feel supported. And we’ve made a decision that we’re not going to return to the office until January. That is the earliest we’ll do it. And that will be reviewed when we get closer to January because we don’t know where the pandemic will be and it’ll be in the middle of flu season. And we’re really working with others on a PR campaign to make sure people this year, more than ever, get flu shots because you want to reduce the risk and the demand on the system that the flu victims might have if we still have a pandemic that’s going at the rate it is right now.
MH: You’ve done some accelerated payments to providers. How has that process gone? Do you imagine that will continue the rest of the year?
Baackes: All of the medical groups that contract with us are under capitation agreements. So all of our primary-care physicians have been getting paid based on the number of people in their panel, regardless of whether they’ve shown up in the office or not. So they’re in better shape than providers who depend solely on fee-for-service. The specialists in some of those groups get paid that way, but we’ve already paid the groups, so we hope they’re balancing that out.
Some of our bigger hospitals are also under capitation—the four public hospitals here in Los Angeles. For those hospitals where we didn’t have a capitated rate, that’s where … we’ve accelerated them so that we pay electronic claims in five days and paper claims in 10. To do that, we’ve suspended certain audits and things that you would normally do. We do plan to begin to slowly bring those back beginning at the end of July.
If the pandemic goes on, and of course we’re having a surge right now in Los Angeles … we’ll have to review that as we go along. But I would say, by and large, the accelerated payments we have made have been very helpful.
MH: We’ve heard a lot, especially from the primary-care community, that one of the things we should take away from the pandemic is a more accelerated move toward capitation.
Baackes: We’ve had a lot more interest from hospitals that have not been under capitation (about a move) to capitation agreements since the pandemic started. So we plan to move more of those that are willing—and if we can come to terms with them—into capitation arrangements to avoid the kind of problems that those who depend solely on fee-for-service reimbursement are experiencing.