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III. The Health Plan of San Mateo

Community Roots. The Health Plan of San Mateo has its roots in the San Mateo community. The cooperation of providers, consumers and public health policymakers has ensured broad awareness and input as HPSM pursues its mission and goals.

In its developmental phases, collaboration between the county Departments of Health Services and Social Services, the Board of Supervisors, the Medical Society, the Hospital Consortium, consumers, and other providers created a broad base of support for HPSM. In keeping with the intent of the original Medicaid program, HPSM was designed to integrate members into mainstream medical care. Utilizing the expertise of existing, committed providers in San Mateo's medical community, HPSM's planners addressed community-wide concerns about poor access, low reimbursement, and high costs associated with Medi-Cal. Increasing the participation of private practitioners as well as preserving the role of safety net providers were both critical elements in ensuring that beneficiaries were guaranteed the full range of health care services Medi-Cal provided. The Health Plan was assisted initially by both state and local financial support, receiving a $450,000 loan from the County (repaid by HPSM in FY 1998/89), a $12,000 grant from the Peninsula Community Foundation, and a $50,000 grant from the California Health Financing Authority.

HPSM's Regulatory Framework. The Health Plan of San Mateo is a County Organized Health System (COHS) and Health Insuring Organization (HIO), one of five operating in California and one of about half-a-dozen in the nation. The first California plan, in operation since 1983, is the Santa Barbara Regional Health Authority. Others in California are The Solano Partnership Health Plan, Cal OPTIMA in Orange County and Santa Cruz Health Options.

Under federal law, Health Insuring Organizations are defined as capitated entities that arrange and/or pay for covered health care but do not directly provide care to members. In each of the five California H10s, the plans are mandatory for AFDC and SSI/SSP beneficiaries and the plan is the exclusive Medi-Cal managed care contractor within the county. Development of HIOs requires federal authorization, and new H10s were de facto prohibited by requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) that Medicaid and/or Medicare enrollment in health plans  not exceed 75% of total plan membership. Other federal law prohibits the enrollment of more than 10% of a state's Medicaid beneficiaries in County Organized Health Systems. In addition to long-standing questions related to mandatory enrollment and freedom of choice issues, Congress voiced concerns in 1985 regarding the "quasi-public" nature of H10s, their limited capital asset base, and their exemption from the reserve requirements placed on commercial insurers. San Mateo County's federal waiver was approved before the COBRA requirements became effective.

Governance of HPSM. The Health Plan is governed by the San Mateo Health Commission, doing business as the Health Plan of San Mateo. The commission is a quasi-governmental, fully independent entity authorized in 1986 by passage of special state legislation. The commission was established in June 1986 by the San Mateo County Board of Supervisors under the authority of the California Welfare and Institutions Code. Federal regulations governing Health Insuring Organizations require that a separate entity be established in cases where the county directly provides health services through a hospital or other county-sponsored facilities. Enabling state legislation therefore provides for the establishment of a local public agency whose decision-making is independent of the county. Under this arrangement, the San Mateo Health Commission has responsibility for policy setting; oversight of its health care systems; contract, purchase, and lease approval; employment of the Executive Director; financial oversight; and establishment of advisory groups and committees of the Commission.

The San Mateo Health Commission operates the Health Plan under a prepaid, risk contract negotiated with the State of California through the California Medical Assistance Commission (CMAC) and administered by the State Department of Health Services. The San Mateo Health Commission receives two-year waivers of certain federal Medicaid program provisions granted by the Health Care Financing Administration in accordance with Section 1915(b) of the Social Security Act. Among the program waivers granted are those that allow HPSM to be the sole source of non-emergency medical care for Medi-Cal beneficiaries residing in San Mateo County, and permit HPSM to restrict the choice of providers to those contracting with the commission. As a waivered program, HPSM must be cost-effective, demonstrating savings to the state compared to the Medi-Cal fee-for-service system.

The Health Commission meets on a monthly basis and consists of 11 voting members appointed by majority vote of the county Board of Supervisors to four year terms. With the exception of the one permanent seat held by the Director of the San Mateo County Health Services Agency, commission members may serve a total of two full terms, or ten years if the term begins or ends with filling out another member's term. The other voting members of the commission are two members of the Board of Supervisors, three public members representing HPSM beneficiaries and the senior and/or minority communities in San Mateo County, one hospital administrator, one representative of the San Mateo County General Hospital physicians, one pharmacist, and one representative of the hospitals located in San Mateo County.

The commission is advised by a number of standing committees, advisory groups, subcommittees, and ad-hoc groups. Committee and advisory group memberships consist of commission members, providers, representatives of community groups, and consumers. See Attachment B for a listing of committees and advisory groups.

Covered Medi-Cal/HPSM Benefits. The Health Plan's contract with the state Department of Health Services requires that HPSM deliver a specified scope of services, at a minimum identical to the traditional Medi-Cal benefit package. The Health Plan has added a number of benefits, including special prenatal services, the HealthRide transportation program, adult health screenings and an expanded drug formulary.

Not included in HPSM's contract and therefore remaining in the Medi-Cal fee-for-service system are dental care, long-term care room and board charges, long-term in-home waivered services, multi-senior services, adult day health services, and services covered by the Child Health and Disability Prevention Program (CHDP). CHDP is the California equivalent of the federal Early and Periodic Screening, Diagnosis and Testing (EPSDT) program. Care delivered to children through California Children's Services (CCS) is authorized by the county Health Services Agency and paid for by HPSM. Some Medi-Cal mental health care services were covered by HPSM until April 1995, at which time all mental health services were consolidated into a county run managed mental health plan.

A Profile of HPSM's Membership. The Health Plan of San Mateo provides nearly universal coverage to Medi-Cal beneficiaries in San Mateo County. Beneficiaries automatically become HPSM members if they qualify for public assistance through the Aid to Families with Dependent Children (AFDC) program, Supplemental Security Income/Supplemental Security Program (SSI/SSP) program, or through undocumented immigrant status. Approximately 25% of HPSM members are dually eligible for Medicare and Medicaid.

Undocumented immigrants became HPSM members in September 1993 and by federal law are limited to services for emergencies and deliveries. California has added prenatal care to the scope of services available to undocumented immigrants.

Medi-Cal beneficiaries who are not HPSM members and have remained in the state fee-for-service system are those qualifying for Medi-Cal on the basis of percent of poverty guidelines and certain Medicare beneficiaries eligible only for Medi-Cal payment of the Part A (Hospital) deductible and coinsurance and/or Part B (Medical Services) premiums.

Information about HPSM's membership is presented in Table 2.

Membership Growth. As indicated in Figure 4, HPSM's membership grew nearly 85% between FY 1987/88 and FY 1994/95, from 28,041 average member months in 1987/88 to 51,852 estimated for 1994/95.

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Gender and Age. At the end of FY 1994/95, HPSM membership was 61% male and 39% female. Over HPSM's history, the proportion of males has increased slightly while the proportion of females has decreased. In FY 1994/95, 16%, and 3% were 85 or over. Like the county population, there have been numerical increases in all age groups since FY 1998/89. As percentages of HPSM's membership, there have been increases in the 0-4, 5-19 and 20-44 age groups, no change in the 54-64 age group, and decreases in the 65-84 and 85+ age groups.

Figure 5 compares HPSM membership by age in FYs 1989/90 and 1994/95

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Ethnicity. In 1993/94, HPSM membership was estimated to be 14% African-American, 9% Asian/Pacific Islander, 26% Caucasian, and 36% Hispanic, with a 15% share unreported. Between FYs 1988/89 and 1993/94, the numbers of members within all ethnic groups increased. As percentages of HPSM's membership, there were increases among Hispanics and Asian/Pacific Islanders, and decreases among Caucasians, African-American, and "Not Reporteds." The Health Plan's membership has a lower percentage of Caucasians and Asians and higher percentages of Hispanics, African-Americans, and "Other" groups than the county population.

Figure 6 compares HPSM membership by ethnic group in FYs 1988/89 and 1993/94.

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Medi-Cal Eligibility Category. Changes in HPSM's member eligibility profile have resulted from changes in San Mateo County demographics as well as from changes in Medicaid eligibility criteria. By Medi-Cal eligibility category in FY 1998/95, 50% of members were low-income families eligible through AFDC, 17% were aged and eligible through SSI, 17% were disabled and eligible through SSI, 9% were undocumented immigrants, 6% were medically indigent children, and .3% were primarily medically indigent adults and refugees. Since FY 1987/88, the number of low-income family members has increased by 90%, ages members by 36%, disabled members by 34%, Medically indigent children by 188%, and medically indigent adults by 96%. As percentages of HPSM's membership, there were increases in the family and child categories, and decreases in the aged and disabled categories. In HPSM's two full years of experience with undocumented immigrants, these members comprised about 10% of HPSM's membership in FY 1993/94 and 9% in FY 1994/95. Children born to undocumented immigrants are included in the low-income family category.

Figure 7 compares HPSM membership eligibility category in FYs 1987/88 and 1994/95.

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A Profile of HPSM's Provider Network. The Health Plan of San Mateo is a mixed model managed care plan. Most HPSM providers also participate in several commercial managed care networks in Sam Mateo County. Members select or are assigned a Primary Care Provider (PCP) and directly access the full range of primary care services PCPs provide. Primary Care Providers have case management responsibility for their caseloads and authorize most elective referral, specialty, and impatient services.

The Health Plan contracts with San Mateo based providers certified by Medi-Cal. in good standing with the state Medi-Cal program, and who meet HPSM's credentialing criteria. This "any willing provider" policy has ensured the HPSM's provider network is a mix of public and private providers located throughout the county, Many of HPSM's providers speak languages other than English. The most common languages spoken in San Mateo County aside from English are Spanish, Tagalog, Russian, and Chinese.

Figure 8 presents a profile of HPSM's provider network.


Figure 8
Health Plan of San Mateo Provider Network Profile
FY 1994/95


Primary Care Physicians 156 contracts representing 234 PCPs


Referral Physicians 351 contracts representing specialty physicians in solo, group, clinic and university practices


Hospitals 12 contracted facilities in San Mateo, Santa Clara and San Francisco counties


Pharmacies 115 contracts representing independent pharmacies and chains with multiple sites


Other Services 243 contracts covering non-physician providers

Organization and Staffing. The Health Plan's pattern of organization and staffing reflects not only the structure that needs to be in place to support an effective and efficient managed care program, but the components needed to support a publicly financed program serving a population that is non-commercial, non-employer based, public assistance-affiliated, and diverse in terms of ethnicity, age, health status, and eligibility category. In addition to membership, what differentiates HPSM from commercial insurers is its funding, the focus on member and provider support services, and the unique administrative requirements of managing a public program. 

With some notable exceptions, HPSM's organizational structure is similar to commercial plans. Like commercial plans, HPSM maintains sophisticated financial, MIS, claims processing, provider relations, member services, referral authorization, utilization review, and quality improvement functions. In addition, however, HPSM places tremendous emphasis on informing members about the Health Plan and helping them learn how to use it. When members become eligible for public assistance benefits, for example, they also meet individually or in group "intake" sessions with HPSM Member Services Representatives at sites throughout San Mateo County. Members directly contact HPSM's Member Services staff with questions and problems; there is no "benefits manager" to serve as a liaison between the membership and Health Plan.

Organizationally, HPSM must adapt managed care concepts to the unique characteristics of a public program. From state information, HPSM "re-enrolls" its entire membership each month. Its systems must be able to accommodate retroactive as well as prospective eligibility data, estimates of member counts upon which initial capitation payments to HPSM are based, six and 12 month reconciliations of member counts and capitation payments, and information about members whose Medi-Cal eligibility may change from month to month. Incurred-But-Not-Reported (IBNR) estimates for outstanding claims must anticipate expenses associated with retroactive memberships for which HPSM is responsible but may not know about until the member's eligibility is confirmed, often long after service has been provided. 

The role of the Health Plan's Member Services staff is perhaps one of the most dramatically affected by HPSM's public nature. The public assistance system of which Medi-Cal is a part is complicated and fragmented. Even though HPSM provides beneficiaries with a more accessible and comprehensive provider network than fee-for-service Medi-Cal did, there are still complexities associated with eligibility determinations, PCP selection and change, covered services, referrals and authorizations for services, etc. In addition to orienting members to HPSM in person and responding to a broad range of questions and problems by phone, HPSM's Member Services Representatives fill a quasi-social worker role by helping members understand other social services available to them and referring them as appropriate. For example, to be more available to HPSM members as well as to solidify the collaborative working relationship between HPSM and county and community agencies also serving HPSM members, four of the Health Plan's eight Member Services Representatives are out-stationed at county Human Service Agency offices where members apply for public assistance. Member Services Representatives are highly visible in the community to increase awareness about HPSM and Medi-Cal. 

A variety of language capabilities is critical among HPSM staff and providers, and language and speciality medical care needs of the membership need routine monitoring. Education and health promotion activities, as well as enhancement programs such as HealthRide and the Prenatal Care Program, have required dedicated staff. 

The Health Plan's Provider Relations Department must also work closely with providers. These staff act as resources for providers in understanding the differences between HPSM and the Medi-Cal fee-for-service system as well as between HPSM and commercial insurance. They also support the hundreds of providers who participate in Medi-Cal at reimbursement rates below what is available in the private sector. 

Because HPSM has the option of "bending the rules" related to approved services when it is medically justified, in the best interests of the member, and cost-effective, the Health Services staff has the challenge of living in a "gray" area when these decisions are made. To uphold its fiduciary responsibility, HPSM must administer the Medi-Cal program in San Mateo cost-effectively, appropriately expending public funds. Yet unlike the Medi-Cal fee-for-service system, it may take into consideration alternatives that may not be mandated Medi-Cal benefits or may extend them. It is a great challenge to fairly evaluate "exceptions to the rule," make ethical case by case decisions, be aware of setting precedent, define medical necessity when there may also be a great social need, and overall, provide the right amount of latitude and flexibility while also being fiscally responsible. 

Balancing sound business practice with medical needs, public health needs, and a sense of social responsibility is a challenge faced by the Health Plan daily on an individual member basis as well as at a policy and operational level. The following sections detail how HPSM integrates its financial and service operations.


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