Tobacco tax could be way to keep doctors on Medi-Cal list

Leonid Basovich, left, examines Medi-Cal patient Michael Epps at the WellSpace Clinic in Sacramento in February.
Leonid Basovich, left, examines Medi-Cal patient Michael Epps at the WellSpace Clinic in Sacramento in February. Associated Press file

When President Barack Obama’s federal health reform took effect in 2013, it included a temporary, two-year bump in the amount paid to doctors who care for the poor through the state Medi-Cal program. No surprise, more doctors opened their doors to low-income patients.

But now those federally subsidized extra payments are gone, and advocates fear that access to care is slipping again for people without private insurance.

With about 13 million Californians – nearly one-third of the state – depending on Medi-Cal for their health care, getting as many doctors as possible to accept the program’s patients has become a crucial undertaking.

The solution, some believe, is to use a proposed increase in California’s tobacco tax to subsidize rates paid to private physicians and medical groups that accept Medi-Cal patients. And supporters of this proposal want to tie those increased payments to reforms they say would save taxpayers money and keep patients healthier.

Hector Flores is a leading advocate for the change. Flores grew up poor in Los Angeles and has dedicated his career as a physician to serving the less fortunate. But he says the current system’s incentives waste billions of dollars and discourage doctors from treating the poor.

“We are going to spend $115 billion on Medi-Cal this year,” he says. “That should be enough to buy Cadillac care for every patient. But it doesn’t.”

One problem, Flores believes, is that because hospitals are paid by volume – the more beds they fill, the more money they make – they have no financial incentive to prevent unnecessary hospital stays.

Primary care doctors, meanwhile, are paid a set amount for each patient visit, whether it takes a few minutes or an hour. The consequences are clear: the sicker patients eat up time and cost the practice money. That gives doctors and clinics an incentive to try to steer clear of them.

The state tries to spread the sickest patients around, but the stakes are so high that the bigger medical groups and clinics have learned how to game the system to encourage the most time-consuming patients to go elsewhere.

Flores says that leaves private doctors with the most expensive cases. A recent study found that 80 percent of Medi-Cal visits were handled by about one-third of the doctors, most of them in private practice. “We want to do our fair share,” he says, “but we don’t want to be the only ones.”

The tobacco tax measure that will appear on the November ballot would increase taxes by $2 per pack, nearly tripling the current levy. Some of the money raised would go to increase rates paid to private physicians, some of whom receive as little as $24 per visit.

In return, doctors would be held accountable for the health outcomes of their patients. They would have an incentive to prevent emergency room visits and readmissions after hospital stays.

“The goal is to identify new money and to show how that money can be wisely invested to get a better deal for patients and for the taxpayers,” Flores says.

That sounds promising, but a lot of the details still need to be fleshed out. This will be a topic worth watching as the debate over the tax increase unfolds this fall.

Daniel Weintraub is editor of the California Health Report and can be contacted at Hector Flores is a board member of The California Endowment, a sponsor of the California Health Report.