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Executive Summary

CALIFORNIA's "EXPANDED CHOICE" CAPITATION PILOT PROGRAM, offering full health services, including drugs to recipients under the state's Medi-Cal system, will be launched in three counties beginning next spring. By the target date of April 1, all Medi-Cal recipients in San Diego County will either have chosen or be assigned to a prepaid plan in the county from which they will receive all health services, including drugs. By May the program will expand to the San Fernando Valley portion of Los Angeles County. After experience is gained in the two urban areas, the expanded choice program will begin in a rural county, Stanislaus County. Prepaid health organizations in order to participate must be licensed by the state, which will reimburse them a capita tion rate based on the number of Medi-Cal recipients they have enrolled. All fee-for-service health care will be discontinued under Medi-Cal in these areas. * Pharmacy groups such as the California Pharmacists Assn. are concerned that the state's capitation program will threaten the livelihood of the state's retail druggists. California-based Pharmacists Planning Service, Inc., which has written to U.S. Rep. Dingell (D-Mich.) concerning differential pricing and how it leads to diversion (see related story, p. 7), estimates that the "expanded choice" pilot program will put 87 retail pharmacists out of business. Medi-Cal recipients will receive all MD services, laboratory and X-ray services, hospitalization, and drug services under the "expanded choice" program, and any dental services the prepaid plans provide as well. After the program is in place, recipients who travel away from their health maintenance organization or provider organization and need services such as an Rx refill under Medi-Cal, will need to have their Medi-Cal cards. A provider would use the card to contact the recipient's chosen plan for authorization before refilling the Rx under Medi-Cal. The expanded choice program is the next step in a series of Medi-Cal capitation pilot projects authorized by the state legislature in 1982. In 1984 Gov. George Deukmejian indefinitely postponed a separate pilot program for the "prudent purchase of drugs." At the time, the administration said it needed to study how volume drug purchase contracting would fit with an overall, competitive full-service capitation program for healthcare delivery.

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