The CalOptima Board of Directors Thursday cut back the size of pay raises hospitals and specialist doctors receive to care for about 195,000 new Medi-Cal patients.

The new patients became eligible for Medi-Cal when the federal Affordable Care Act took full effect in January 2014. Many were expected to have serious, untreated medical issues due to being without medical coverage for years.

As a result, specialists were given state-funded raises to handle the anticipated new workload. But the Medi-Cal eligible population turned out to be not as sick as expected, according to a CalOptima staff report.

The state has since reduced payments to CalOptima for those “expansion” patients. CalOptima is a $3 billion health plan for about 740,000 low-income Orange County children, adults and disabled individuals.

The Sept. 3 board action allocated $640,000 to keep the full specialist rate increases in place through Aug. 31 of this year and gave specialists a 15 percent instead of 35.1 percent raise through the end of June, 2016. Similar reductions were applied to hospitals. Specialists include surgeons and doctors who specialize in treating heart, brain and other conditions.

Without income from the state to cover the full cost of the raises, it would have cost CalOptima $353 million in 2015-2016 to keep the higher payments in place, according to the staff report.

The reductions were opposed by two doctor groups, Monarch Healthcare, an Irvine physicians association, and Torrance-based Healthcare Partners.

Dr. Nancy Boerner, Monarch’s chief medical officer, complained there was a “lack of transparency and cooperation” in the proposed reductions including “no open dialog to solicit off-sets to the cuts.

“Cuts of this magnitude can’t be managed over night,” she said.

Replied board member Peter Agarwal, a bank branch vice president: “If we have to be lean, you have to be lean with us.”

CalOptima has 11 voting members on its board of directors with one vacancy. But there were so many conflicts of interest over the payment plans that nearly half of the board members didn’t vote.

The items passed on 6-0 and 5-1 votes, with the only dissenting vote coming from Dr. Samara Cardenas, a pediatrician. “If we cut the money that we’re spending, we’re going to cut services,” Cardenas said.

CalOptima Vice Chairman Lee Penrose, CEO of St. Jude Hospital, recused himself on all four items. Ophthalmologist Dr. Viet Van Dang, whose patients include CalOptima members, recused himself on three of the four items. County Supervisor Andrew Do, who raises campaign funds from the medical industry, abstained on all four votes, while Supervisor Lisa Bartlett abstained on three.

You can contact Tracy Wood at and follow her on Twitter: @TracyVOC.

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