A View from the Highway

by Uriel Heilman

Uriel Heilman is a freelance journalist based in New York City. He reports on local and national political issues contributing to newspapers in Boston, New York and Jeruselem.

If not for the cars speeding along the two-lane highway that runs through the redwood forests in Humboldt County, in northern California, this part of the nation’s most populous state would look almost exactly as it did a thousand years ago: millions of acres of timberland forests, snow-capped mountains that feed fish-filled rivers and lakes, and precious few people.

California is a land of contradictions, a place where desert and forest are just a few miles apart, where incredible wealth borders abject poverty, where the might of the state’s technological titans is dwarfed only by the great mountains that surround them, which abide unchanged as generations come and go. The same state that boasts the sprawling metropoli of Los Angeles and the San Francisco Bay area also is home to millions of people who know nothing of urban sprawl, not to mention paved roads. The rural areas in which these people live are worlds away from the state’s massive entertainment and high-tech industries, and the people who live in them have managed to avoid many of the ills that plague California’s cities. These are places that have more in common with the earth of John Steinbeck than the cyber-universe of Bill Gates.

In the Lompoc Valley in Santa Barbara County, situated on the California coast about 150 miles north of Los Angeles, people still sustain themselves by living off the land, whether that means making use of the county’s natural resources by growing and distributing flowers or other agricultural products or by taking advantage of what the coastal topography has to offer to draw tourists to the area. In Del Norte County, which has just one full-fledged city, Crescent City, population 4,380, most residents work in the timber or fishing industries; others earn their livelihood from tourism or Pelican Bay Prison. Many towns and cities in rural California were born when nearby military bases were built, and the bases provide jobs for many, if not most, of the working residents of those places. Vandenberg Air Force Base, where many of the military’s missiles are built and tested, surrounds the city of Lompoc and employs many of its residents. Ridgecrest was founded in the mid 1950s so that the people working at the China Lake Naval Weapons Center, in the middle of the California desert, would have a place to live. Like many rural California communities, the Lompoc Valley is home to a large prison, which provides a market for many of the goods and services produced and provided by the residents of nearby towns and cities.

For the most part, the needs of the hundreds of thousands of people in California’s rural areas are relatively modest. Rural populations tend to be older and many are more indigent, real estate is much less expensive than elsewhere in the state and food costs slightly less.

But when it comes to health care, which is as pressing a need in the state’s rural areas as it is in its urban ones (and just as expensive) the residents of California’s rural communities are at a significant disadvantage. People generally live farther away from hospitals than their urban counterparts, have limited access to medical specialists and fully-staffed medical facilities with the latest state-of-the-art equipment, and have much less money to spend. Ridgecrest is surrounded by mountains and desert on all sides. More than half the people who live in Imperial County, in the southeastern corner of the state, are poor or near-poor, and Imperial ranks last among the state’s 58 counties when it comes to the percentage of residents who have a high school diploma. In many of these rural parts of the state large numbers of people have little or no health coverage.

The biggest problem with rural health care, experts say, is the system itself, not the service-area population. The health care systems of rural California are quickly becoming problematic for the people they serve and the medical institutions they use because market forces and government initiatives are forcing change on the organization and financing of health care nationwide. If rural health care systems do not keep pace with changes in managed care, the people who live in rural areas will end up having to leave their homes and travel to big cities for medical treatment. When people are far from their doctors, their health isn’t the only thing that suffers, studies show: the appeal of living in rural areas declines, people move out, the economy suffers, and an even greater exodus ensues, plunging the area into a cyclical downturn that is not easily abated.

The key to avoiding that kind of a scenario, according to a recent study published by the California Institute for Rural Health Management (CIRHM), is for rural communities to integrate the organization and financing of their health care systems with managed care while keeping appropriate medical-care decisions local. Generally, the penetration of managed care also keeps health costs down by shifting financial risks to large, managed care institutions like HMOs and away from the patients themselves, who pay monthly premiums rather than fees for services. The question policy-makers today are facing is how best to integrate health care in rural communities into regional managed care systems.

While the rural communities of California share many common concerns about developing integrated systems, each differs somewhat in its strengths and weaknesses according to its location, the compositions of its population, and the minutia particular to each community. That’s why community advocates are saying it is essential that lawmakers understand the implications of the legislation pending in the Triple-A House and Senate bills on each of the rural regions in the Golden State that are part of CIRHM’s project, Developing Rural Integrated Systems (DRIS).

The Indian Wells Valley - Ridgecrest

It’s not hard to get a good view of Ridgecrest. An isolated desert city in the Indian Wells Valley, the city of Ridgecrest, population 28,295(1990 U.S Census), sits in a basin 3,000 feet above sea level and is surrounded on all sides by mountains. The Sierra Nevadas tower over the desert town on its western side, the Inyo mountains are to the north, and the Panamint mountain range rises out of the eastern horizon. Just over the hills is Death Valley, the hottest place in the United States, and to the south is the Mojave Desert — hundreds of square miles of untouched brush and sand and parched earth. Much of this land, about 200 miles northeast of the Los Angeles basin, is restricted to military use.

Ridgecrest sits on the south end of the China Lake Naval Weapons Center, where most of the workers in the small desert city are employed. Though there are a few commuters to the naval base from other towns nearby, the drive to Ridgecrest from anywhere outside Indian Wells Valley is long and sometimes treacherous. The windy road through the mountains from Bakersfield, on the west side of the Sierra Nevadas, is dotted with crosses covered with flowers, roadside tributes to loved ones who lost their lives there; the freeway route around the mountains takes almost two hours.

Despite this distance, it is Ridgecrest’s relative proximity to Bakersfield that has earned the remote desert city the federal designation of being in an urban area (it is part of Kern County). As such, Ridgecrest is not eligible for any of the federal benefits that go to rural areas, though its needs certainly are those of a rural community.

There is only one hospital in the city, with 80 licensed beds, and though there are plenty of doctors in town, patients often have to wait several days before the specialist they need to see comes to Ridgecrest. Some medical specialists (like dermatologists or orthopedists) make regular weekly visits to treat patients in the city; Ridgecrest isn’t big enough to sustain all the specialists it needs on a full-time basis.

The city itself is not unlike the many small desert cities that fill the Southwest. There is an expansive shopping mall in the middle of town, a local movie theatre that charges only six bucks a ticket, and grid-drawn streets that cut through neighborhoods filled with pastel-colored homes. In the height of summer days, temperatures in Ridgecrest can rise to 115 degrees, and at night, strong winds whip through town, covering homes and streets with desert dust. The dust is more than an aesthetic problem; the city’s old and young suffer from respiratory ailments that have been linked directly to the dust. Because of Ridgecrest’s elevation, snow falls there in the winter, and the surrounding mountain roads often become impassable.

On hot summer days, children ride their bicycles through town with plenty of room to peddle on the city’s wide streets. Parents say Ridgecrest is a good city for raising kids and a nice place to live, though in general, the social life for those in between childhood and parenthood is somewhat limited. The naval base lifeline to the community has dried up in recent years; when the military started downsizing after the end of the Cold War, in 1989, local residents began losing their jobs at the base and moving away. The city has lost more than a tenth of its population since 1990 and further downsizing at China Lake is expected to continue into the next decade.

The decline in employment opportunities has driven the local economy into a tailspin. Income levels in Ridgecrest have dropped, real estate values have fallen, and a few store owners have closed up shop. But Ridgecrest is mobilizing to breathe new life into the community, in part by diversifying the economy to reduce the city’s reliance on the naval base for sustenance. At the same time, the city is struggling to maintain and improve the strength of its health care system, even as the number of people on economic assistance continues to rise.

Triple-A Impact on Health System Integration

In general, the Triple-A rollback provisions, while stabilizing important revenue streams to community providers, diminish the financial incentives for providers to integrate, which affects the development of rural systems on several levels. Many of the rural towns in California have Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), which handle much of the outpatient medical care in those regions. Until now, the FQHCs principally licensed Community Health Centers (CHCs) - - have maintained separate health networks from mainstream private-practice providers. Licensed community health centers evolved as an alternative health care system to provide access to medical care for uninsured and Medicaid beneficiaries who were experiencing barriers to care. Many CHCs

 “By funding the budget shortfall for Sage (CHC) between what’s covered by state and federal resources and what patients actually have to pay, the burden of funding the FQHC is shared by the local hospital in an integrative relationship.”

When the Balanced Budget Act (BBA) passed in 1997, cost-based reimbursement for FQHCs and RHCs in California was scheduled to drop to 70% of allowable costs and then to end altogether in the year 2002. The threat of the loss of FQHC status as well as State Medicaid managed care activities over the past decade has motivated clinic and county based FQHCs to integrate with other providers in regional networks. The proposed Triple-A bills, if passed, would roll back the FQHC sunset provisions in the BBA bills, maintaining full cost- based reimbursement to the health centers and enabling them to access this reimbursement ad infinitum. This change would substantially reduce the financial incentive for the FQHC clinics in three of the four DRIS sites to participate in local integrated systems to gain financial economies of scale.

Ridgecrest, however, is in a unique position. Ridgecrest Regional Hospital picks up the tab for medical costs for the uninsured who seek care at the Sage Community Health Center — an RHC developed by the hospital that later became an FQHC. By funding the budget shortfall for Sage between what’s covered by state and federal resources and what patients actually have to pay, the burden of funding the FQHC is shared by the local hospital in an integrative relationship. Any provisions in the proposed Triple-A bills that broaden the scope of cost-based reimbursement would be beneficial to the community as well as support the local integrated system by reducing local costs.

Triple-A Impact on Critical Access Hospital Eligibility

In order to ensure access to care in remote communities, the Medicare Rural Hospital Flexibility Program part of BBA 97 authorized the establishment of CAHs (Critical Access Hospitals), which are limited-service hospitals participating in a health care network. CAHs are eligible for cost-based reimbursement under Medicare which could be more financially advantageous to some smaller rural hospitals experiencing financial strains in the face of revenue reductions, increasing technology demands and physical plant upgrade requirements. To qualify as a CAH, hospitals must serve areas with no other hospital within 35 miles or 15 miles on secondary roads. They must comply with certain regulations: CAHs can only have a maximum of 15 acute-care beds with up to 25 beds where there are swing-beds licensed. Patients stays are restricted to 96-hours, after which patients must be transferred to a skilled nursing bed or other acute care provider. CAHs must have formal transfer agreements with regional hospitals for patient transport and referral.

Because the Indian Wells Valley is considered part of an urban MSA (Metropolitan Statistical Area), its hospital is currently not eligible to become a CAH. Provisions in the proposed Triple-A bills would establish a waiver process by which rural hospitals located in urban MSAs could be classified as rural for programmatic purposes. The state would dole out these special rural designations on a case by case basis. In Ridgecrest, the community hospital could be eligible to become a CAH if the community so desired and was willing to adhere to the relevant federal guidelines. The ability to designate Ridgecrest Regional Hospital as a CAH may be essential to ensuring access to affordable integrated care for residents of the Indian Wells Valley in the long term. However, what the proposed federal legislation does not do is require that Medicaid (Medi-Cal in California) follow Medicare in how it reimburses CAHs. The State can decide that Medi-Cal payment provisions be the same as Medicare. With cost-based reimbursement available for Medicare but not for Medi-Cal covered patients, the feasibility of utilizing CAHs as a means of preserving access to hospital care in the Indian Wells Valley is a marginal proposition at best.

 “Provisions in the proposed Triple-A bills would establish a waiver process by which rural hospitals located in urban MSAs could be classified as rural for programmatic purposes.”

Triple-A Influence on the use of Telemedicine

One of the less expensive ways to improve the access that residents of rural regions have to medical experts and specialists is through the use of telemedicine technology, which allows doctors to send live, real time images and sound, by computer to doctors elsewhere in the country — much like a live T.V. broadcast.

The proposed Triple-A bills greatly expand the possibilities for practitioners to be compensated for using telemedicine, making it a very effective way to improve and accelerate the treatment of patients in rural areas. The lack of specificity of cross-border issues in the proposed bills, however, would mean that the states still would need to resolve how cross-licensing impacts the acceleration of telemedicine, especially in border areas like Del Norte and Imperial.

Until now, telemedicine efforts in rural areas have been somewhat stymied since the development of telemedicine has had to be explored through private grants and foundation money, rather than government dollars. However, the passage of Triple-A would enable places like Ridgecrest and Lompoc to be considered rural by federal definition, increasing the likelihood that they would receive Medicare reimbursement for telemedicine. Such funds could significantly accelerate the development and use of telemedicine services.

Lompoc Valley

Like Ridgecrest, the city of Lompoc is a rural city in a county with a federal urban MSA designation. But unlike its counterpart in the desert basin, Lompoc is close enough to Santa Barbara so that local residents can commute to their densely populated neighbor to the south for non-emergency medical care.

The hour-long drive from Santa Barbara to Lompoc along the Pacific Coast is filled with rolling yellow and green hills and millions and millions of flowers. Much of Lompoc’s economy is based on the flower industry. Another large Lompoc Valley employer, Vandenberg Air Force Base builds missiles next door. With a regional population of 63,000 (including 4,000 federal prisoners), Lompoc looks a little like a Pacific resort town, though most tourists who make their way through the region bypass the city several miles away on Route 101. For recreation, most tourists tend to go north to coastal locations that are not surrounded by restricted military areas.

Nevertheless, as the L.A. and Santa Barbara regions grow so does Lompoc, which has seen its population increase by 10% in the last decade. Residents of the city have income levels comparable with those elsewhere in California and lower unemployment than in the rest of the state. It is the least remote of the four communities involved in the DRIS project.

Like the hospital in Ridgecrest, Lompoc Healthcare District Hospital is considered federally to be in an urban county so it is not eligible to become a CAH. Under the waiver provision in the proposed Triple-A bill, however, Lompoc’s hospital might be able to qualify for CAH status by reducing the number of licensed beds in use and making other decisions to limit its services. Careful consideration would have to be given to the cost-benefit of conversion as well as the social investment of the community in altering the current role of the hospital, however. The major payer of inpatient care in Lompoc is Medicare. Because of the County Organized Health System, the Santa Barbara County Local Initiative prepaid Medi-Cal health plan — most of the Medicaid eligible beneficiaries receive their hospitalization in Santa Barbara. Although requiring Medi-Cal payment to follow Medicare with cost reimbursement for CAHs would benefit Lompoc Hospital financially and administratively it is probably not a essential feasibility issue here.

With the proposed end of cost-based reimbursement for FQHCs in 2002, the Santa Barbara County Local Initiative,

 “If FQHC reimbursement is reinstated in full…with the passage of the Triple-A bills, the incentive to integrate financially into a system with other local providers would vanish in all but preventive services.To this extent, the bills hinder network success in Lompoc since aggregating a sufficient number of lives, including Medicaid lives, is a critical feasibility factor here.”

With regard to telemedicine, Lompoc stands to benefit in the same ways Ridgecrest would if it were designated rural under the proposed Triple-A provisions. With a federal waiver as a rural community, Lompoc could be reimbursed under Medicare for telemedicine services. This is no small issue even though Lompoc is close to Santa Barbara. Telemedicine would bring specialty services to residents of Lompoc Valley, particularly the elderly who experience transportation barriers to making the trip to Santa Barbara. The expanded reimbursement opportunity of telemedicine would allow the Lompoc physicians to offer specialty services to inmates of the federal prison thereby increasing the cost-benefit of implementing these expensive services.

Imperial County

Imperial is already a federally designated rural county, so the county and thus is eligible to receive all the benefits that come with being rural.

Imperial County takes up the southwestern corner of California, its northern edge stretching from 50 miles south of Palm Springs to the Arizona border in the east. The south side of the county line is the international border with Mexico. The 2.7 million acres in between, which comprise Imperial, the only entirely designated rural county in southern California, are wide, hot, and mostly uninhabited. Imperial is mostly desert and irrigated farmland, except for a few small towns and a salty lake called the Salton Sea, which formed after the Colorado River damn was built.

The biggest city in the county is El Centro, population 37,500, which is just 10 miles from the Mexican border. Though there are 140,000 people in Imperial, just over the border sits the Mexican city of Mexicali, home to another million people, some of whom commute to work in the U.S. every day. There are U.S. border patrol checkpoints on all the roads leading out of the county. Some of the high mortality statistics of Imperial County are thought to be caused by Mexican Nationals entering the country who end up dying in the desert heat or drowning in the canals before ever reaching their destination. The terrain in the western part of the county, between El Centro and San Diego, a two-hour drive away, is hot and punishing. Rocky desert mountains hide the steep road that runs through it, Interstate 8, and there is no water (or mailboxes) for miles and miles around.

Imperial’s economy is based largely on agriculture and tourism, much of it from travelers on their way to or from Mexico. Partly because of migrants coming from the country’s less affluent neighbor to the south, Imperial is the fastest growing of the four counties involved in the DRIS project. A full 70% of the county’s population is of Latino background, most of them Mexican-Americans, making it the most Hispanic county in California. The small towns that line Route 86, which runs north-south through Imperial, reflect the large Hispanic presence in the county. Billboards in Imperial are in Spanish and English, Mexican restaurants abound, and road signs bearing cities with Spanish names advertise distances in miles and kilometers. Imperial also is one of the poorest areas of California, with 54% of Imperial’s population poor or near-poor.That translates into a very high percentage of people who are on Medi-Cal (28%) almost twice that of the California average.

There are three licensed hospitals in Imperial County. Calexico Hospital on the border of Mexicali has been closed for the past three years but continues to operate an RHC administered by El Centro Medical Center. El Centro Medical Center, owned by the City of of the same name, is located ten miles North of Calexico. Pioneers Memorial Hospital, a district hospital, is located fourteen miles up the road.

The definition of rural is not an issue for Imperial since it already is designated a rural county. Although the hospitals are less than 35 miles apart, El Centro Medical Center and Pioneers Hospitals could currently qualify for CAH status if their boards of directors determined that CAH designation would improve their financial position; if they made the necessary changes to meet the federal service limitation requirements; and if each obtained a certificate as a Necessary Provider of Health Care Services under California’s State Rural Health Plan for participation in the Federal Medicare Rural Hospital Flexibility Program. The proposed Triple-A provisions would permit Calexico Hospital to reopen as a CAH

 “The passage of the Medicare reimbursement provisions for the use of telemedicine under Triple-A also would have a beneficial effect in creating access to speciality services in Imperial.”

Passage of Triple-A would maintain cost-based reimbursement for the FQHCs and RHCs in Imperial, which is mentioned earlier, again diminishes the financial incentives for FQHCs or RHCs to integrate with other providers in their service area. The impact would be a slowing of the development of managed care networks that included Medi-Cal eligibles and the uninsured in Imperial, similar to the effect it would have in Lompoc Valley.

The passage of the Medicare reimbursement provisions for the use of telemedicine under Triple-A would also have a beneficial effect in creating access to speciality services in Imperial. Right now many specialty services can only be accessed by driving two hours across the mountains into San Diego County.

Humboldt-Del Norte Counties

While Imperial County is the desert in the southeastern border of the state; Humboldt and Del Norte counties are in the exact opposite position, taking up the northwestern border of the Golden State with nearly 3 million acres of forests and green hills. The Hispanic population in Imperial is at 70%; in Humboldt/Del Norte it is no greater than the Native American population, each are about 6%. However, like its desert counterpart at the other end of California, Humboldt/Del Norte is struggling to develop a health care system to sustain the local population in the era of managed care. Nearly 40% of the residents of the region are poor or near-poor, and the proportion of people eligible for Medi-Cal benefits (21%) is higher than the California average.

Bordering Oregon on one side and the Pacific Ocean on another, Humboldt/Del Norte is covered by national forests, which provide the 163,000 people that live there with more than just a pretty backyard. The region’s economy

 “Because such a high percentage of Medi-Cal (Medicaid) eligible patients utilize the hospital,for CAH conversion to be feasible, there needs to be a federal or state requirement that Medicaid pay cost based reimbursement the same as Medicare under the CAH provisions.”

Though less than half the people in the region live in incorporated cities, the health care provider supply is robust for a rural region. In all, 111 primary-care physicians and 177 specialists work in the region. There are six acute-care hospitals in the area and nine community health centers.

Like Imperial, Lompoc, and Ridgecrest, Humboldt and Del Norte counties are considered Health Professional Shortage Areas (HPSA), which is one of the criteria for qualifying for special federal and state funding and maintaining federally designated FQHC and RHC status. BBA 97 created a stricter HPSA definition that will result in many of the rural regions of California losing their HPSA designations and becoming ineligible for the special funding that is accorded to those regions. While the other service areas involved in the DRIS project are not at threat to lose their HPSA status, central Humboldt County and Del Norte County are. If these regions lose their HPSA status, the providers would also lose their designation as FQHCs and RHCs as well as the reimbursement benefits they afford.

Triple-A, if passed, might give central Humboldt and Del Norte County a chance to keep their HPSA status, though without calculating the numbers — it is difficult to predict the exact effect. Triple-A would allow consideration on the supply side of the equation to be given for retiring and resigning physicians. On the demand side consideration would be given to the size of the elderly population who utilize care at a higher rate and for the number of uninsured and Medicaid eligible persons living in the area. If supply is shown to be less than adequate and the demand for providers greater than what is available, the HPSA status of the area might be preserved.

Only in Southern Humboldt County where HPSA status would remain, could Jerold Phelps Memorial Hospital qualify to became a CAH and keep its RHC operating. Garberville, a town in Southern Humboldt County, is an hour and 15 minutes away from Eureka, the county seat. The eighteen bed hospital has both acute and swing beds. It is clear when

 “Triple-A, if passed, might give central Humboldt and Del Norte County a chance to keep their HPSA status…”

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