HAYWARD -- A judge on Wednesday said she will extend for up to one year the state takeover of a local health plan that covers more than 200,000 low-income Alameda County residents.
Alameda Alliance for Health "is no longer able to meet the standards required of all health plans doing business in the state of California," Alameda County Superior Judge Brenda Harbin-Forte wrote in a proposed ruling that allows a state-appointed conservator to get the plan in better financial footing.
County officials opposed the state takeover and for weeks fought in court to regain local control of the nonprofit health provider, but Harbin-Forte agreed with state regulators that the plan's failure to process and promptly pay back tens of thousands of medical claims could endanger the care of its enrollees.
"Hopefully, it will be a thriving, successful, code-compliant" agency after the state sorts through its finances, Harbin-Forte said during a Wednesday hearing in the Hayward Hall of Justice. "I think everybody wants this to be over with as soon as possible."
A state attorney said Wednesday this is the first time the state has ever seized a public health plan, though it previously took over three failing private plans -- of those, two were rehabilitated and one fell apart.
Founded in 1996, the Alameda Alliance provides managed health care for 204,000 people, 194,000 of whom are on Medi-Cal, the state's health care program for the poor. County health officials have described the plan as critical to maintaining the East Bay's health care safety net.
"The Alliance, for over a decade, was one of the highest-performing medical care measures in the state," said Alex Briscoe, an Alliance board member who also directs the Alameda County Health Care Services Agency.
"A combination of factors brought it to its knees," Briscoe said.
A flood of new enrollees in January, an expensive new IT system that did not pan out, and inadequate state payments for disabled seniors all stressed the organization this year, Briscoe said.
Briscoe and other prominent East Bay backers insist that no one's care was disrupted, no patient was denied service, and the Alliance board would have been able to steer itself back into financial order without the state's interference.
The state Department of Managed Health Care disagreed and earlier this year named J. Mark Abernathy as a temporary conservator. Abernathy works for Emeryville-based Berkeley Research Group, the same consultant that had been monitoring Alameda Alliance's finances since November.
Alliance directors and board members clashed with Abernathy and had said the consultant's shift to the conservatorship was a conflict of interest because he would have had a financial incentive to show the plan was unable to fix its own problems. Abernathy wrote in court papers that Alameda Alliance was unable to control its spending, had too many administrators and spent more on furniture, equipment and software than comparable providers.
"The conservator continues to find problems," said Heidi Lehrman, an attorney for the state Department of Managed Health Care, at the hearing Wednesday.
The Alameda County Board of Supervisors awarded Alliance a $5 million emergency loan in late February after then-CEO Ingrid Lamirault spoke publicly about the financial problems. State officials a few months later placed Lamirault and other executives on administrative leave, escorting them from the plan's Alameda office. Now the conservator is preparing to select new managers. Harbin-Forte said Wednesday that the state has final say but should listen to the recommendations of the Alliance board.
While few patients are likely to have followed the legal wranglings, some have noticed problems this year.
"The providers I've seen are good. The administrative stuff is a mess," said Berkeley resident Joshua Hamlett. "I haven't had this good a health care (provider) in years, but the process of getting that health care has been a nightmare."
Earlier this year, Hamlett said he would have to wait four hours on the phone to talk to an Alliance representative. His average wait time later shortened, but was still "pretty difficult," he said.
Frustrated by the problems, some patients have quit the managed care provider. The Rev. Sarah Garner, of Oakland, was in the process of dropping out of Alameda Alliance for Health and switching to a new insurer, Anthem Blue Cross.
"The reason I left is it takes too long to see a doctor," Garner said. "If you miss one appointment at Alameda Alliance, it takes about three or four months to see a doctor again. They have multiple issues. They have good intentions, but it's very hard if you're really sick with diabetes or some other disease that needs constant care."