89.3 F
San Fernando
Thursday, Feb 2, 2023
-Advertisement-

AB 1383: California Hospital’s Bitter Pill for Medi-Cal Ills

Convincing California hospitals to tax themselves to help address the chronic underfunding of California’s Medi-Cal program was not an easy task. The feat, which culminated with Gov. Arnold Schwarzenegger signing bill AB 1383 recently, was great albeit mostly bittersweet. “This is not something we’re thrilled about, not at all,” said Jim Lott, executive vice president of the Hospital Association of Southern California, who both supported and led the effort. “And it isn’t a good precedent to set.” Asking hospitals to take action and dig into their own pockets to help improve government payments for care provided to government subsidized patients, “is a hard pill to swallow,” said Lott. “It’s kind of ridiculous, it kind of makes no sense,” he said. California ranks dead last in the nation when it comes to funding Medi-Cal, which provides essential health care services to the poorest and most vulnerable Californians. In 2008, California Hospitals lost more than $4.2 billion in unpaid Medi-Cal costs. And because California has been unable to meet the federal match requirements, the state now leaves almost $2 billion federal dollars a year that would go to fund Medi-Cal, unclaimed. AB 1383 helps rectify this. The bill imposes an annual provider fee upon general acute-care hospitals in order to collect a total of $2 billion state wide. The state will use the funds to leverage $2.3 billion annually in federal matching Medicaid funds. The fees paid by the hospitals combined with federal matching funds will be used to provide supplemental Medi-Cal payments to hospitals, as well as provide the state with $320 million annually for children’s health coverage. When 43 percent of California hospitals now find themselves with serious financial problems, the measure could alleviate some of the strain caused by inadequate reimbursements. For local hospitals, such as Valley Presbyterian Hospital, where Medi-Cal patients constitute about 50 percent of their business, the bill will make a world of a difference. “Continued underfunding of these patients puts future capital improvements at risk in this facility,” said CEO Gus Valdespino. “Going forward, our ability to continue to recapitalize the facility to comply with seismic requirements that are being imposed by the state and our ability to continue to provide cutting edge technology could all be hampered if we had not obtained this funding,” he added. Valley Presbyterian Hospital exemplifies how crucial it is to increase the effective reimbursement that hospitals receive for Medical payments. “Our analysis of our last fiscal year showed that Medi-Cal underpaid us below our costs by more than $11 million dollars. This [bill] goes a long way towards closing that gap and allowing us to continue to serve our community,” said CFO Robert Allen. Gladly, California hospitals were able to see the bigger picture and agreed to this self assessment, said Lott. Under this measure, not all hospitals will pay the same fee. The assessment will be based on a specific formula so that hospitals that treat a disproportionate share of Medi-Cal patients will get a disproportionate share of those funds. Some hospitals could pay as little as $8,000 a year while others could pay as much as $7 million. And not all hospitals would benefit directly. At least 20 percent of assessed hospitals will be net contributors, according to Lott, meaning they will get no money back. Rural hospitals, who are really distressed, will be exempt from the fee but will benefit from the funds, however. Still missing from the puzzle is a funding mechanism to cover the relatively minor administrative costs of collecting the fees as well as an urgency clause that would allow it to take effect before Jan. 1. These elements were removed from the bill introduced by Assembly member Dave Jones (D-Sacramento), in order for it to gain passage in late September. Now, Jones is pushing for a new piece of legislation AB 188, to fill in the holes and determine funding for AB 1383. The federal Centers for Medicare and Medicaid Services (CMS) also has to approve the proposed provider fee, which could take up to 6 months. One can only hope the bill doesn’t get tied up in Sacramento red tape. Twenty two other states use the same hospital provider assessment proposed by AB 1383 to increase reimbursements, said Lott. However, many of those states, over time, have directed those funds for other purposes, which is why the California Hospital Association is looking into sponsoring a ballot proposition sometime next year that would require the hospital fees to go exclusively toward supplemental Medi-Cal payments. The 2010 ballot initiative would require amending the state constitution to cement the recent law and lock in Medicaid payments. “We’re considering it; we have not made a final decision yet. First we want to make sure voters in California will accept this,” said Lott, adding that they will keep in mind the voter burnout that was evident last spring and make sure the measure doesn’t get caught in the whirlwind of voter discontent. Staff Reporter Andrea Alegria can be reached at (818) 316-3123 or by e-mail at aalegria@sfvbj.com.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-