Agreement on Federal Contribution to Medi-Cal Could Affect Safety Net Hospitals
California could lose at least $368 million next year in funding for hospitals in low-income and rural areas if state and federal officials do not reach an agreement on Medi-Cal funding, administration officials have said, the Sacramento Bee reports. The state also could lose guaranteed increases in federal funding for such hospitals based on the number of uninsured state residents.
The state's current agreement for federal hospital funding expires June 30.
Gov. Arnold Schwarzenegger (R) is seeking an additional $671 million annually in federal funds for Medi-Cal. Administration personnel have said that Schwarzenegger has discussed the issue several times with Bush administration officials including HHS Secretary Mike Leavitt and that negotiations have been "positive." Schwarzenegger aides said they expect to have reached an agreement with the federal government before the current agreement expires.
In addition, Schwarzenegger last month wrote a letter to Leavitt stating that California has been more effective than other states at controlling costs in its Medicaid program.
However, some critics of the administration say Schwarzenegger "has kept a lo[w] profile on the issue," while other governors are lobbying aggressively against proposed Medicaid funding reductions, the Bee reports.
Rep. Zoe Lofgren (D-Calif.), chair of California's Democratic caucus, said, "My concern right now is that [Schwarzenegger] may not have done enough."
Schwarzenegger spokesperson Julie Soderlund said, "The governor is certainly committed to ensuring California gets this important waiver to support the financing of our safety-net hospitals."
According to the Bee, Schwarzenegger has agreed to Medi-Cal accounting changes "[u]nder pressure from the Bush administration." Schwarzenegger aides have said the Bush administration will not agree to an agreement on Medi-Cal funding without revisions to the accounting rules.
Under the changes, public hospitals will be required to spend money before they receive federal matching funds, an arrangement that could lead to decreases in federal funding. Currently, the state can use money from counties and hospitals to qualify for matching federal funds, even if the total contribution is not spent on Medi-Cal services.
In addition, California's congressional delegation earlier this month sent a letter to Bush administration officials stating its support for additional funding for California hospitals.
The White House Office of Management and Budget last month opposed increasing Medi-Cal funds for California. OMB also has suggested reducing California's allocation, according to hospital representatives.
The absence of an agreement is affecting the state's budget process because state legislators do not know how much money will be available "and what strings will be attached," the Bee reports.
Sen. Denise Ducheney (D-San Diego), chair of the budget subcommittee on health and human services, said, "The dilemma we're facing is how do you budget not knowing what the federal position is? We were expecting to see it in February, and we were expecting to see it in March, and it's now May ... and we still don't have it. It really does leave us in a very difficult position to try to get a budget out on time" (Benson, Sacramento Bee, 5/15).