California Budget Delay Threatens Payments To Medi-Cal Providers
A $2 billion safety-net fund created to continue paying Medi-Cal providers during a budget impasse has been depleted, threatening care at hospitals, nursing homes and other facilities, the San Diego Union-Tribune reports (Mendel, San Diego Union-Tribune, 7/28).
California since July 1 has been without a budget for the current fiscal year. The Assembly approved a spending plan, but Senate Republicans are demanding deeper spending cuts that exceed the $722 million operating deficit projected in the plan (California Healthline, 7/26).
The $2 billion Medical Providers Interim Fund, created in 1998, receives $1 billion from the state and $1 billion in federal matching funds to continue paying Medi-Cal providers when there is no state budget.
The Department of Finance said the $2 billion fixed amount was estimated to be sufficient enough to cover two months without a budget. However, the amount has not kept pace with inflation, and an accounting change has increased Medi-Cal payment rates.
H.D. Palmer, spokesperson for the Department of Finance, said the ongoing budget stalemate forced the state to cut a payment to Medi-Cal managed care plans from $223 million to $143 million.
If the Legislature by Thursday does not pass a budget, Medi-Cal will not be able to make an estimated $227 million payment to hospitals and nursing homes.
Duane Dauner, president of the California Hospital Association, said the payment can amount to 60% or more of revenue for hospitals that treat large numbers of Medi-Cal beneficiaries. He added, "Many of these facilities operate on very thin financial margins and do not have the reserves to operate without Medi-Cal payments."
Jim Gomez, president of the California Association of Health Facilities, said, "If the state budget is not enacted within the next few days, the state will not be able to pay providers for 24-hour care for nearly 6,000 developmentally disabled individuals living in more than 1,000 community-based small group homes throughout California."
Legislation sponsored by the health facilities association to double the Medi-Cal reserve fund to $4 billion has failed two years in a row.
The Assembly Appropriations Committee this year did not approve the bill (AB 237) by Assembly member Audra Strickland (R-Westlake Village) after a committee analysis argued that recent state budget experience indicated that an increase to the emergency fund was unnecessary (San Diego Union-Tribune, 7/28).