California Hospitals Brace For Medi-Cal Cuts, Higher Administrative Fees
California hospitals are taking a "wait-and-see" approach to how a change in federal Medi-Cal funding and an increase in state administrative fees will impact them, the East Bay Business Times reports. A proposed HHS rule would effectively cut $250 million annually from Medi-Cal by reducing the upper payment limit for the program over a six- to eight-year period. The move would prevent California from using the Medicaid "loophole" under which states pay local public facilities more than the actual cost of services, receive extra Medicaid matching funds from the federal government and then require the local facilities to return the state overpayments. Also, Gov. Gray Davis' (D) proposed budget has called for increasing the administrative fee paid by Medi-Cal disproportionate share hospitals. Revenues from the fee have fallen from about $85 million a year in 1999 to $30 million this year. While the changes have yet to impact hospitals, administrators are bracing for them. Adela Pang, the chief financial officer for Children's Hospital in Oakland, is "still assessing" how the change in the upper payment limit will affect the hospital. However, she is considering "actual cuts or reductions to services." Cuts in dental care are a possibility, but Pang said that instead of eliminating the benefit, she would work with the county "to see if there's anything they can do jointly." Carolyn Kemp, a spokesperson for Alta Bates Summit Medical Center in Berkeley, said, "Considering the fact that this is the first phase of the state's budget process, California hospitals came through ... relatively well." However, she added that "costs continue to escalate every year" for the hospital (Thomas, East Bay Business Times, 1/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.