California Officials, Lawmakers Ask HHS To Approve Waiver Request for Medi-Cal Contractor Program as Submitted
California officials and lawmakers have asked HHS to approve the state's request for a two-year extension of a Medi-Cal contractor program waiver and to avoid revisions to the request that could cost the state's safety net hospitals about $300 million in federal funds over the next two years, the Pasadena Star-News reports (Rester, Pasadena Star-News, 7/23). Under the Selective Provider Contracting Program, established in 1982, the state requires hospitals to compete for the Medi-Cal inpatient market, a process that reduces Medi-Cal fee-for-service and managed care costs, according to the Department of Health Services. About half of California's hospitals participate in SPCP, with more than 240 under contract with Medi-Cal. The state redirects some of the funds saved through SPCP to about 80 safety net hospitals, which provide care for a large number of low-income and uninsured patients. California must apply to HHS to renew the SPCP waiver every two years. The current waiver expired in December 2001, but the state has operated the program this year under a series of temporary waivers. According to DHS, although HHS will likely approve the state's SPCP waiver request this year, the agency may not consider funds saved through reduced Medi-Cal managed care costs to determine the budget neutrality of the request -- a requirement for approval. The move would require California to reduce expenditures under SPCP, which would result in a loss of $300 million in federal funds for the state's safety net hospitals over the next two years, according to DHS (DHS release, 7/17).
In a letter sent to HHS earlier this month, 51 of 52 members of the California congressional delegation asked the agency to renew the state's SPCP waiver request as submitted to avert a reduction in federal funds to the state's safety net hospitals. "The cumulative impact of declining federal funding is that emergency rooms and trauma centers will be at serious risk, and hospitals will cut back on nonemergency services. Entire hospitals may even be at risk of closure," the letter said. The lawmakers expect HHS to make a decision on the waiver request this week, a spokesperson for Rep. David Dreier (R-Calif.) said (Pasadena Star-News, 7/23). In addition, Rep. Bill Thomas (R-Calif.) last week sent a separate letter to HHS, and the state's two senators also have sent a letter to the agency (Josh Kotzman, California Healthline, 7/31).
According to a Sacramento Bee editorial, HHS should approve California's SPCP waiver request as submitted to "maintain a program that helps keep afloat" the state's safety net hospitals. A decision by HHS not to consider funds saved through reduced Medi-Cal managed care costs to determine the budget neutrality of the waiver request would lead to a $300 million loss of federal funds for the hospitals over the next two years and add "another burden for a system on the edge," according to the editorial. The editorial points out that the state "isn't asking to augment the program or change long-standing rules" in the SPCP waiver request and asks the Bush administration to approve the request as submitted. "This should be a no-brainer for Washington," the editorial concludes (Sacramento Bee, 7/29).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.