CMS Should Not Revise State’s Waiver Request for Medi-Cal Contractor Program, Los Angeles Times Says
Although "California's health safety net is not always a model of cost-efficiency," CMS Administrator Tom Scully "seems poised" to revise the state's request for a two-year extension of a Medi-Cal contractor program waiver -- a move that could cost the state's safety net hospitals about $300 million in federal funds over the next two years and would "punish California and Los Angeles County for the wrong reasons," according to a Los Angeles Times editorial. California officials and lawmakers have raised concerns that Scully will allege that the state violated federal law by "reallocating, rather than returning to Washington" more than $150 million a year in Medi-Cal funds saved through the Selective Provider Contracting Program, the editorial states. According to the editorial, Medi-Cal redirects some of the funds saved through SPCP to the state's safety net hospitals, which provide care for a large number of low-income and uninsured patients (Los Angeles Times, 8/5).
Under SPCP, 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. About half of California's hospitals participate in SPCP, with more than 240 under contract with Medi-Cal. California must apply to CMS 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. Although CMS 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 (California Healthline, 7/31). The editorial states that California's "funnelling of Medicaid savings back to hospitals ... is not bad government," concluding, "The state should be rewarded, not penalized for it" (Los Angeles Times, 8/5).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.