LOS ANGELES COUNTY: Feds Extend Medicaid Waiver
Federal officials ended the "cliffhanger debate" over Los Angeles County's Medicaid waiver yesterday, agreeing to extend it for five years. The waiver of Medicaid rules -- allowing the county to receive Medicaid reimbursement for treating patients in outpatient clinics rather than in hospitals -- translates into $1.2 billion, which the county will use to keep clinics open and provide medical services for the poor, the Los Angeles Times reports. In 1995, federal officials had granted the nearly bankrupt Los Angeles County a five-year waiver on the condition that the county reform its health care system. Tuesday's agreement extends that waiver, despite the county's failure to make those reforms, which included boosting outpatient visits to three million per year and cutting costs. Under the extension, the county faces penalties if it again fails to make the reforms; the waiver's value declines over the five-year period, and the agreement cannot be renewed again.
Without the extension, the county faced a $250 million deficit in its current budget and up to a $700 million deficit in coming years. But even with the waiver, county officials estimate that within four years, the health department will again have "significant deficits," which will have to be addressed with either new revenues or cutbacks in services. Because the amount of federal money declines over time, the county will face an estimated $111 million deficit in four years and a $350 million deficit in the fifth, and final, year of the waiver extension. County supervisors had hoped to have the extension granted last April, but arguments about who would contribute money to the ailing county stalled the agreement. Federal officials had pushed for the state, which had not contributed in 1995 and now is operating on a $13 billion surplus, to chip in. In the end, the federal government will contribute $900 million over five years to help restructure the county's health care system, while the state will contribute $300 million. The county will pay $400 million more than the current total of $3.2 billion it now spends on health care, footing the bill with tobacco settlement money. State officials must formally approve the deal and submit it to HCFA before it will be final (Riccardi, 6/28). In a statement released yesterday, Gov. Gray Davis (D) said, "This waiver is the result of a collaboration among the state, the federal Health Care Financing Administration, and Los Angeles County to create a partnership that will enhance the viability of the health services in Los Angeles County." He added, "While preserving health care treatment for low-income residents, this agreement institutes tough new accountability measures to assist Los Angeles in moving away from emergency room care and toward community health clinics" (Office of the Governor release, 6/27).