LOS ANGELES COUNTY: Might Lose Medicare Money as Waiver Expiration Nears

      With a $1-billion federal waiver of Medicaid rules "that has kept public hospitals open and [Los Angeles] County out of bankruptcy" set to expire June 30, county officials are scrambling to find ways to extend the waiver, the Los Angeles Times reports. In 1995, to save the county from insolvency, President Clinton granted the five-year waiver, which shifts rules to allow the federal government to reimburse the county for outpatient services, "rather than just inpatient treatment." The waiver's intent was to move the county away from expensive inpatient care toward "a more preventive, outpatient-based way of delivering medical services." While negotiations on a waiver extension appear stalled, county supervisors Tuesday asked county health and budget staff to create a contingency plan should the waiver expire and the county have to "plug a deficit in its health department that could ultimately grow to $700 million." Although some county sources said they "still expect to get some form of a waiver ... by June 30," Supervisor Zev Yaroslavsky said, "This is anything but inevitable."

Lowered Expectations
      To get a waiver extension, county officials might "have to drastically lower their expectations" from a five-year extension to a three-year renewal. Under such a plan, the waiver would remain in place in the next year's budget, but would be phased out over the next two. County officials have said that such a plan is too harsh, as the county would face a nearly $300 million deficit in the first year and a $700 million deficit in three years. Such losses could translate into almost 4,000 layoffs and the "slashing" of up to 1.2 million outpatient visits and 35,000 admissions to county hospitals. But federal officials note that the county has "failed to meet two ... key terms of waiver": it has saved $200 million less than it predicted and has "fallen one million behind in the number of patients it treats outside its hospitals." Federal officials also would like the county and state -- with its $10 billion surplus -- to contribute more funding this time, as well as form an "exit strategy" to help the county wean itself off the waiver (Riccardi, 4/19).