New Medi-Cal Funding Agreement Could Affect Hospital Budgets
About 150 hospitals that provide the majority of inpatient care for low-income and uninsured state residents might face budget shortages under a proposed Medi-Cal agreement with the federal government, the Palm Springs Desert Sun reports. For some hospitals, as much as 60% of their budget could be in question if the agreement is approved by lawmakers before the current legislative session ends on Sept. 9 (Henshaw, Palm Springs Desert Sun, 7/24).
Under the agreement, which was announced by Gov. Arnold Schwarzenegger's (R) administration last month, the federal government would provide the state with an additional $671 million annually for the program over five years. California would receive a five-year waiver from federal rules regarding hospital payments for Medi-Cal, which would allow the state to continue contracting with 230 hospitals for Medi-Cal services, rather than pay the 600 hospitals statewide.
In addition, $360 million of the federal funds would be used to shift more than 500,000 low-income beneficiaries to managed care plans between January 2007 and mid-2008.
Critics of the agreement -- including hospitals, Democratic lawmakers and patient advocates -- say it would draw funding away from hospitals that serve as safety nets for the state's low-income and uninsured residents (California Healthline, 6/23).
According to the Desert Sun, the agreement could affect the budgets of counties that support large public hospitals because the counties would have to pay for a larger portion of indigent care.
In addition, some hospital officials have said the new funding agreement would not keep pace with rising health care costs because the plan does not include funding increases over time.
Administration officials said the plan includes some growth money "but admitted there could be a problem in the final years," the Desert Sun reports.
Lawmakers must approve legislation to provide Medi-Cal funding that includes the basic terms of the agreement with the federal government. According to the Desert Sun, "the basic deal appears set for now," but lawmakers are "under pressure" to approve funding legislation by the end of the session so that hospitals can begin receiving funding by the end of this year (Palm Springs Desert Sun, 7/24).