Proposed Medi-Cal Reimbursement Rate Increase Could Improve Outlook for Health Plan of San Mateo
Health Plan of San Mateo and the seven other county-run Medi-Cal health plans will receive a 3% increase in reimbursements for treating beneficiaries under Gov. Arnold Schwarzenegger's (R) revised $103 billion fiscal year 2004-2005 state budget, the San Mateo County Times reports (Hay, San Mateo County Times, 5/14). HPSM is managed by the county in an effort to expand Medi-Cal beneficiaries' network of pharmacies, hospitals and doctors by providing higher reimbursement rates than traditional Medi-Cal. It covers an estimated 43,000 Medi-Cal beneficiaries in the county. In October, health plan officials warned that they would be forced to cease operations unless the plan received increased government funding. The health plan is losing about $600,000 a month because medical inflation has outpaced state contributions. In addition, because the health plan contracts directly with the county, the county-run hospital is ineligible for federal subsidies that most public hospitals receive. A report released last week found that some of the county-run health plans could become insolvent as early as next year without financial assistance. The report, funded by the David and Lucile Packard Foundation, indicated that the eight plans provide coverage to almost 500,000 people statewide and save the state $150 million per year because of lower administrative costs. The report also found that the plans provide guaranteed access to doctors, better access to specialists and better customer service than traditional Medi-Cal (California Healthline, 5/13). If Schwarzenegger's revised budget is approved, HPSM will receive about $3.5 million more in FY 2004-2005 than it did this fiscal year, according to HPSM Director Michael Murray. He said that the increased reimbursement would make it possible for the health plan to continue operations for another year, adding, "It's a great step forward. This makes a tight situation not so tight for our survival."
However, the Times reports that the "lifeline" could be "too little, too late" for HPSM, as the San Mateo Medical Center, the county-run hospital, might terminate its contract with the health plan in two weeks to become eligible for as much as $10 million annually in federal funding. The hospital's director said that the medical center has been losing millions of dollars each year treating indigent patients, according to the Times. The medical center wants to begin contracting directly with the state for Medi-Cal services in part because the HPSM is "near collapse," the Times reports. Murray said he did not know whether the proposed Medi-Cal reimbursement increase would affect negotiations with the hospital but added, "If they terminate [the contract], we're back to square one" (San Mateo County Times, 5/14).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.