San Mateo County Gives 90-Day Notice of Termination of Contract With Health Plan of San Mateo

San Mateo County supervisors on Tuesday issued a mandatory 90-day notice to the Health Plan of San Mateo, saying the county might terminate its contract with the HMO on July 1 if more money is not found to shore up finances at county-run San Mateo Medical Center, the San Mateo County Times reports (Hay, San Mateo County Times, 3/24). Health Plan of San Mateo 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 provides coverage to 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 government funding. The health plan is losing about $600,000 a month because medical inflation has outpaced state contributions (California Healthline, 2/6). 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. If the county were to terminate its contract with the health plan, it could receive up to $10 million per year in extra federal funds, according to hospital CEO Nancy Steiger (San Mateo County Times, 3/23). In November, former Finance Director Daniel Zingale pledged $2.4 million to the health plan, but approval of the funding was withdrawn when Gov. Arnold Schwarzenegger (R) took office. It is unclear whether the funding will be restored (California Healthline, 2/6). Sen. Jackie Speier (D-San Mateo), who helped secure the funding in November, said she is "still optimistic she can get a commitment from the state to fund the plan" and prevent the county from terminating the contract, according to the Times. But others say the issuance of the 90-day notice sounds a "death knell" for the health plan, the Times reports (San Mateo County Times, 3/24).