California’s Public Hospitals Face New Medi-Cal Mandate

Public hospitals in California will be required to contract with at least one Medi-Cal managed care plan starting in 2018 — one of several changes signed into law this summer that collectively will generate more than $3.7 billion in federal funding for the hospitals over the next four years.

But advocates for low-income Californians say one regional contract with a Medi-Cal insurer is not enough to ensure adequate access to care. In addition, public hospitals may be exempted from the mandate if “good faith” contract negotiation efforts have failed.

The Western Center on Law and Poverty, an advocacy group, lobbied lawmakers to require that public hospitals contract with all Medi-Cal managed care plans in their region.

But that was not included in the hospital financing arrangement, which is part of what’s known as the “Medi-Cal 2020 waiver” — a $6.2 billion agreement between state officials and the federal government to facilitate programs related to health care quality, access and cost.

The agreement is intended to improve the quality of care and enhance access to it for the state’s 13 million-plus Medi-Cal enrollees, about 80 percent of whom are in managed care plans.

The Western Center said it decided to advocate for broader Medi-Cal coverage after hearing about the challenges Medi-Cal enrollees face trying to get specialized care at some University of California health systems.

Five UC health systems are included among 25 state-designated public hospital systems that traditionally have cared for uninsured and underinsured patients.

Public hospitals like San Francisco General Hospital and Harbor-UCLA Medical Center often serve Medi-Cal enrollees, but they are not obligated to provide all services to these patients. The hospitals say that Medi-Cal managed care reimbursements often do not cover the costs they incur caring for them.

“We hear from our local legal aid partners that there are significant specialty access problems for some Medi-Cal members who would like to be able to access services at UC hospitals,” the Western Center’s director of public advocacy, Elizabeth Landsberg, wrote in a letter to lawmakers.

Western Center says it hears from legal advocates that Medi-Cal clients do have access to primary and specialty care at the UC health systems, but it can be limited. The advocacy group said it doesn’t know if Medi-Cal patients are having problems at other public hospitals.

The UC hospitals say they do their fair share serving Medi-Cal patients, and the reimbursements often do not cover the costs they incur caring for those patients.

Landsberg’s group wants the new requirement for Medi-Cal contracting to provide for the full scope of health care services, including primary and specialty care.

“We think there’s a public obligation to serve Medi-Cal patients,” Landsberg said. “These are public dollars supporting public hospitals that should be serving our neediest.”

The California Association of Public Hospitals and Health Systems (CAPH) says the new Medi-Cal funding arrangement, including the managed care contract rule, was incorporated as part of a push to pay hospitals based on the value of care provided, not just the quantity of services.

“[It’s] a basic first step in what public systems are embracing as they take on more alternate payment models,” says Erica Murray, president and CEO of CAPH, who says the new funding arrangement is a win for public hospitals.

In general, Murray says, all public hospitals have some sort of contract with Medi-Cal managed care, but the scope of the contracts varies and changes frequently. She says that limited access to specialty care “plagues” the entire Medi-Cal system and is not specific to contract arrangements.

The Department of Health Care Services said the new law does not specify the range of care the public hospitals must provide, but it encourages public hospital systems to contract “for the full scope of services that the hospitals offer.”

California Senate Health Committee Chairman Ed Hernandez (D-West Covina) wrote one of the bills that formally turned the new public hospital funding rules into state law. He says the Western Center’s suggested contracting requirements weren’t included because of the financial difficulty they would impose.

“Ideally, I would love to see all the public hospitals, including the UCs, see any and every Medi-Cal patient that comes in the door,” said Hernandez.

“The dilemma is…you can’t force people to see Medi-Cal patients because of the poor reimbursement rates.”

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