Most of us in the public hospital and health systems are delighted that health reform has finally begun.  For decades, we’ve struggled with limited capacity, shrinking resources and now, more recently, with increased demand for our services resulting from the recession. 

All of this has been against a backdrop of annual uncertainty at every level of government. We’ve had to maneuver our way through complicated federal and state level program modifications and compete at the county level with law enforcement and other county programs for what are now smaller and smaller county general funds.  It has been a daunting effort, and we should be breathing a sigh of relief.

It’s hard to celebrate when there is a minefield between you and the goal post and that is sometimes the way it seems to me.  Before we reach 2014, when nearly every American will have some sort of health coverage, our public systems are facing a number of challenges with limited options for addressing them:

• The federal waiver that sets our reimbursement rate for Medi-Cal must be negotiated and approved.  While the conditions are far better now than they were under the Bush administration, there is always anxiety until the details are nailed down — probably sometime this summer.
• County general funds are decreasing and will continue to do so for a number of years until revenue from property taxes and vehicle fees return to some semblance of normal.  Last year, that meant $13 million in budget cuts. This year, we’re cutting $11 million.
• Until the recession ends and while unemployment insurance and COBRA end for many people, we can expect the capacity of our safety net to continue to be strained. Partnerships with our community clinic partners, hospitals and groups like Operation Access can help but none of us, even working together, can easily meet this growing need.
• The prison system, in trying to solve its own budget deficit problems, has concocted a number of schemes that involve releasing inmates who cost the most money because they need extremely high levels of medical care. They are released without Medi-Cal and will become the responsibility of counties to care for.

It is extremely important for us in the public hospital/health system world to be hyper-vigilant right now.  We must strengthen our systems so we are ready for 2014 and advocate for any support we can get between now and then to reach that goal. Health care reform restored some of the federal disproportionate share funding that systems like ours get.  We must be sure that policies, grants and other health reform implementation are all done in a way that supports our systems.

California has an unprecedented opportunity to expand coverage to thousands of childless adults — and the utmost responsibility to handle with care the protections and rights already afforded them under California’s unique laws for indigents.   Beginning Jan. 1, 2011, Medicaid will cover childless adults with incomes up to 138 %of the federal poverty level (FPL) and the new state exchange will cover persons with incomes above 138% FPL no later than 2014.  Building upon an existing and important patchwork, California must strike a balance between optimism and growth alongside preservation of rights.  

California can also alleviate the strain on the existing safety net now by opting for “early take-up” and working with counties to transition childless adults starting in 2011. We should maximize all avenues of eligibility so that persons with disabilities, for example, receive Medi-Cal instead of straining county programs; coordinate application and renewal processes and eliminate duplication to make seamless transition mechanisms; and close gaps between overlapping but unaligned provider networks.  Embarking on these efforts now can help ensure that the system built for ultimate expansion is sound.  While expansion should commence as early as possible, California must ensure this system is built thoughtfully.  Specifically, California should:

1) Preserve the counties’ residual safety-net obligation for persons excluded from Medi-Cal or the exchange. This can be done by:

• Retaining and affirming the Section 17000 mandate that counties are the provider of last resort for indigent health care.  This must remain intact even as we expand Medi-Cal because Medi-Cal and the exchange will never reach 100% enrollment, because of limits in those programs’ eligibility and because Medicaid, Medi-Cal, and exchange policies may change over time and the last-resort safety net must not be eroded or erased; and 
• Enacting a state law maintaining eligibility for county health programs that mirrors the federal “maintenance of effort” law.  Enrollment will be much lower, but the structure must remain.

2) Learn from local practices and systems used in eligibility, service delivery, financing and integration to maximize coverage and care for while maximizing new federal dollars. This can be done by:

• Crafting written materials and outreach to ensure applicants understand what they are getting and what their rights and responsibilities are.  Childless adults such as the homeless and those with multiple chronic conditions are among the most vulnerable and easily disenfranchised and extra effort must be paid to ensure they are informed and connected. 
• Constructing a seamless merging of provider networks to ensure that there are safety-net providers remaining that are most responsive to childless adults’ chronic, multiple health needs.  The Coverage Initiative projects and counties’ networks will need to merge with existing Medi-Cal networks and guide which practices to avoid; and
• Taking the option to allow hospitals and other providers to enroll applicants presumptively, building on county best practices.

3) Integrate county health, Medi-Cal and exchange systems used for eligibility, delivery, care coordination and financing to maximize federal match, minimize burdens on this vulnerable population and place persons in the most beneficial program as required by state law. This can be done by:

• Covering childless adults before 2014 to draw the federal match for county expenditures.  This is a great opportunity to provide real coverage to childless adults who, in some counties, now have only had access to very limited services. 
• Integrating systems to maximize federal match and minimize how many people need the residual county care by aligning and coordinating application systems and procedures not only between Medi-Cal and the exchange, as federally required, but also with the county programs.  
• Aligning how eligibility is determined across programs to facilitate transition at implementation and throughout the life of the programs.  For example, federal reform changes the way income is counted.  If county systems are not changed, applicants may be locked out of both Medi-Cal and the county program.  Coordination as individuals’ circumstances change must be seamless; and
• Plan now for the eventual decline in federal financial contributions.  While the residual obligation is on the counties, there are numerous transitional issues to ensure continuity of care and to prevent collapse of this new system.

Who is an MIA — medically indigent adult? He or she is typically a low-income, working individual with no disabilities and no minor children living at home. Some are young adults in entry-level jobs with no health coverage. Some are older, sometimes still working, often unemployed.

California currently pays for care to MIAs  through its 58 counties with a mix of state, county and sometimes federal funds. County programs for the MIAs are poorly funded, facing increasing demands for care with diminishing resources as state realignment funds to counties diminish because sales taxes and vehicle license fees have fallen during our severe recession. In 2006, California’s counties reported spending about $1.8 billion on care for about 1.2 million uninsured persons — roughly $275 per uninsured Californian (6.5 million total uninsured then, 8.2 million now).

Many but not all the county programs for the uninsured are quite weak in the areas of prevention and primary care, which are essential elements of the federal reform. Others are not good on management of chronic conditions and better at delivering episodic care. This leaves many uninsured dependent on the emergency room for treatment of preventable illnesses. Ten California counties received three-year competitive federal grants to improve primary care, chronic care management and prevention for the MIAs, and most have markedly improved their systems; these grants end at the end of this summer.

The recently enacted federal health reform bill would allow California to get federal matching to pay for Medicaid coverage of its MIAs effective April 1, 2010. On Jan. 1, 2011, a new option for Medicaid enrollees with multiple chronic conditions will provide states more money for care coordination and case management services. . Then in 2014, California will receive 100% federal funding for coverage of all MIAs. A number of other states (Oregon, Arizona, New York, Maine and Massachusetts) already receive federal Medicaid match for this population through a 1115 waiver and are well positioned to benefit immediately from the new match. What about California? Yes, it can. It could do so either as a straightforward state plan amendment or through a 1115 waiver request to the federal government that builds on and improves county coverage of the MIAs.

California is seeking to renew a 1115 Medicaid waiver set to expire on August 31, 2010. Medicaid waivers grant states federal funds and flexibility to experiment with their Medicaid programs, in order to make their programs more efficient and effective.

Under federal health reform, California could expand Medicaid to  MIAs, using its current county spending on their care to fund the local match. The counties already do so in a limited fashion under the current waiver for 10 counties.

Alternatively, the state could expand its Medicaid waiver, under which counties could still put up their current funding to draw down matching federal dollars but would maintain some flexibility to transition their current systems to meet federal reform requirements by 2014.

In summary, many California counties already do or could readily enact program improvements to meet federal Medicaid standards. Some counties are unprepared to meet federal reform requirements, and still others may be unwilling to transition to a better-balanced and more integrated system even with potential access to federal matching funds. Considering the varying levels of readiness and willingness among counties for reform, California could seek a Medicaid waiver while establishing transitional benchmarks giving the less-prepared counties the time and appropriate financial incentives to build their systems in line with federal requirements.

In our view the first and highest priorities are to improve primary care and prevention, geographic and timely access, treatment of chronic conditions and a steady shift to managed care. In addition, such a waiver could cap counties financial exposure so that their financial obligations under the waiver do not exceed what they have already voluntarily undertaken. Counties are already struggling with budgetary concerns; this type of waiver would ensure that the access to new federal matching funds neither harms their programs’ sustainability, not allows a county to pocket the federal match with no system improvements.

California providers will still struggle to finance care to those uninsured that do not qualify due to income or immigration status. In 2014, the exchanges and federal tax credits will become operational to finance care for the uninsured with incomes above 133% of federal poverty level  and the Medicaid expansion will cover those with incomes below that level with 100% federal funds.

Beginning Jan. 1, 2014, Federal Health Care Reform will include most uninsured, indigent adults, except undocumented aliens, in Medi-Cal or in subsidized insurance exchanges.

The question is how to survive for the next three-and-a-half years.

One option is expansion of the Coverage Initiative program that was started under California’s Medi-Cal 1115 Waiver.  This program, which currently includes 10 counties, could be broadly expanded by obtaining new federal matching funds for indigent adults with incomes below 133% of the federal poverty level.  A provision of the health care reform legislation allows such an expansion effective April, 2010.  Existing county health care funds could be used to match against the Federal funds, so that no state appropriation would be necessary.