Health Officials, Public Hospitals at Odds Over Fee

The state says it’s just shifting money around, and that everyone benefits from new federal financing tools known as CPEs — certified public expenditures.

Under the recent federal Medicaid waiver, California can get up to $400 million in federal funds for state-only programs, according to Toby Douglas, director of the California Department of Health Care Services. These are programs licensed or certified by the state providing care and services to a designated population, such as adult day health care or developmental disability care. Public hospitals provide some state-only services, and submit these certified public expenditures, or CPEs, to get federal matching funds.

“But we don’t have enough state-only expenditures, and public hospitals have expenditures beyond what they can get from the waiver,” Douglas said. “We can roll over that money … they get more federal funds, and we get to use their excess certified public expenditures to reach the $400 million mark.

“We see this as a win-win,” Douglas said.

Public hospital officials disagree. They don’t see a sizable administrative fee as a good thing.

After acknowledging the severity of the state’s budget crisis, Melissa Stafford Jones, president and CEO of the California Association of Public Hospitals, got right to the point.

“This is a 20% fee. It’s called a processing or administration fee. That’s nowhere near the cost of processing or administrating the programs,” Stafford Jones said. “I think we should call it what it is, which is a significant reduction in funding for public hospitals.”

The point of CPEs is to reimburse services that are being provided to Medi-Cal patients, Stafford Jones said.

“[Public hospitals] are incurring the cost for those people, and they would not be able to get the full amount of federal reimbursement under this proposal,” Stafford Jones said. “The state would be using those expenditures to keep the federal funds for themselves, and yet the services will still be provided [by public hospitals]. The only way the CPE works is when they have already provided the service, it only works once we incur the cost. We can’t go back and undo it, because it’s already happened. So the federal funding that would be available to [hospitals] that should be there because they’re providing that care, would not be there for them.”

Douglas said that Stafford Jones and the public hospitals were mistaken, that the state isn’t taking all CPEs, just excess ones.

“This is not a reduction,” Douglas said. “You could view it … the counties could be getting an increase, of something that was not on their books. In fact, it’s not a reduction. This is just using excess certified public expenditures for the state.”

The measure passed budget subcommittees last week.

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