Hope, Fear in State’s Community Clinics

There are some in the health care world who contend clinics caring for Medi-Cal patients and the uninsured are doomed to failure. Not so, according to a study released yesterday by the California HealthCare Foundation, which publishes California Healthline.

The report, Financial Health of Community Clinics, found that financially stronger clinics serve a high number of low-income patients and manage to have high reimbursement levels compared to financially weaker clinics.

Carmela Castellano-Garcia can explain that one. She’s president and CEO of the California Primary Care Association which represents more than 800 clinics and health centers in the state.

“The clinics that are FQHCs (Federally Qualified Health Centers) make a stronger showing,” Castellano-Garcia said. “It’s important to point out that the FQHCs get PPS money — that is, from the Prospective Payment System — it’s an enhanced Medi-Cal rate. That’s why they’re in the financially strong category.”

But right now, Castellano-Garcia said, no one’s getting any money from Medi-Cal, enhanced or otherwise, because the state is currently operating without a budget and all Medi-Cal checks have temporarily ceased.

The study points out that most of community clinics’ revenue comes from Medi-Cal — an average of about 70% of clinics’ cash. That’s a big percentage of income to just disappear, Castellano-Garcia said.

“Medi-Cal is our biggest payer,” she said. “And we’re not getting paid. This has been going on for weeks.”

Castellano-Garcia said it’s ironic that the clinics have struggled for years to achieve some semblance of financial balance — and only recently have some of them achieved it. “When you pull the rug out from under them,” she said, “it’s just outrageous. They don’t have much in the way of cash reserves.”

Once the budget mess is resolved, community clinics are looking at one other possible pitfall, Castellano-Garcia said. It has to do with the Medicaid waiver, so it’s complicated.The short version is: California’s Medi-Cal program gets matching funds from the federal government’s Medicaid program. The new waiver, which is expected to be finalized at the end of October, shifts the funding responsibility to the counties. That makes sense, Castellano-Garcia said, because the counties currently pay for the uninsured, and when those patients join the expanded coverage group, the money spent caring for that group is freed up, so the counties don’t end up paying more.

But here’s the rub, Castellano-Garcia said: In shifting funding responsibility to the counties, the state has proposed eliminating the PPS requirement, which means that community clinics might not get that higher reimbursement rate. The details and clinic protections are still being worked out, she said, but it’s a looming concern for many community clinics.

In the meantime, Castellano-Garcia said, the primary care association has set up loans to tide clinics over during the lack-of-state-budget crisis. “But we’ve got about $22 million in loans and about $35 million in requests,” she said.

About one-third of community clinics in California are not FQHCs, she said. “Those are the financially challenged, and they’re very much suffering right now,” Castellano-Garcia said.

“And there are plenty of FQHCs that are flipping out right now, I can tell you that. We’re all very much affected by the budget cuts from last year, there have been layoffs, and cutting back services — all in the last year,” she said.

“Whatever gains we’ve made,” Castellano-Garcia said, “have been undermined by what’s been happening recently.”


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