Pediatric Centers Must Pay Retroactively

If you were running a business on a shoestring budget, how hard would it be to pay off a lump sum payment equal to 10% of costs for the past 10 months?

That’s the question Terry Racciato would like to ask officials at the Department of Health Care Services.

Racciato, president of two Together We Grow pediatric day health centers in San Diego, is facing the prospect of paying the state $200,000 or more for what she considers to be a state administrative mistake.

“We have always been related to the home health agencies, which were exempted. They exempted pediatric clinics and home health agencies from that cut,” Racciato said. “So we assumed we weren’t one of the ones to be cut.”

The state did agree to include PDHCs among the exemptions but that exemption was approved by DHCS recently and is scheduled to go into effect Sunday. That means Racciato’s centers and the other 12 PDHCs in the state will owe about 10 months’ worth of the 10% cut.

At this point, the decision about when PDHCs should be exempt — on Apr. 1, as the state says, or retroactive to June 1 last year, as PDHC providers say — rests in the hands of CMS. The state plans to send a revised State Plan Amendment to CMS in May. Federal officials would rule on the plan soon after receiving the amendment.

CMS officials could not be reached for comment Monday.

“I’m not trying to paint a dire picture or anything,” Racciato said. “But I live this. And these centers are [financially] marginal at best. I don’t know how we’re going to pay that.”

According to officials at DHCS, the 14 centers cost the state about $5 million a year in general fund money. “So we’re looking at about $442,000 in general fund additional expense [for the 14 centers for 10 months],” according to Anthony Cava of DHCS.

PDHCs weren’t specifically listed as exempt in June, Cava said, because of the way the state classifies the centers.

“They’re not listed as a provider type because it’s a service,” Cava said. “An EPSDT (early and periodic screening, diagnosis and treatment) service. So we’re not exempting them as a provider, we’re asking [CMS] to exempt them as an EPSDT service.”

Since EPSDT services are on the June list of provider types that are subject to the 10% cut, and since those cuts were approved by CMS, the state needs to file a new State Plan Amendment (SPA) to exempt pediatric day centers, Cava said.

“They are in the original SPA,” he said, “so we need to file a new one.”

That filing will most likely happen in May, Cava said, and the exemption, when it’s eventually approved by CMS, would be retroactive to Apr. 1, 2012.

“Well, I have difficulty with that,” Racciato said. “Home health agencies weren’t listed [among providers subject to the cut], and they get 80 or 90% of their business providing EPSDT services.”

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