Deal Near On Hospital-Based SNF Cuts
The California Hospital Association announced late Wednesday that a 10% cut in Medi-Cal payments to inpatient providers with attached skilled nursing facilities will likely be reversed in the coming days.
An agreement to reverse the planned cut was apparently included in a bill that also would dramatically escalate the fee hospitals have imposed on themselves to leverage additional federal funds for the Medi-Cal program, according to officials.
The bill, SB 239, was sponsored by the CHA and co-authored by Sen. Ed Hernandez, D-West Covina, chair of the powerful Senate Health Committee, along with Senate Pro Tem President Darrell Steinberg, D-Sacramento.
The bill passed unanimously through the Assembly Health Committee on Wednesday and is expected to be voted on by the full Assembly today, according to a CHA spokesperson. A Senate vote is expected sometime next week.
The reversal would apply to urban hospitals with SNFs. Rural facilities were recently exempted from the cuts.
CHA Senior Vice President Anne McLeod said persistent lobbying by hospitals of lawmakers led to the decision to reverse the cut, the first phase of which went into effect this month.
“I think our efforts all year on this issue paid off,” McLeod said.
Hospitals have been litigating the matter in federal court since the cuts were initially enacted in 2011. Although the legal battle has forestalled the cuts, setbacks for the hospitals at the appellate level strongly suggested a legislative solution would be the only remedy that would be effective.
Officials with Department of Health Care Services, which administers the Medi-Cal program could not immediately comment on early Wednesday evening. Spokespersons for Hernandez and Steinberg were also unavailable.
Meanwhile, the four-year-old service fee hospitals have imposed on themselves to draw more federal funds into Medi-Cal would also be more than doubled. The original fee will draw a total of $4.6 billion in matching funds by the time it expires on Dec. 31. The new fee would draw nearly $10.6 billion between this January and June 2016.
The fees collected from the hospitals would be placed into a single fund. It would later be mixed with the leveraged federal funding when it is received, then redistributed back to the hospitals.
Hospitals with a disproportionate share of Medi-Cal patients would receive more money than other facilities.
Of the amount levied by the hospitals, $2.4 billion would be placed back into the state's General Fund and used to fund children's healthcare coverage. That compares to the $1.2 billion contributed to children's coverage under the existing fee. That money would not be used to leverage federal matching funds.
“It's a continuation of a successful program we've had in place for four years. It's a vital part of the Medi-Cal program,” McLeod said. She added that the program helps mitigate the $5 billion a year the state's hospitals lose treating Medi-Cal patients.
Another $1.7 billion in leveraged funds may also be received to cover Medi-Cal enrollees who would enter the program as the result of expanded eligibility under the Affordable Care Act, accoring to McLeod, although whether that occurs has yet to be determined.
The Centers for Medicare & Medicaid Services would have to approve at least the portion of the plan to move the $2.4 billion into the General Fund, CHA officials said, assuming Gov. Jerry Brown signs the bill.
