Protecting our seniors is the right thing to do from both a health care and economic perspective. That is why Republicans and Democrats are working together to reverse Medi-Cal cuts to hospital-based skilled-nursing facilities.

Here’s some background and history demonstrating why we must act.  Skilled-nursing care tied to hospitals is different from that of a traditional nursing home.  Treatment options are more specialized and patients, depending on their condition, can receive targeted care that can lead to their discharge and an independent life at home once again. These facilities are tremendous assets, and because they’re so specialized, hospital-based skilled-nursing services are in great demand, far beyond current capacity. 

In 2011, as California faced a deep budget deficit, state government passed a 10 percent across-the- board cut to Medi-Cal payment rates.  In the case of the skilled-nursing facilities, the cuts were effectively much deeper, 25-40 percent, because the cut was applied to the Medi-Cal reimbursement level from 2008. Imagine if your boss reimbursed you for gas, but did so based on the price of gas five years ago.  Then imagine if they reduced that amount by 10 percent.  In December 2008, gas cost $1.61 a gallon, so you’d only be getting $1.45 for what now costs more than twice that amount.

These cuts threaten the very existence of hospital-based skilled-nursing care throughout California, and have prompted an effort by hospital leaders to block the cuts in the courts.  That put the cuts on hold.  If they were allowed to go forward, the state would then look to “clawback” payments to hospitals made in the interim.

Fast forward to today.  Lower courts have ruled that the cuts should stand, so the state was preparing to implement the cuts, plus demand the back payments from 2011 to the present.  This, despite an improved economy that has given the state a chance to make targeted investments that protect vital services.

Hospitals across California faced unpalatable choices.  In San Diego, Palomar Health announced in July that it would close its 96-bed facility, and I am also greatly concerned about the Edgemoor Distinct Part Skilled Nursing Facility, which is operated by the County of San Diego. It’s not just a regional problem; hospitals across California are facing closure or deep cutbacks.  The dominoes have begun to fall.

This mandate is a huge economic issue as well.  A recent white paper from the California Hospital Association noted that California would cost 36,000 jobs, $2 billion in economic activity and deliver a potential $252 million hit to the State General Fund.  That’s because the state would force patients to find placement in a less efficient and more expensive alternative facility.  In this instance, it costs more to make the cuts than to reverse them.

As mentioned, support for reversing these cuts is bipartisan.  Assemblymember Luis Alejo (D-Salinas) authored AB 900, which is designed to reverse the Medi-Cal cuts. AB 900 passed 76-0 out of the Assembly and then 8-0 in its first committee in the Senate.  Not a single “No” vote has been cast against it.  Legislative momentum was undeniable.

Thankfully, last week the California Department of Health Services announced that rural hospitals would be exempted from the cuts and that their reimbursement rates would no longer be frozen at 2008-09 payment levels.  This was a tremendous step in the right direction as the state recognized the need to preserve access to this specialized care.

But there is still work to be done. The retroactive cuts that still apply to all facilities and hospitals in urban areas are still facing the deep cuts.  The issue of access to the most efficient and effective health care services isn’t based on geography.  If not addressed, there will be more facilities in some of California’s most populous areas that could close like Palomar in San Diego. We will be displacing our parents and grandparents, hurting them while at the same time costing the state billions in jobs and economic repercussions.

I’m committed to working with my colleagues and the Governor to continue our progress and achieve a solution that respects our seniors, protects taxpayers and allows California to provide access to quality, efficient health care.