The Allan Zaremberg article on the hospital provider fee, AB 1383 (Jones/Alquist) is both inaccurate and misleading. I am responding because the preservation of the health care safety net is at stake.
California hospitals lost $4 billion last year due to Medi-Cal underpayments—nearly double the losses since 2004. We rank 50th in Medi-Cal reimbursement rates (51st if we count the District of Columbia). Because California has been unable to meet the federal match requirements the state now leaves almost $2 billion federal dollars a year unclaimed. There is zero possibility of being able to meet the match in the foreseeable future. But there is an established process to bring those federal funds into California without cost to taxpayers, hospitals or patients.
Twenty two other states use the same hospital provider assessment proposed by AB 1383 to increase reimbursements. This is a cost effective, proven method to address the problem, with no cost to the general fund, to taxpayers, to patients or to hospitals.
Nor are there any costs to pass on. 90% of California hospitals make money under the proposal. 10% of the hospitals who do little or no Medi-Cal are net contributors to the program. They are fully reimbursed through a private contract with the other hospitals. They do not lose one penny.
The crisis for hospitals and patients is acute. Without additional reimbursement, hospitals have had to reduce capacity or close services. Consequences of these devastating actions are not limited to Medi-cal patients. Services to all patients will be limited or eliminated.
California is at a cross roads in determining the level of services and infrastructure support that will be provided to this and to future generations. It is clear that much of the governmental support that will be provided will need to be based on something other than new or increased taxes. That brings us back to AB 1383.
Legislative counsel has said that the provider assessment under AB 1383 is in fact a fee under the Sinclair case. In short, AB 1383 is exactly the type of financing that is important in California today.
AB 1383 also takes advantage of the federal government’s increased share of the funding for the Medicaid program under the economic stimulus package. During 2009 and 2010 the federal government will match 62% of Medi-Cal costs, up from 50%. This reduces the amount that hospitals need to generate through the provider fee to draw down the federal funds.
Now, what exactly was the downside of the hospital provider fee proposal?