New bill to address Medi-Cal payment shortfalls

The following is a media statement by C. Duane Dauner, President, California Hospital Association:

California's Medi-Cal program provides essential health care services to the poorest and most vulnerable Californians. Yet, the state ranks dead-last in the nation when it comes to funding health care for these patients. In 2008, California hospitals lost more than $4.2 billion in unpaid Medi-Cal costs.

To address these catastrophic Medi-Cal payment shortfalls, the California Legislature late last week enacted AB 1383 (Jones, D-Sacramento; Alquist, D-Santa Clara). The bill, which is sponsored by the California Hospital Association, the California Children's Hospital Association and Daughters of Charity Health System, will bring to California more than $2 billion annually in new federal funds through the assessment of a provider fee on California hospitals. There is no cost to the state General Fund or to taxpayers. Because of the state's dire fiscal situation, the hospital provider fee is the only practical way to generate the required state funds necessary to obtain matching federal Medicaid dollars. The additional monies will be used to increase Medi-Cal payments to hospitals. Additionally, the hospital fee will provide the state with $320 million annually for children's health care coverage.

It is essential that AB 1383 be signed into law immediately in order to take advantage of a one-time enhanced federal match that was contained in the federal economic stimulus package. The enhanced matching rate of federal to state dollars (68 percent to 32 percent) expires on December 31, 2010.

AB 1383 reflects the results of a delicately balanced, negotiated agreement among all of the stakeholders, including the Schwarzenegger Administration. The final version of the bill includes amendments that were requested by the Governor's office to provide the state with the necessary flexibility to protect the state General Fund and adjust the methodology for setting the fee assessed on each hospital to conform to federal requirements.

California's hospitals urge Governor Schwarzenegger to immediately sign AB 1383 into law.