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Officials still negotiating details of legislation needed to ease L.A. County Health Services shortfall

August 30, 2010 |  7:46 pm
State and federal health officials were still negotiating two key pieces of state legislation late Monday that would add a five-year extension to a federal Medicaid waiver set to expire Tuesday. It would also ensure funding from a hospital provider fee levied by the state on private hospitals and matched by Medicaid.

Los Angeles County’s Department of Health Services, facing a $600-million deficit from this and last fiscal year, had been counting on both sources of money.

The department expected to receive $144 million under the hospital fee legislation to help cover last year’s $200-million deficit, and $57.5 million for the first six months of this fiscal year. The state Senate approved the legislation last week and the Assembly was expected to pass it late Monday. Separate legislation would have to be proposed this fall to extend the fee next year, state officials said.
“We came pretty close to breaking even” last fiscal year, said John Schunhoff, the department’s chief. “But we still have a lot more to do for this year.”

Federal officials agreed Friday to extend the federal waiver for 60 days, ensuring that California receives about $255 million, but state and federal officials had yet to reach agreement late Monday on the state’s five-year waiver request for $10 billion, according to Gregory Franklin, deputy director of healthcare operations at the state  Department of  Health Care Services. Both state and federal officials said they expect to reach an agreement by Oct. 31, and state lawmakers have until Nov. 15 to act on the legislation.
Los Angeles County currently receives about $300 million annually from the waiver, but officials had hoped to receive an additional $150 million this fiscal year, Schunhoff said. Under the 60-day extension, they will receive $25 million less than expected.

Last week, state lawmakers approved legislation that the governor is expected to sign that will allow the new private nonprofit reopening of Martin Luther King Jr. Hospital in Willowbrook to receive Medi-Cal reimbursements of no less than 72% of inpatient costs.

Other private hospitals receive an average 67% in Medi-Cal reimbursement, according to Jim Lott, executive vice president of the Hospital Assn. of Southern California.

“As much as we want to see King hospital be successful, to carve it out as the exception in state law for the enhancement in the Medi-Cal rate is just not good policy,” Lott said. “There are many hospitals that are equally deserving of that treatment."

But public health officials praised the legislation.

“The area around MLK desperately needs services. Everybody right now should be thinking of everything they can do to support the reemergence of that hospital,” said Dr. Mitchell H. Katz, San Francisco’s public health director.

Schunhoff said the King legislation “helps to solidify the financial basis for the hospital going forward, even though it won’t open until early 2013. And we’re pleased that the provider fee seems to be nearing final approval. We just need to do well in terms of additional funding for the waiver in order to maintain our system.”

Schunhoff said he would present the latest plan to address his department’s deficit to the Board of Supervisors on Sept. 28. He said it was “too soon to tell” whether the plan would include layoffs.

-- Molly Hennessy-Fiske