Uncompensated Care to the Remaining Uninsured in California’s Public Hospitals

Uncompensated Care to the Remaining Uninsured in California’s Public Hospitals

California’s 2020 waiver requires an analysis of the financing of uncompensated care to the uninsured in California’s public hospitals. At risk is ongoing federal funding for the safety net care pool (SNCP). The recent report by the Navigant Consulting Group provides excellent insight into financing of care for the remaining uninsured and arguments that can be made both for and against continued federal financing of the SNCP (about $236 million annually). SNCP was funded for one year only pending this report and the continuing negotiations with the federal government based on its findings and conclusions.

To give some context to this discussion, SNCP under the past (2010-15) waiver paid for a variety of programs: 1) care to the uninsured in public hospitals, 2) DSRIP improvements in the quality and safety of care in public hospitals, 3) care to the uninsured in designated State Health Programs (e.g. CCS or GHPP) and 4) the Health Care Coverage Initiative for county coverage of the uninsured with incomes between 133% and 200% of poverty. Total funding for all these components was just over $2 billion, of which 70% was for DSRIP. The 2010-15 waiver had a series of matching offsets or discounts to assure that Medi-Cal funds were not used for non-emergency care to the undocumented.

The new (2015-2020) waiver transforms DSRIP into PRIME. The major focus of PRIME is to beef up the quality and quantity of Public Hospitals’ outpatient care and improve integration of their care to the Medi-Cal managed care population.

Under the new waiver, DSH and SNCP would be merged into a single program to pay for care to the remaining uninsured; the focus of GPP (Global Payment Program) is a managed care like balanced and accountable delivery system for the remaining uninsured. It moves county hospital systems towards primary care and prevention and away from emergency room centric care. DSH and SNCP in the past were primarily linked to hospital based care; GPP will broaden the scope and delivery of care outside institutional settings just as the LIHP (Low Income Health Program) did in the 2010-15 waiver. The federal financing for GPP will be a combination of DSH and SNCP. So this report and the subsequent negotiations are key to the federal decision as to how much if at all the SNCP component of GPP continues to be funded. SNCP will be phased out and discontinued at the expiration of the 2020 waiver.

The report finds that in 2013-14 the public hospitals provided 1.9 million inpatient days, of which 930,046 (49%) were Medi-Cal days, and the uninsured days were 163,304 (8.5%). Public hospitals are defined for these purposes to include both the county hospitals and the UC hospitals some of whose patient mix is very different from county hospitals.  The percentages of care to the uninsured by county hospitals vary greatly by county: Alameda (Highland) = 14.8% uninsured days, Arrowhead (San Bernardino) = 9.3%, Contra Costa = 7.5%, Kern 7%, Los Angeles = 15.7%, Natividad (Monterrey) = 3%, Riverside = 6.2%, San Francisco = 8.8%, San Joaquin = 6.8%, San Mateo = 21.6%, Santa Clara = 6.8% and Ventura = 12.2% uninsured days. The percent of uninsured inpatient days in UC facilities is also widely divergent by facility; UCLA at one contrasting pole provides only 0.8% of its total days of care to uninsured patients; while 9.4% of UC San Diego inpatient days are to otherwise uninsured patients. Unfortunately the report does not have any extensive or comparable data or information on care in county clinics – either in free standing community settings or linked to the county hospital. Riverside and San Francisco counties have extensive county operated clinic networks. Los Angeles and Alameda are exemplary in operating their own clinics and funding local community clinics for an integrated delivery system to the uninsured county indigent.

How are the county systems doing? The report looks at the ratios of payments to costs for three groups of patients: Medi-Cal fee for service, Medi-Cal managed care and uninsured. For Medi-Cal fee for service the ratio was 107%; for Medi-Cal managed care, the ratio was 109%, and for the uninsured the ratio was 113%. In other words, public hospital systems’ financing appears to be in the black for each of these populations. That look may be somewhat deceiving.

The report looks at the percent of the state/local Medi-Cal match paid by the institutions themselves (83%) and the percent paid by the state (17%). In other words the state of California is paying 1/6th, and the county and UC hospitals are footing 5/6th of the state/local match. Public hospitals are thus exceedingly dependent on local financing of the Medi-Cal match – a narrow and insecure base.

The report re-analyzes payment to cost using two alternative scenarios. Under the first scenario which discounts both local CPEs (Certified Public Expenditures0) and IGTs (Intergovernmental Transfers), the payment to cost ratio is 71%. In other words without local provider IGTs and CPEs, these institutions are $2.7 billion in the red. This highlights the crucial importance of the local political willingness to continue to sustain these public systems. Under the second scenario which adjusts DSH by 175% consistent with a California specific federal law, their payment to cost ratio is 98%; these institutions under this scenario are $225 million in the red.

The report closes by pointing out additional perils for safety net hospitals in that DSH payments are scheduled to be cut by 50% beginning in 2018 and the federal match for the new eligibility categories will decline from 100% now to 90% by 2020, for which match public hospitals may well be on the hook in their own institutions.

It does not discuss the implications of the massive 5-6 million growth in Medi-Cal enrollment between December 2013 and the present, as the report only looked at data from the 2013-14 budget year. It does not analyze whether the public hospitals are retaining or losing patient market share as they must now compete in the Medi-Cal managed care markets for patients who were previously county indigent. These are critical pieces of information for an informed decision.

The report lacks urgently needs a follow up, supplement or addendum on outpatient care and financing in these public systems. Some public systems in the past devoted very little of their resources to free standing locally accessible county clinics for the uninsured; others were extensive. Utterly overlooked in the waiver are the four to five counties that operate public clinics (but not hospitals) that care for the uninsured; in these counties, there are substantial unmatched local expenditures for their care to the remaining uninsured. Counties need to make a strong case on how would and will California’s public systems make progress if the SNCP funds were approved?

See the Navigant report at http://www.dhcs.ca.gov/provgovpart/Documents/Waiver%20Renewal/CA_UCP_Report_Final.pdf?utm_source=May+2016+Newsletter&utm_campaign=May+2016+Newsletter+&utm_medium=email.


Prepared by: Lucien Wulsin

Date: 6/2/16



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