Newly-Signed Budget Improves State's Fiscal Health; One Piece of Unfinished Business Remains

Deep Cuts to Medi-Cal Providers Must Be Reversed to Prevent Holes in Safety Net

Jun 27, 2013, 14:57 ET from California Hospital Association

SACRAMENTO, Calif., June 27, 2013 /PRNewswire-USNewswire/ -- As the ink dries on the newly-signed state budget, Governor Brown and state lawmakers have taken a significant step forward in improving California's fiscal health.  This year's on-time, balanced budget hopefully sets the groundwork for a new era in collaborative governance between the Executive and Legislative branches of state government.

Yet, one piece of unfinished business remains.

Hospital-based skilled-nursing facilities across California are making plans to cut back services and even close facilities, due to the state budget's failure to reverse devastating Medi-Cal payment cuts.  Those cuts tear a hole in California's safety net and punish frail and elderly patients and their families.

The great unfinished business of the 2013-14 budget is the need to make a strategic reversal of the Medi-Cal cuts to hospitals, doctors, pharmacists, dentists and other health care providers. At least part of the answer is contained in AB 900 (Alejo), which passed the Senate Health Committee last week on a bipartisan 8-0 vote.  The measure provides some limited relief to hospital-based skilled-nursing facilities, although it leaves retroactive cuts in place and doesn't address the cuts to other health care providers.

"Restoring these funds to all health care providers is critical to preserving access to quality health care and protecting our most vulnerable patients," said C. Duane Dauner, President/CEO of the California Hospital Association (CHA).   

Hospital-based skilled-nursing facilities face cuts ranging from 25 percent to 40 percent, since these cuts are based on rates in effect in 2008 and are retroactive to 2011.  In the past five years, nearly one-third of these facilities have already closed due to economic pressures, reducing options for those who need specialized care.

For now, health providers like Eastern Plumas Health Care in Plumas County are faced with untenable choices.  Providers there are making plans to eliminate services, including closure of skilled-nursing facilities that would displace 50 patients and force families to find new care hundreds of miles away.

"I think it's a heartless act for our seniors and our community to cause this much pain and mental anguish," Eastern Plumas CEO Tom Hayes said of the pending cuts.

In Hollister (San Benito County), Hazel Hawkins Memorial Hospital also is making plans to shut down a 70-bed facility.  In Coalinga (Fresno County), Coalinga Regional Medical Center has informed patients that it is preparing to start the closure process.  That would affect 77 patients and nearly 250 jobs.   In Shasta County, Mayers Memorial Hospital has already sent a letter to the state, notifying it that the closure process has begun for facilities in Fall River Mills and Burney. More than half of the employees there face layoffs.

And, in San Francisco, nearly 1,000 frail and elderly patients who are cared for at two hospitals — 400-bed Jewish Home and 780-bed Laguna Honda Hospital — are at risk of losing the health care services they rely upon.  In fact, Jewish Home has already issued layoff notices and is contemplating a financial reorganization.

Restoring the cuts also is the fiscally prudent thing to do, according to a recent economic issue brief prepared by CHA.

CHA's analysis shows that 36,000 jobs could be lost statewide.  In addition, the CHA analysis found, the overall ripple effect stemming from these cuts could result in a $2 billion economic erosion to the state's economy.  

CHA, along with a broad coalition of other health care providers, is urging lawmakers and the Brown Administration to take advantage of the improved budget picture by expanding AB 900 to all health care providers and to eliminate the retroactive "clawback" provisions stemming from the 2011 (AB 97) legislation.

SOURCE California Hospital Association