Media Statement

California Hospitals Disappointed by Budget Proposal to Reduce Medi-Cal Funding to Hospitals
Proposal Will Cut Nearly $86 Million to Hospitals in State, Federal Matching Funds

The Jan. 5 release of the Governor’s proposed 2012-13 state budget offers a glimmer of hope that an upturn in California’s ongoing fiscal crisis may be on the horizon. Given the projected $9.2 billion deficit for the coming fiscal year, however, a balance of revenues and expenses is required to address the state’s short- and long-term budget challenges.

The Administration’s proposal to redirect nearly $43 million from private and non-designated public hospitals is disappointing.  These stabilization funds were intended to cover costs already incurred by hospitals.  And, because these funds are matched by federal dollars, the loss to hospitals would be almost $86 million.

The state also has proposed reforming the payment methodology for rural health care clinics, moving from a cost and volume-based payment to a risk-based payment system that promotes efficiencies and better outcomes.  This change, while well-intended, may pose some operational challenges for these small rural providers who have limited resources.

The state’s proposal to improve care coordination for seniors and persons with disabilities is good public policy, but the actual process to transition these individuals to managed care plans must be done carefully so that patient care is not compromised or interrupted.  CHA looks forward to working closely with the Department of Health Care Services (DHCS) to ensure that adequate care provider networks are in place, especially for dual eligible beneficiaries (those covered by both Medi-Cal and Medicare) and the transition is handled smoothly.

These are trying times. California’s hospitals recognize that sacrifices are necessary, but we urge state leaders to ensure that our most vulnerable patients are not harmed in the process of balancing the budget.