Media Statement

California Hospitals Praise Governor Schwarzenegger
Assemblymember Dave Jones played critical role in ensuring passage of AB 1653

California’s community hospitals commend Governor Schwarzenegger for signing a key piece of legislation that will bring more than $2.6 billion in new net federal funds to California’s beleaguered Medi-Cal program.

AB 1653, authored by Assemblymember Dave Jones (D-Sacramento), makes the statutory changes necessary to receive federal approval of California’s hospital fee program. The bill was passed overwhelmingly by both houses of the Legislature last week. AB 1653 amends previous legislation (AB 1383, Jones) authorizing the state to assess a fee on California hospitals. The fee, which covers a 21-month timeframe (April 1, 2009 – December 31, 2010) will be used by the state to generate new matching federal funds for the Medi-Cal program without tapping into the state’s General Fund.

California’s Medi-Cal program provides essential health care services to the poorest and most vulnerable Californians. Yet, the state ranks last in the nation when it comes to funding health care for these patients. In 2009, California hospitals lost $4.6 billion in actual costs for treating patients enrolled in Medi-Cal. The new federal funds generated by the hospital fee will be distributed to hospitals as supplemental Medi-Cal payments. These new monies will cover nearly half of the losses hospitals sustain as a result of Medi-Cal payment shortfalls.

Although the original legislation was enacted last year, federal approval is required before the fee can be implemented. For the past several months, representatives of the federal Centers for Medicare and Medicaid Services (CMS) have been reviewing the details of the hospital fee program with state officials. During its review, CMS determined that a number of technical changes were needed in order for the hospital fee program to gain federal approval. AB 1653 implements these necessary changes.

California’s hospitals appreciate the leadership shown by both Governor Schwarzenegger and Assemblymember Jones in enacting AB 1653.