March Recap of DHLF Activities

Following is a summary of the issues the DHLF has been focusing on in April.  Your feedback on all communications is welcome and encouraged.
Hospital Industry/SEIU Compromise

State Legislative Update

Low-Income Health Program (LIHP) –SB 1081 (Fuller, R-Bakersfield), the DHLF-sponsored bill which will modify the waiver terms/conditions to allow a public District hospital to become an MCE-LIHP contractor in counties that are both without a county hospital or are not interested in becoming a LIHP contractor.  The bill successfully passed the Senate Appropriations Committee earlier this week on a vote of 7 to 0.  The bill next will be heard on the Senate Floor and we hope to have it on the governor’s desk within a few weeks as it will become effective upon his signature (based on the urgency clause in the bill).
As reported last month, the California Primary Care Association (CPCA), representing clinics, wanted an amendment requiring a LIHP contractor to contract with “any willing provider.”  The compromise reached was including an amendment that will suggest (rather than require) a stakeholder meeting to be convened by a District hospital LIHP contractor including health plans, consumers, providers, etc.
Waiver Funding in Recognition of Uncompensated Care – A meeting was held with DHCS to discuss AB 2096 (M. Perez, D- Cathedral City), the DHLF-sponsored bill which will allow district and other non-designated public hospitals to use certified public expenditures to access 2010 Waiver funding in recognition of their uncompensated care.  DHCS provided some direction on determining calculations of the District hospital portion of public hospital care provided (specifically it was recommended to consider outpatient services), but did indicate a redirection of current funding would be challenging.  We’ve always known diverting any of the funds currently allocated to county/UC hospitals ($1.8 billion over the 5-year term of the 2010 Waiver currently allocated to these hospitals) will be challenging at best, but we remain committed to ultimately securing some funding for District hospitals and continue to explore all avenues that will result in this funding.
We also appreciate your grassroots support on AB 2096 in the form of support letters and will have follow-up requests on both of the above bills as they come up for a vote.
Other Bills Two other bills are garnered the Forum’s attention recently.

Advocacy Meeting with CHA and DHCS

The DHLF Executive Committee made a successful advocacy trip to Washington D.C. on March 14 to discuss District hospitals’ concerns with the 2010 1115 Waiver.  Individual meetings were held with staff of Senators Boxer and Feinstein and the Executive Committee also participated in a meeting that included staff of Representatives Issa and Hunter, as well as CMS and HHS representatives (both Central Office staff and Region IX staff via telephone).
These meetings provided an opportunity for the Forum to outline the District hospitals’ concerns with the Waiver.  These issues included participation in the LIHPs, as a contractor and/or being provided the ability to use certified public expenditures (CPEs), and participation in participation in the Safety Net Care Pool via CPEs for care provided to the uninsured.   Attached to this summary are the documents we used in the meetings on these subjects.
The feedback on the meetings received from both the Executive Committee and the representatives we met with was positive.  As a result, future periodic meetings with Congressional and CMS/HHS representatives will be a component of the DHLF’s ongoing advocacy strategy.

May Educational Session/Board Meeting

Please mark your calendars:  as discussed in the February Summary, the DHLF will combine the May Board meeting with an education session the day before (education session: May 16 / Board meeting: May 17).  Some of the issues on the agenda for the education session include California’s Health and Human Services activities and Health Benefit Exchange (invited speaker: Diana Dooley, Secretary of California Health & Human Services and member of the Exchange Board); charity care/uncompensated care reporting (for OSHPD, IRS and cost reports); compliance and claims review; Medi-Cal APR-DRGs, and a legislative and state budget update.  The agenda is being formalized and will be sent to you soon.  Additionally, we are inviting all District hospitals (including non-DHLF members) to participate in the May meetings.  These meetings will be held in Sacramento with the agendas to be sent in the near future.


As previously reported, DHCS has indicated they plan to continue to move forward with transitioning to APR-DRGs for Medi-Cal inpatient FFS reimbursement beginning January 1, 2013 (with a three-year transition).
Below is a proposal the DHLF is advancing relative to APR-DRGs, but the state’s proposal is anticipated any day now.  While some of the elements may be changed slightly, our understanding of elements to be included in the state’s final draft include (of interest to District hospitals):

  • A revised rural hospital definition to a “remote rural” defined as a hospital that is at least 15 miles in driving distance from the nearest general acute care hospital that has at least a basic emergency department.  (Four District hospitals – Healdsburg District Hospital, Pioneers Memorial Hospital, Oak Valley District Hospital, Palm Drive Hospital – would not meet the “remote rural” definition.
  • DRG base price – $6609
  • Remote rural DRG base price – $9772
  • Cost outlier pool – 11%
  • Cost outlier structure – symmetric high and low
  • Cost outlier threshold – $30,000
  • Relative weights – APR v. 29 national
  • DRG policy adjusters – 2.0 for neonates at hospitals operating a regional NICU; 1.25 for neonates at all other hospitals

The DHLF is preparing a proposal regarding the transition to DRGs and will be further refined and vetted with stakeholders, including DHCS over the coming weeks.  Components include:
District hospitals that currently either do or do not contract with CMAC and are located in “open areas” – This includes 31 District hospitals (29 non-contracting and 2 contracting) and the “open areas” are areas where the principles of competitive contracting do not apply (according to CMAC).  Hospitals in this category would continue to receive cost-based reimbursement.  This would address the hospitals that are not included in the “remote rural” definition as proposed by the State.
District hospitals that currently are located in “closed areas” (both contracting and non-contracting) – There are 13 District hospitals currently classified in these categories.  We are conducting several analyses to determine whether it would be beneficial for these hospitals to be exempt from the DRG system as newly designated public hospitals. This would result in the hospital using CPEs to draw down the federal share of Medi-Cal reimbursement, but it also would allow these hospitals to access other funds available only to designated public hospitals (uncompensated care and delivery system improvement funds).  Based on the results of the analyses, the move to designated public hospitals may prove to be a disadvantage for some District hospitals and beneficial to others, thus providing them with the option of being subject to DRGs.
We continue to join with other hospital organizations in advocating for a delay to the implementation of APR-DRGs, however DHCS appears very committed to their implementation date of January 1, 2013.

State Budget

Legislative budget committees have begun to meet and DHLF legislative advocates have provided testimony and written comment as follows:

  • Opposing the proposed reduction in reimbursement to FQHCs and RHCs participating in Medi-Cal managed care.
  • Opposing redirection of stabilization funding (new funds that were available in the 2005 Waiver) for all DSH-eligible hospitals, including approximately $1 million that would be directed to District hospitals.
  • Concern expressed regarding implementation of “operational flexibility” in the Medi-Cal program as details on this proposal are scarce and the budget does assign a savings to this item.
  • Concern expressed regarding proposed changes to Medi-Cal managed care:  1) improving care coordination for seniors and disabled Medi-Cal beneficiaries, including the dual eligibles by providing managed care plans with a blended payment consisting of federal, state and county funds along with the responsibility for delivering the full array of health and social services, including long-term care; 2) expanding Medi-Cal managed care into rural counties; and 3) transitioning children from the Healthy Families Program to Medi-Cal managed care coupled with a rate reduction in the Healthy Families Program.

Federal Advocacy – Provider Fees