maintaining a healthcare safety net for indigent californians medi-cal redesign waiver development...
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Maintaining a Healthcare Safety Net for Indigent Californians
Medi-Cal Redesign Waiver Development
Maintaining a Healthcare Safety Net:Securing Federal Medicaid Funding for Indigent Services
April, 2004
California Association of Public Hospitals and Health Systems
Medi-Cal RedesignPresentation Purpose
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To describe a proposal designed to maintain and protect healthcare access for Medi-Cal and medically indigent Californians
To respond to requests from key State officials to develop alternatives for providing more cost-effective and medically appropriate Medi-Cal healthcare services
To explore the potential use of local resources currently earmarked and expended for local indigent care as the state share of expenditures for services at public safety net facilities not normally recognized as Medi-Cal services
To build on a highly successful state and local partnership in obtaining federal Medicaid payments to protect and stabilize the public healthcare safety net and generate state savings
Medi-Cal Redesign Opportunities
Components of the statewide Medicaid Demonstration Project would be designed to:
Better protect healthcare access and promote coordinated systems of care for Medi-Cal and medically indigent patients
Stabilize and transform the public healthcare safety net
Better utilize existing local resources to increase federal Medicaid funding
Better navigate Medicaid payment limits and address uncertainty with current Medicaid inpatient payments
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Medi-Cal RedesignKey Safety Net Pressures Today
Steadily growing demand by vulnerable population for public healthcare safety net services
Funding sources at local, state, federal levels will either decline significantly or remain flat absent change
Significant expansion in Medi-Cal coverage has not been accompanied with Medi-Cal rate increases to ensure access to services
Rising labor, pharmaceutical, and supply costs
State and local budget crises
Widening expense and revenue gap
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Medi-Cal RedesignWhy Action is Necessary for Public Safety Net
Significant progress in implementing efficiencies and expanding outpatient services to low-income Californians needs to continue
Fiscal constraints are leading to service curtailments – current volume, scope, and intensity of services cannot be maintained without addressing structural financial threats
Medi-Cal payments are critical to ability to sustain services to medically indigents and to fulfill Welfare and Institutions Code (WIC) Section 17000 obligation
Heavy reliance on Medicaid inpatient payments juxtaposed with increasingly strict limits on IGT-financed inpatient payments to public safety net facilities
Increased reliance on the public safety net by high-cost Medicaid and uninsured Californians
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Source: OSHPD Annual Financial Disclosure Report 2002
Concentration of Hospital Care to Medi-Cal and Medically Indigent Patients
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Medi-Cal RedesignStatus of Public Hospital Safety Net Cont.
6%
94%79.3%
20.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
# of Hospitals
Hospital Costs Medi-Cal
35.2%
64.8%
Hospital Costs Indigent
All Other Hospitals
Public Hospitals
Medi-Cal Redesign Widening Expense-Revenue Gap
Expense-Revenue Gap at Public Hospitals and Health Systems
$7.0
$7.2
$7.4
$7.6
$7.8
$8.0
$8.2
$8.4
$8.6
$8.8
2002 2003 2004 2005 2006 2007
Bil
lion
s
ExpensesRevenues
Source: OSHPD Annual Financial Disclosure Report
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Status of Medi-Cal Inpatient Supplemental Payments
CMAC SPCP Supplemental Payments (1255, GME, 1732)
Transition to Medi-Cal Public Inpatient UPL to 100% Waiver expires December 2004 OIG skepticism over cost savings and policy debate over intergovernmental
transfers (IGTs)
SB 855 DSH Supplemental Payments
OBRA ’93 DSH cap at 175% OIG findings and policy debate over IGTs Administrative issues
Structural reforms needed to respond to these pressures
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Current payment structure severely limits Medi-Cal payments to public hospitals and health systems.
Medi-Cal Redesign CAPH Proposal Components
Pursue a Medicaid match for indigent services in public safety net facilities under a statewide Medi-Cal 1115 demonstration project
Design coordinated systems of care for both Medi-Cal and indigent populations
Develop local indicators of access and care coordination for both Medi-Cal and indigent populations
Ensure continuance of SPCP supplemental payments
Restructure SB 855 DSH cap for public hospitals to ensure receipt of Medicaid match for indigent services
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These proposal components in the Medicaid demonstration are designed to demonstrate:
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Medi-Cal Redesign CAPH Proposal Objectives
Coordinated systems of care for all low-income groups result in efficient and economical provision of Medi-Cal services
Support of public safety net infrastructure results in broader access to appropriate and cost-effective care for Medi-Cal services
Reduction in inappropriate emergency room and inpatient services can be obtained without financial penalty to public hospitals and health systems
Increased quality and a reduction in the burden of disease for all low-income populations can be obtained
Medi-Cal Redesign Structure of Indigent Care Match
New Medicaid payment (state share and federal match) for indigent care provided at public safety net facilities and coordinated by county health systems
Potential use of current Realignment funds as state share of Medicaid indigent payment -- $850 million currently provided to public hospitals alone
Local flexibility in developing and administering the healthcare delivery structure, designed to assist localities in maintaining current level of WIC 17000 responsibilities
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Medi-Cal Redesign Flow of Indigent Care Match
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Maximum number of indigent patients to be served under each project and appropriate payment amount will be prospectively determined
County will have option to voluntarily redirect a portion of Realignment payments to fund state share of a Medicaid payments to serve these patients
County will be responsible for receipt of new Medicaid indigent payment, coordinating care and managing the program at the local level
Periodic payments will be made as services are rendered to indigent patients up to prospectively determined maximum
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Medicaid Demonstration Indigent Care Project Payment(State and Federal match)
CurrentIndigent CareCounty Support
CurrentCounty IndigentHealthcare Services
Medi-Cal RedesignFlow of Indigent Care Match
Cont.
Proposed Flow of Payments to Public Safety Net Facilities
Portion of RealignmentFunding
Cur
rent
R
eali
gnm
ent
Fun
ding
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Medi-Cal Redesign Indigent Care Match Promotes Transformation
Helps further transition patient care toward coordinated care model for both Medi-Cal and indigent populations that emphasizes high-quality, efficient primary care and secondary care, in conjunction with viable teaching hospitals providing necessary tertiary care
Helps financially stabilize the public healthcare safety net
Improves access to specialty care
Promotes development and maintenance of personnel and resources to support new healthcare delivery systems.
Helps ameliorate the financial penalty to public hospitals that currently flows from reducing inpatient services
Medi-Cal Redesign Indigent Care Match: Key Structural Elements
Sizing of local program must be consistent with and related to current level of services provided by public healthcare safety net facilities
New payments must be directed to public healthcare safety net
Program cannot become an insurance product or an entitlement program
Localities must have the flexibility to define scope of services subject to resources and appropriate utilization limitations
Level of program funding must be predictable and stable
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Clear designation of target population for services under the program
Statewide Medi-Cal Demonstration Project, including new Medicaid indigent payments, must meet federal budget neutrality requirements
Program must include special treatment of new Medi-Cal indigent care revenue in, or relief from, the SB 855 DSH cap for public safety net hospitals
Medi-Cal indigent payments will help offset any declines in IGT-funded supplemental payments
Medi-Cal Redesign Indigent Care Match: Key Structural
Elements
Work paper under development
Continued financial analysis and modeling
Proposed expansion of the current close working relationship with the State to include this proposal
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Medi-Cal Redesign Indigent Care Match – Process
Ongoing CAPH activities include:
Promoting coordinated systems of care for both Medi-Cal and indigent populations
Stabilizing and transforming the public healthcare safety net
Obtaining appropriate levels of Medicaid federal financial participation
Implementing structural change to address pressures on public hospital Medi-Cal payments
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Medi-Cal Redesign Indigent Care Match – Conclusion
This proposal seeks to build on the highly successful state and local partnership in obtaining federal Medicaid payments to protect the public healthcare safety net and generate state savings by: