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HomeMy WebLinkAboutMINUTES - 12221986 - T.1 Phil Batchelor The Board of Supervisors Contra Clerk of the Board and County Administration Building Costa x(415Administrator 372-237t toy 651 Pine St., Room 106 County Martinez, California 94553 Tan Powers,tst DistW Me"C.Fanden,2nd DWrict ftbert I.Schroder,3rd District Sunne Wright IlePeak,4th District Tan Torlakson,5th District OD NOTICE OF SPECIAL MEETING OF THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, STATE OF CALIFORNIA TO WHOM IT MAY CONCERN: NOTICE IS HEREBY GIVEN that, pursuant to Government Code Section 56965 , the Chairman of the Board has called a special meeting to . discuss and determine what actions need to be taken relative to pending State Government actions regarding Medi-Cal and related health matters including consequences to this County. The meeting will be held on Monday, December 22, 1986 , at 10 :00 a.m. , in the Board Chambers, County Administration Building, 651 Pine Street, Room 107 , Martinez, California. By Order of Chairman Tom Powers Phil Batchelor, County Administrator and Clerk of the Board of Supervisors By Deputy Clerk Dated: December 19, 1986 2 :00 p.m. THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on December 22, 198F by the following vote: AYES : Supervisors Fanden, Schroder, McPeak, Torlakson and Powers NOES: None ABSENT : None ABSTAIN: None SUBJECT : OPTIONS FOR BOARD .ACTION IN RESPONSE TO PROPOSED STATE REDUCTIONS IN MEDI-CAL REIMBURSEMENT The Board of Supervisors called a special meeting of the Board of Supervisors for Monday, December 22, 1986, at 10 : 00 A.M. in the Board Chambers to hear a report . from the County Administrator and Health Services Director regarding cutbacks in the Medi-Cal Program which are under consideration by the Director of the State Department of Health Services pursuant to authority vested in the Director under Welfare & Institutions Code Section 14120. The Board received the attached report from the Health Services Director and received verbal comments from the County Administrator. The Board Members discussed the matter and suggested various actions which might be taken in an effort to impress on . the Governor and the Legislature that the State' s Reserve for Economic Uncertainties should be used if there is an unexpected deficit in the Medi-Cal Program rather than imposing reimbursement limits on the County and private medical community. Following this discussion, the following motion was adopted unanimously: IT IS BY THE BOARD ORDERED that: The Health Services Director is authorized to outline options the Board of Supervisors could take if the State proceeds with the proposed 10o reduction in reimbursement for certain Medi-Cal services and the implications of implementing each of these options and report his conclusions and recommendations to the Board at an appropriate time. 1hereby CWMY thot this is a true and correct copy of an actin takon orad mitered on the minutes of the Board of SuPervtsoj�on t6ye is�hovm ATTESTED: PHIL BATCHELOR,Cie*of the Board of Supervisors and County Administrator � Oepr11Y cc: County Administrator Health Services Director ••..o CONTRA COSTA COUNTY HEALTH SERVICES DEPARTMENT - T-C.-•.iii. To: Phil Batchelor and the Date: December 19, 1986 Board of Supervisors A4,41, From:Mark Finucane Subject: ReductionsMedi -Cal Health Services Director On December 17, 1986, Dr. Kenneth Kizer, Director of the Department of Health Services, Steve Merksamer, Chief of Staff to Governor Deukmejian, and Jess Huff, Director of the Department of Finance, called a special meeting in Sacramento to advise health care representatives of proposed reductions in the Medi-Cal Program. The State Department of Finance is now estimating a deficit in the Medi -Cal budget of $280.7 million by the end of June, 1987. This short- fall was the result of an apparent underbudgeting of Medi-Cal expenditures. Enclosed materials from the State provide details on this deficit. In response to this deficit, the State Health Services Director is contemplating invoking Sections 14120 and 14103.4 of the Welfare and Institutions Code. These sections allow the Director, in response to a deficit situation in the Medi-Cal budget, to impose a 10% rate reduction for providers inthe fee-for-service Medi-Cal system. This rate reduction will be effective February 1, 1987, and will apply to all types of providers, including physicians, clinical labora- tories, optometrists, psychologists, outpatient clinics, hospital outpatient departments, medical transportation providers, home health agencies, dentists, Child Health Disability Prevention Services, and many other providers. Providers not subject to the 10% rate reduction are those who are under legal or contractual arrangements with the State, and include long term care providers , prepaid health plans (such as our own) , hospital in-patient providers (Medi-Cal contract hospitals) , and Short-Doyle/Medi-Cal providers. In addition, the W&I Code allows for the delay of elective procedures beginning February 1, 1987. These include all services generally considered not to be immediately necessary to protect the life of the individual , or to prevent significant disability or pain. The Code allows for a ninety day delay in pro- viding those services. These are services which normally require a Medi -Cal Treatment Authorization Request (TAR) . My staff and I have major concerns regarding the impact of these proposed reduc- tions on our Department and on the community. These concerns are as follows: 1. The preliminary estimate of the revenue loss for the Health Services Department is: Fiscal Period 1986/87: $ 202,723 Fiscal Period 1987/88: $ 342,537 A-41 3/81 - 2 - Phil Batchelor and the Board of Supervisors These estimates are without knowledge of how long the provider rate decrease will continue and without knowledge of how long the postponement of elective services will continue. The FY 87/88 estimate of revenue loss does not include the loss due to postponement of elective surgery. (A preliminary breakdown of revenue loss estimates is attached. ) 2. We do not yet have confirmation that the Governor will restore the $25 million to the MIA budget. We therefore continue to be at risk for approximately $500,000. Absorbing this reduction in addition to the above reductions will be devastating. None of the State 's actions should divert our attention from the pressing need to restore the $500,000. This money is budgeted and depended upon by the Department. 3. I am concerned about the potential impact of these rate reductions on the willingness of community providers to continue to provide medical services for Medi-Cal beneficiaries. The net result is very likely to be referral of more Medi-Cal patients to our system. Our Department could be forced to absorb more patients with less money, given the above scenario. 4. Undoubtedly these reductions will be extended to our Prepaid Health Plan rates when they are renegotiated in July. As you know, this fiscal year we only received an overall .9% increase of the Health Plan rates. 5. We are concerned that our current efforts to renegotiate our Medi-Cal in- patient per diem rate will be affected by the State's action. Our FY 86/87 budget includes what we anticipated to be a modest increase in that rate. 6. Although there is no reduction in the Medi-Cal per diem rate at this time, a revenue loss will occur with the delays in elective surgeries. Our greatest concern is that these reductions are only a precursor to more Medi-Cal cuts in' 1987/88. At the same time they announced these problems, the Governor's staff expressed their goal of "restructuring" the Medi -Cal program. We take "restructuring" to mean cutting. We are therefore making the following recom- mendations to the Board: 1. Consider reducing by 10% the payments we make for Health Plan enrollee out- - of-plan expenses. 2. Authorize the County Administrator, the Health Services Director, and County Counsel to consult with other counties and outside counsel with regard to filing a joint suit against the State over this action. 3. Authorize the County Administrator to direct our lobbyists to explain to the legislature the severity of these reductions and to urge restoration of them and of the remaining $25- million in MIA money. 4. Direct the Department to prepare a position paper for the Board of Supervisors to be presented to the CSAC Board of Directors who are meeting on January 15th. - 3 - Phil Batchelor and the Board of Supervisors 5. The Board should prepare a direct communication to the Governor, the Chief of Staff, the Finance Director, the Director of Health Services, and our legislative delegation with regard to the severity and impact of these reductions. 6. The Commission on California State Government Organization and Economy (Little Hoover Commission) heard testimony on December 4, 1986, with regard to the impact of the Medi -Cal reform legislation of 1982. Much of that testimony had to do with the difficulty of providing services at the Medi-Cal rates of reimbursement. The reductions will obviously exacerbate the conditions noted in that hearing. The Board should communicate directly with the Little Hoover Commission urging them to take into account these recent reductions in preparing their recommendations. MF : j e f CONTRA COSTA COUNTY HEALTH SERVICES DEPARTMENT Mark Finucane, Director To: Health Services Department Date: December 18, 1986 From: Patrick Godley, Chief Subject: Financial Officer MEDI-CAL REDUCTIONS We have reviewed the impact of the proposed 10% Medi-Cal reduction; the following is our estimate based upon the information known at this time: Revenue Loss Enterprise Fund I Fiscal Period Fiscal Period 1986/87 1987/88 Hospital and clinics - Medical Services: Includes M.D.s; outpatient $ 128,082 $ 307,397 services, and dental ; assumes ancillary reim- bursement is reduced at the 10% rate. - Elective Services: The postponment of services $ 60,000 Unknown will decrease the amount of days reimbursable during the 1986/87 fiscal period; it is unknown to what extent, if any, the days will be recap- tured in 1987/88. Enterprise Fund II Health Plan Exempt from curtailment; N/A N/A unknown regarding out-of-plan payment reduction to outside vendors A-41 8181 -2- A/DA/MH Exempt from curtailment. Psy- N/A N/A chologists are identified for reduction but are assumed to be exempt under S/D provider status. Public Health - Home Health Agency. Assumes $ 9,050 $ 21,721 across-the-board reduction for all disciplines. - Child Health and Disability $ 5,591 $ 13,419 Program. Environmental Health/Detention Facility - No Impact N/A N/A California Children' s Services Under Review Department Total : $202,723 $342,537 J J986-87 MEDI=CAL STATUS REPORT MONTH ENDING 10/1986 �c/O ✓. CUMULATIVE PAYMENTS - STATE/COU.lTY FL,NDS FY 1986-87 _ PROGRAM BUDGET SURPLUS/ X SURPLUS! ITEM-4260-101(b) APPROPRIATION ACTUAL DEFICIT(-) DEFICIT(-) PROFESSIONAL $1489107,000 $153,398,700 $5,291,700 -3.57 Physicians $86,531,600 $879291,500 -$759,900 -0.88 Other Medical $23,618,100 $25,616,700 -$1.998,600 -8.46 Hospital Outpatient $37r957r300 $40,490,500 -$2,533,200 -6.67 HOSPITAL INPATIENT $2329000,900 $240,902.300 -$8,901,400 -3.84 DRUGS $53,095,500 $62044,800 -$9,349,300 -17.61 LONG-TERM CARE $175,S32r200 $173,250,600 $2,281,600 1.30 Skilled Nursing Fac. $158,063,300 $1559,720,000 $2,3439300 1.48 Intermediate Care Fac. $17068,900 $17,530,600 -$61,700 -0.35 OTHER SERVICES 1 $14,666,700 $15,408,500 -$741,800 -5.06 Medical Transportation $6,121,700 $5,919,900 $201,800 3.30 Other Services $7,293,200 $7,769,200 -$476,000 -6.53 Home Health $1,251,800 $1,719,400 -$467,600 -37.35 DENTAL $15,690,300 $15,9529800 -$262,500 -1.67 REDWOOD $8.182,600 $7,828,800 $353,800 4.32 PHP $41.018,800 $41,129,200 $110,400 -0.27 AUDITS $ LAW_ SUITS $108,300 $117,600 -$99300 -8.59 { EPSOT $5,933,200 $6,702,400 -$769,200 -12.96 BUY-IN $23,258,200 $21,103,400 $2,154r800 9.26 STATE HOSPITALS $57,716,100 _$63,707,800 -$51991,700 -10.38 MISC. NON-FFS $49684,300 $3,525,400 $11158,900 24.74 RECOVERIES -$7,635,800 -$7,766,500 $130,700 1.71 CO. ORG. HEALTH SYS. $4,670,300 $5,730,600 r -$1,060,300 -22.70 SHORT-DOYLE (4440-101) $0 $0 $0 - - REIMBURSEMENTS -$7,210,600 -$8r879,100 $1,6669S00 23.14 POTENTIAL VARIANCE -$38,257,900 $0 -$38,257,900 - - SUBTOTAL $731,560,100 $794,557,300 -$62,997,200 -8.61 ITEM-4260-101(b) ---------------------------------- --------------- ABORTIONS (4260-105) $10,509,600 $9,717,300 $792,300 7.54 F.I. ADMIN!. (4260-101(c)) $4,755,600 $4,334,500 $421,100 8.S5 CO. ADMIN. (4260-101(a)) $20,357,600 $19x556,,100 $601,200 3.94 REIMBURSE (FI R CO ADMIN!) -$150:800 -$469300 -$1041500 -69.30 GRAND TOTAL MEDI-CAL $767,032,100 $828,119,200 -$61,087,100 -7.96 MOTE: Excludes interim payments charged to the General Fund Loan. s n � C v} 0 m � Ir w ~ CD r z 00 p w ❑ I Z -' Z L0 0 Q F- w ❑ OD H cn LL (T) -i Q CN QO ' Z WODr--,co I CD '; N p r cu * Q U No U ODmm �^ f i v F- Q M O O U U I Q H (nn n (D W � ��Nbti r- C)i co co ,�W LOmor � z rnmcncr) c r--. 9B6t rn m (z> cT o d C) -c-, �- z mQcuc"uLn cn 9e` O se6t Cr) v Ln Ln LD H ❑ H cU r-+ U) rn Ln m U) , Z SB�b r-+ rn rn v -� e6t .�, cn cv M v Q � H � r � m be`�B6t N d -� z `° U Q H ccmzU) LO Z Lu —.O wJ � U) U) - w r n >- O F— Q Q 7 u, UQUw Lu -:x L CC J cn oU) F— U Qa w d H f--, cf: z 0o LU CD CD En } U J � CD O `� � zCD H ❑ �`- z LO ❑ u U3 UO z W Q Q o LE) W w w Q Q cn cn U ►-� o Z. cl: -� F-H w o LL _ o F— J (n CDF- 0 U') =:) v Q LL )c O W � UQ Z � mcn CD vm �. 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O w Cc Z w LD O 1 U -i LU WC] F- :DU _.J z W F- U Q OQ U I -< }- +-+ -J U CD CC W co O F- Q z F- CZ ' Q U O Z W rn O -1 O F-- W v � U O m MOD � U1 r. r ` r-4 1-4 o r c N o 1-" CLn ,4 , L 0 U Zn J LJ> a a H rn 0o cn c_ 0 W d CSS 8 t 00 t° � Ci Ln o _ C3 O Yt Ln v !It �j REFERENCE MATERIALS Paae Exibiis 1 Bar chart illustrating actual current and projected fiscal year-end deficit. 2 Pie chart illustrating components of the deficit. 3 Sections 14120 and 14103.4 of the Welfare and Institutions Code. 4 Providers subject to 10 percent rate reduction. 5 Providers • .QJ subject to the 10 percent rate reduction. Please send your comments and suggestions on how to restructure the Medi-Cal program to keep future year's expenditures within budgetary limitations to: Kenneth W. Kizer, M.D., M.P.H. Director Department of Health Services 714 P Street, Roan 1253 Sacramento, CA 95814 .rw�.a. . .. .. �.F•t<.-�iw -.:�'.... -J�i ... .. .-..:�.-. --' .-. .`��y�Jk7i1�4���i,r�:Lnifk~_•3*�.:wnai +' LL. p F 0 C m- i0 C3 x w. h 00 co U o W N �+— U. CU ( ) VJ w w Q rt ul CJ w f � 431 W m v LLJ C t- U Q a o o Q o a N +sa ... "'S.•..•b�a..•..,.,-nr�.� ...�-;h.��.K. .. ,-'�.4'.,nq�!v�r:�"�r'e'�-�'`f..aM+.':T. '..tii�4+G+-..+n._.... c.1 m in co X .Kti. r W �T K ' • 1 v - p.{ N � ll O tT V r7 4 Q O WL8 O 1 Y_ --f > ~ W � G7 p Z tet- p U W o , o ct� Z •Wr + LJ O 7 V) e� Q. W .00 0 00 LLJ < 0 H YLn U CV LLJ CV 1 1 0 a `O �r K .r .{ § 14120. Schedule of anticipated payments; reports; modifica- tions; consultations (a) At the beginning of each fiscal year, for the current fiscal year, the director shall establish a monthly schedule of anticipated to- tal payments and anticipated payments for categories of services, ac- cording to the categories estab.ished in the Governor's Budget. The schedule will be revised quarterly. (b) The director shall report actual total payments and pay- ments for categories of services, as set forth in subdivision (a), monthly to the Director of Finance and to the Joint Legislative Budget Committee. (c) At any time during the fiscal year, if the director has reason to believe that the total cost of the program will exceed available funds, the director may, first modify the method or amount of pay- ment for services provided that no amount shall be reduced more than 10 percent and no modification will conflict with federal law. If such modification is not sufficient to bring the program within avail- able funds, the director may postpone elective services in the schedule of benefits. Such postponement of elective services shall be accom- plished by changing the standards :or approval of requests for prior authorizations. Such changes shall be designed to insure that those recipients most in need of elective services receive them first within the funds available,-but that no particular service is completely elimi- nated. (d) At any time during the fiscal year, if the total amounts paid since the beginning of the fiscal-year exceed by 10 percent the amounts scheduled, the director shall immediately institute the action set forth in subdivision (c) above. _.. (e) At any time during the fiscal year, if the total amounts paid for any category of service exceeds by 10 percent the amounts sched- uled (other than-services for which the method or amount of. nay- __ - ment is prescribed by the United States Secretary of Health, Educa- tion, and Welfare pursuant to Title XIX of the federal Social Security Act) 1, the director shall modify the method or amount of payment for such category of service to assure that the total amount paid for such category of service in the fiscal year shall be less than 10 per- cent in excess of the total amount scheduled provided the total cost of the program to the State General Fund will not exceed appropriated state general funds. (f) Before any of the above actions are taken by the director, he shall consult with representatives of concerned provider groups. (Added by Stats.1968, c. 1241, p. 2350, § 4. Amended by Stats.1971, c. 577, p. 1125, § 36, eff. Aug. 13, 1971, operative July 1, 1972; Stats.1973, c. 1212, p. 2876, § 424, operative July 1, 1974; Stats.1977, c. 1252, p. 4671, § 840, operative July 1, 1978; Stats.1978, c. 429, § 248, eff. July 17, 1978, oper- ative July 1, 1978.) - 142 U.S.C-A-11396 et seg. 4 14103.4. Determination which services elective The director,with the advice of the Medicaid Advisory ' ' ' Committee required by federal law or regulation. shall determine which of a ealth care and related remedial or preventive services are elective. The director and the ' ' ' committee shall consult with representatives of providers of such services before making a determinati�on. (Amended by Stats.1982, c. 327, p. 1557, 226, urgency, eff. June 30. 1982; Stats.1982, c. 328, p. 1589, 1 22, urgency,eff.June 30, 1982.) • 1 . Providers Subject to 10 Percent Rate Reduction Effective 2-1-87 Physicians Clinical Laboratories Optometrists Opticians Chiropractors Psychologists Podiatrists Physical/Occupational Therapists Speech Therapists Audiologists Prosthetists Orthotists Outpatient Clini Dialysis Centers Rehabilitation Centers Furse Anesthestists ' Acupunctur i s_ts osp t I Outpatient Departments Pharmacists (Dispensing and Drug Ingredients) Medical Transportation Providers Portable X—Ray Providers Durable Medical Equipment Dealers Hearing Aid Dispensers Heroin Detoxification Providers Home Health Agencies ntists (DDS) Redwood Health Foundation lid Health Disability Prevention edi—Cal Only) Adult Day Health Care Providers 11 . Providers Not Subject to 10 Percent Rate Reduction Due to Legal/Contractual Pequirements: Long Term. Care Providers Prepaid Health Pians County Health Initiatives Primary Care Case Management Systems Senior Care Action Network Program Rural Health Clinics Hospital Inpatient Providers Short-Doyle/Medi-Cal Providers EXHIBIT 5 _ fir::.. ,��: - _ - •_ _.- :::�'.'-- _ THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on December 2.2, 198E by the following vote: AYES : Supervisors Fanden, Schroder, McPeak, Torlakson and Fanden NOES : None ABSENT : None ABSTAIN: None SUBJECT : SPECIAL BOARD MEETING TO ADDRESS PROPOSED STATE REDUCTIONS IN €1EDI-CAL REIMBURSEMENT The Board of Supervisors called a special meeting of the ' Board of Supervisors for Monday, December 22, 1986, at 10: 00 A.M. in the Board Chambers to hear a report from the County Administrator and Health Services Director regarding cutbacks in the Medi-Cal Program which are under consideration by the Director of the State Department of Health Services pursuant to authority vested in the Director under Welfare & Institutions Code Section 14120 . The Board received the attached report from the Health Services Director and received verbal comments from the County Administrator. The Board Members discussed the matter and suggested various actions which might be taken in an effort to impress on the Governor and the Legislature that the State' s Reserve for Economic Uncertainties should be used if there is an unexpected deficit in the Medi-Cal program rather than imposing reimbursement limits on the County and private medical community. Following this discussion, the following motion was adopted unanimously: IT IS BY THE BOARD ORDERED that: 1. The County Administrator, Health Services Director, and County Counsel are directed to consult with other counties and outside Counsel with regard to filing a joint suit against the State over the proposed Medi-Cal reductions. 2 . The County Administrator is directed to request the County' s lobbyist to explain to this County' s legislative delegation the severity of the proposed Medi-Cal reductions and to urge restoration of the proposed Medi-Cal reductions and the remaining $25 million in funds for the Medically Indigent Adult (MIA' s) , utilizing the State' s Reserve -for Economic Uncertainties for this purpose. 3 . The Health Services Director is ordered to prepare a position paper for the Board of Supervisors to review and approve on January 13 , 1987 to be presented to the CSAC Board of Directors on January 15, 1987 . i Page 2 4 . The Health Services Director is directed to prepare letters for the Chairman' s signature to the Governor, the Governor' s Chief of Staff, the Director of the State Department of Finance, the Director of the State Department of Health Services, and this County' s legislative delegation, pointing out the severity and potential impact that the proposed reductions in the Medi-Cal Program will have on the citizens of Contra Costa County and recommending that the State' s Reserve for Economic Uncertainties be used to avoid the need for reductions in Medi-Cal reimbursements. 5. The County Administrator is directed to call to the attention of the Commission on California State Government Organization and Economy ( the Little Hoover Commission) the proposed reductions in Medi-Cal reimbursements and urge the Commission to take these proposed reductions into account in making recommendations on the impact of the Medi-Cal reform legislation of 1982. 6. The Health Services Director is authorized to correspond with the Contra Costa Mayors' Conference, each city in the County, the Alameda-Contra Costa Medical Association, the Concerned Physicians of Contra Costa, and such other individuals and organizations as in his judgment may be of assistance in alerting legislators and the Governor to the impact of the proposed reductions in Medi-Cal reimbursements requesting their support of the County' s position and urging that they share their concerns in writing with the Governor and members of the Legislature. 1 hereby certify That this Is a true and correct copy of an action taken Hasid entcrcd on the minutes of the Board of Supervis rs on the date shown. ATTESTED: PHIL BATCHELOR, Cie;k of the Board of Supervisors and County Administrator BY61 cc: County Administrator Health Services Director County Counsel 1 ' - 1, Y NA CONTRA COSTA COUNTY HEALTH SERVICES DEPARTMENT - To: Phil Batchelor and the Date: December 19, 1986 Board of Supervis From:Mark Finu a�e or Subject: Medi-Cal Reductions Health Services Director On December 17, 1986, Dr. Kenneth Kizer, Director of the Department of Health Services, Steve Merksamer, Chief of Staff to Governor Deukmejian, and Jess Huff, Director of the Department of Finance, called a special meeting in Sacramento to advise health care representatives of proposed reductions in the Medi-Cal Program. The State Department of Finance is now estimating a deficit in the Medi-Cal budget of $280.7 million by the end of June, 1987. This short- fall was the result of an apparent underbudgeting of Medi-Cal expenditures. Enclosed materials from the State provide details on this deficit. In response to this deficit, the State Health Services Director is contemplating invoking Sections 14120 and 14103.4 of the Welfare and Institutions Code. These sections allow the Director, in response to a deficit situation in the Medi-Cal budget, to impose a 10% rate reduction for providers in the fee-for-service Medi-Cal system. This rate reduction will be effective February 1, 1987, and will apply to all types of providers, including physicians, clinical labora- tories, optometrists, psychologists, outpatient clinics, hospital outpatient departments, medical transportation providers, home health agencies, dentists, Child Health Disability Prevention Services, and many other providers. Providers not subject to the 10% rate reduction are those who are under legal or contractual arrangements with the State, and include long term care providers, prepaid health plans (such as our own) , hospital in-patient providers (Medi-Cal contract hospitals) , and Short-Doyle/Medi-Cal providers. In addition, the W&I Code allows for the delay of elective procedures beginning February 1, 1987. These include all services generally considered not to be immediately necessary to protect the life of the individual , or to prevent significant disability or pain. The Code allows for a ninety day delay in pro- viding those services. These are services which normally require a Medi-Cal Treatment Authorization Request (TAR) . My staff and I have major concerns regarding the impact of these proposed reduc- tions on our Department and on the community. These concerns are as follows: 1. The preliminary estimate of the revenue loss for the Health Services Department is: Fiscal Period 1986/87: $ 202,723 Fiscal Period 1987/88: $ 342,537 __ A-41 3/81 1 a 2 Phil Batchelor and the Board of Supervisors These estimates are without knowledge of how long the provider rate decrease will continue and without knowledge of how long the postponement of elective services will continue. The FY 87/88 estimate of revenue loss does not include the loss due to postponement of elective surgery. (A preliminary breakdown of revenue loss estimates is attached. ) 2. We do not yet have confirmation that the Governor will restore the $25 million to the MIA budget. We therefore continue to be at risk for approximately $500,000. Absorbing this reduction in addition to the above reductions will be devastating. None of the State 's actions should divert our attention from the pressing need to restore the $500,000. This money is budgeted and depended upon by the Department. 3. I am concerned about the potential impact of these rate reductions on the willingness of community providers to continue to provide medical services for Medi-Cal beneficiaries. The net result is very likely to be referral of, more Medi -Cal patients to our system. Our Department could be forced to absorb more patients with less money, given the above scenario. 4. Undoubtedly these reductions will be extended to our Prepaid Health Plan rates when they are renegotiated in July. As you know, this fiscal year we only received an overall .9% increase of the Health Plan rates. 5. We are concerned that our current efforts to renegotiate our Medi-Cal in- patient per diem rate will be affected by the State's action. Our FY 86/87 budget includes what we anticipated to be a modest increase in that rate. 6. Although there is no reduction in the Medi-Cal per diem rate at this time, a revenue loss will occur with the delays in elective surgeries. Our greatest concern is that these reductions are only a precursor to more Medi-Cal cuts in 1987/88. At the same time they announced these problems, the Governor's staff expressed their goal of "restructuring" the Medi-Cal program. We take "restructuring" to mean cutting. We are therefore making the following recom- mendations to the Board: 1. Consider reducing by 10% the payments we make for Health Plan enrollee out- - of-plan expenses. 2. Authorize the County Administrator, the Health Services Director, and County Counsel to consult with other counties and outside counsel with regard to filing a joint suit against the State over this action. 3. Authorize the County Administrator to direct our lobbyists to explain to the legislature the severity of these reductions and to urge restoration of them and of the remaining $25 million in MIA money. 4. Direct the Department to prepare a position paper for the Board of Supervisors to be presented to the CSAC Board of Directors who are meeting on January 15th. - 3 - Phil Batchelor and the Board of Supervisors 5. The Board should prepare a direct communication to the Governor, the Chief of Staff, the Finance Director, the Director of Health Services, and our legislative delegation with regard to the severity and impact of these reductions. 6. The Commission on California State Government Organization and Economy (Little Hoover Commission) heard testimony on December 4, 1986, with regard to the impact of the Medi-Cal reform legislation of 1982. Much of that testimony had to do with the difficulty of providing services at the Medi-Cal rates of reimbursement. The reductions will obviously exacerbate the conditions noted in that hearing. The Board should communicate directly with the Little Hoover Commission urging them to take into account these recent reductions in preparing their recommendations. MF : j e f , CONTRA COSTA COUNTY HEALTH SERVICES DEPARTMENT Mark Finucane, Director To: Health Services Department Date: December 18, 1986 From: Patrick Godley, Chief Subject: Financial Officer MEDI-CAL REDUCTIONS We have reviewed the impact of the proposed 10% Medi -Cal reduction; the following is our estimate based upon the information known at this time: Revenue Loss Enterprise Fund I Fiscal Period Fiscal Period 1986/87 1987/88 Hospital and clinics - Medical Services: Includes M.D.s; outpatient $ 128,082 $ 307,397 services, and dental ; assumes ancillary reim- bursement is reduced at the 10% rate. - Elective Services: The postponment of services $ 60,000 Unknown will decrease the amount of days reimbursable during the 1986/87 fiscal period; it is unknown to what extent, if any, the days will be recap- tured in 1987/88. Enterprise Fund II Health Plan Exempt from curtailment; N/A N/A unknown regarding out-of-plan payment reduction to outside vendors A-41 3/81 -2- A/DA/MH Exempt from curtailment. Psy- N/A N/A chologists are identified for reduction but are assumed to be exempt under S/D provider status. Public Health - Home Health Agency. Assumes $ 9,050 $ 21 ,721 across-the-board reduction for all disciplines. Child Health and Disability $ 5,591 $ 13,419 Program. Environmental Health/Detention Facility - No Impact N/A N/A California Children's Services Under Review Department Total : $202,723 $342,537 0r-2 - 1986-87 MEDI-CAL STATUS REPORT vS MONTH ENDING 10/1986 �X_ CUMULATIVE PAYMENTS - STATE/COUINTY FUINDS FY 1986-87 _ PROGRAM BUDGET SURPLUS/ x SURPLUS/ ITEM-4260-101(b) APPROPRIATION ACTUAL DEFICIT(-) DEFICIT(-) PROFESSIONAL $148,1079000 $153,398,700 $5,2919700 -3.57 Physicians $86,531,600 $87,291,500 -$759,900 -0.88 Other Medical $23,618,100 $25,616,700 -$1,998,600 -8.46 Hospital Outpatient $379957,300 $40,490,500 . -$2,533,200 -6.67 HOSPITAL INPATIENT $232000,900 $240,902000 -$8,901,400 -3.84 DRUGS $53,095,500 $62,444,800 -$9,349000 -17.61 LONG-TERN CARE $175,532,200 $173,250,600 $2,281,600 1.30 Skilled Nursing Fac. $158,063,300 $1559720,000 $2,343,300 1.48 Intermediate Care Fac. $17,468,900 $17,530,600 $61,700 -0.35 OTHER SERVICES 1 $14,666,700 $15,4089500 -$7419800 -5.06 Medical Transportation $6,1219700 $51919,900 $201,800 3.30 Other Services $7,293,200 $7,769,200 -$476,000 -6.53 Home Health $1,251,800 $1,719,400 -8467,600 -37.35 DENTAL $15,690,300 $15,952,800 -$262,500 -1.67 REDWOOD $8,1829600 $7,828,800 . 5353,800 4.32 PHP $41,018,800 $41,129,200 -$1141400 -0.27 AUDITS & LAW_ SUITS $108,300 $117,600 -$9,300 -8.59 EPSDT $5,933,200 $6,702,400 -$769,200 -12.96 BUY-IN $23,258,200 $21,103,400 $2,154,800 9.26 STATE HOSPITALS $57,716,100 _$63,707,800 -$5,991,700 -10.38 MISC. NON-FFS $4,684,300 $3,525,400 $1,158,900 24.74 RECOVERIES -$7,635,800 -$7,766,500 $130,700 1.71 CO. ORG. HLALTH SYS. $4,670,300 $59730,600 .r -$1,060,300 -22.70 SHORT-DOYLE (4440-101) $0 $0 $0 - - REIMBURSEMENTS -$7x210,600 -$8,879,100 $19668,500 23.14 POTENTIAL VARIANCE -$38,257,900 $0 -$38,257,900 - - SUBTOTAL $731,560,100 $794,557,300 -$62,997,200 -8.61 ITEM-4260-101(b) ---------------------------------------------���__--_ ABORTIONS (4260-105) $109509,600 $9,717,300 $792,300 7.54 F.I. ADMIN. (4260-101(c)) $4,755,600 $4,334,500 $421,100 8.S5 CO. ADMIN. (4260-101(a)) $20,357,600 $19,556,L100 $601,200 3.94 REIMBURSE (FI & CO ADMIN) -$1501800 -$46,300 -$1047500 -69.30 GRAND TOTAL MEDI-CAL $767,032,100 $828,.1199200 -$61,087,100 -7.96 CNOTE: Excludes interim payments charged to the General Fund Loan. h• �.1 • v tf'1 N 'ei co Q I I Cl I— w Z CD rs" = w OD O w Q 1 z I' zco0 w D0to LL G) Cl F- v� r w i"N. • I �',ri .' 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Please send your comments and suggestions on how to restructure the Medi-Cal program to keep future year's expenditures within budgetary limitations to: Kenneth W. Kizer, M.D., M.P.H. Director Department of Heaith Services 714 P Street, Room 1253 Sacramento, CA 95814 10 c X W ..+..J CA • ^ v" `.0 co c W T� N "7 Q) C) 0 c V W O ri in LLJ D •_ +f► U � N I � W t0 co Ol uiui CD !A O U O LA- C>O m D W N ...1 4 Q F- U Q O O O O 0 .R 1* N O -r xs'..—� ., ... .=:yr.�u•..-.r-.tet. .•t•_ _ 1_� r{.4 �i- =.F`� • t Lni co :K V� W - d' t/Y N ! n r-4 � o W = Z4 cn �...� ~ Lv Cry 0 Z En W o � V [] M I oLLJ tn Q U a ..�.�. z Wx At a: V) ol 00 00 V 1 QD 0o I CD co 3 W- o H U N W D _ Q U g I ! o O N N {n V N v 4m ' I _ _ .. ,. .. .. �'J:�S�n. '�t�"+_�.�ry'=..s. ;r`rr�t- _.,+r3• _..;., c,w�h:P+'.: § 14120. Schedule of anticipated payments; reports; modifica- tions; consultations (a) At the beginning of each fiscal year, for the current fiscal year, the director shall establish a monthly schedule of anticipated to- tal payments and anticipated payments for categories of services, ac- cording to the categories estab:ished in the Governor's Budget. The schedule will be revised quarterly. - (b) The director shall report actual total payments and pay- ments for categories of services, as set forth in subdivision (a), monthly to the Director of Finance and to the Joint Legislative Budget Committee. (c) At any time during the fiscal year, if the director has reason to believe that the total cost of the program will exceed available funds, the director may, first modify the method or amount of pay- ment for services provided that no amount shall be reduced more than 10 percent and no modification will conflict with federal law. If such modification is not sufficient to bring the program within avail- able funds, the director may postpone elective services in the schedule of benefits. Such postponement of elective services shall be accom- plished by changing the standards for approval of requests for prior authorizations. Such.changes shall be designed to insure that those recipients most in need of elective services receive them first within the funds available,--but that no particular service is completely elimi- nated. - (d) At any time during the fiscal year, if the total amounts paid since the beginningof- the -fiscal-year exceed by 10 percent the amounts scheduled, the_director shall immediately institute the action set forth in subdivision.(c) above.. (e) At any time during the fiscal year, if the total amounts paid for any category of service exceeds by 10 percent the amounts sched- uled (other than-services for which the method or amount of--pay- _ ment is prescribed by the United States Secretary of Health,_Educa- tion, and Welfare pursuant to Title XIX of the federal Social Security Act) 1, the director shall modify the method or amount of payment for such category of service to assure that the total amount paid for such category of service in the fiscal year shall be less than 10 per- cent in excess of the total amount scheduled provided the total cost of the program to the State General Fund will not exceed appropriated state general funds. (f) Before any of the above actions are taken by the director, he shall consult with representatives of concerned provider groups. (Added by Stats.1968, c. 1241, p. 2350, § 4. Amended by Stats.1971, c. 577, p. 1125, § 36, eff. Aug. 13, 1971, operative July 1, 1972; Stats.1973, c. 1212, p. 2876, § 424, operative July 1. 1974; Stats-1977, c. 1252, p. 4671, § 840, operative July 1, 1978; Stats.1978, c. 429, § 248, eff. July 17, 1978, oper- ative July 1, 1978.) - 142 USX-& 11396 et seq. ¢ 14103.4. Determination which services elective The director,with the advice of the Medicaid Advisory ' ' ' Committee required bv hederal law nr regulation, shalt determine which of a ealth care and related remedial or preventive services are elective. The director and the ' ' ' committee shall consult with representatives of providers of such services before making a determination. iAmended by Stau.1982, c. 327, p. 1557, ¢ 2Z6, urgency, eff. June 30. 1982; Stats-1982, c. 32N. p. 1589,,¢ 22, urgency,eff.June 30, 1982.) - 1 . -1-87 Providers Subject to 10 Percent Rate Reduction Effective 2 Physic_ans--) Clinical Laboratories Optometrists Opticians Chiropractors Psychologists Podiatrists Physical/Occupational Therapists Speech Therapists Audiologists Prosthetists Orthotists Outpatient Clini Dialysis Centers Rehabilitation Centers Nurse Anesthestists ' Acupuncturists Hospital Outpatient Departments 7�:?��' Pharmacists (Dispensing and Drug Ingredients) Medical Transportation Providers ' Portable X-Ray Providers Durable Medical Equipment Dealers Hearing Aid Dispensers Heroin Detoxification Providers Home Health Agencies ntists (DDS) Redwood Health Foundation lid Health Disability Prevention edl-Cal Only) Adult Day Health Care Providers EXHIBIT 4 . ii . Providers Not Subject to 10 Percent Pate Reduction due to Legal/Contractual Requirements: _ Long. Term: Care Providers Prepaid Health Pians County Health Initiatives Primary Care Case Management Systems Senior Care Action Vetwork Program Rural Health Clinics Hospital inpatient Providers Short-Doyle/Medi-Cal Providers EXHIBIT 5