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Home My WebLink AboutMINUTES - 04231996 - C40 TO: Y' BOARD OF SUPERVISORS 6E L Contra FROM: PHIL BATCHELOR, COUNTY ADMINISTRATORCosta Count April 1996 y DATE: A P rrq-�ecaT'' SUBJECT: LEGISLATION: AB 2894 (AGUTAR) - DISPROPORTIONATE SHARE HOSPITAL PAYMENTS SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: ADOPT a position in OPPOSITION to AB 2894 by Assemblyman Fred Aguiar, which would alter the allocation of disproportionate share hospital funds to increase funding to Children's Hospitals by taking funds away from County Hospitals. BACKGROUND: Currently, County Hospitals provide the State match in order to earn additional disproportionate share hospital funds from the Federal Government. Children's Hospitals and some private hospitals which serve large numbers of low-income patients benefit from this system by receiving disproportionate share payments for which counties are providing the match. Assemblyman Aguiar (with co-authors Assemblyman Tom Bates and Senator Nicholas Petris, among others) has introduced AB 2894 which, as,introduced, would do the following: + Allow Children's hospitals meeting the Major Teaching Hospital criteria to be paid the higher per diem rate of either the Major Teaching Class or the Children's Hospital Class. The Children's Hospital Association calculates that this provision would increase disproportionate share hospital payments to all children's hospitals by approximately $72 million. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE 4—APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER X IT IS BY THE BOARD ORDERED that the Health Services Director is APPROVED rind AUTHORIZED to send a letter to the author of F,B 2894 (Aguiar) indicating that the Contra Costa County Board of Supervisors would strongly support this bill for additional funding of children' s hospitals, if the bill were amended to ensure that money will not be taken 'away- from county hospitals or other public hospitals. VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED April 23 , 1996 Contact: PHIL HELOR,CLERK OF THE BOARD OF cc: PER tSANDC UNTY A INI RAT See Page 2 BY PUTY YO + Provide a disproportionate share hospital payment add-on to high Medi-Cal California Children's Service (CCS) hospitals -- those whose Medi-Cal days are at least 25% CCS. The add-on to the hospitals disproportionate share hospital per diem would grow gradually to a maximum of $390 a day for hospitals whose Medi-Cal days are 80% or above CCS. The Children's Hospital Association calculates that this provision would increase disproportionate share hospital payments to all children's hospitals by approximately $15 million. Because AB 2894 selectively expands the program for children's hospitals, this proposal would, in effect, result in a direct cost-shift from county hospitals to children's hospitals. Counties would have to increase their transfer payments to the State to provide the match for the additional funding going to children's hospitals without receiving any corresponding increase in gross payments to their own county hospitals. County hospitals would lose $1 for every $2 that the children's hospitals gain, resulting in a reduction of at least $43 million in all county hospitals net benefit. Although the Children's Hospital Association estimates that AB 2894 would increase disproportionate share hospital payments to children's hospitals by a total of about $87 million, that may be an underestimation based on preliminary calculations by the California Association of Public Hospitals and Health Systems. It is estimated that Contra Costa County would lose $926,571 under the provisions of AB 2894. While we understand and sympathize with the fiscal plight faced by many children's hospitals, county hospitals are hardly in a position to solve the fiscal problems of children's hospitals. This sets a dangerous precedent by assuming that anytime another sector of the hospital industry needs money it can expect public hospitals to bail it out. Whatever the solution is to the fiscal problems of children's hospitals, AB 2894 is not it. We recommend that the Board of Supervisors oppose AB 2894. cc: County Administrator Health Services Director Sara Hoffman, CAO's Office Les Spahnn; Heim, Noack, Kelly & Spahnn 1121 L Street, Suite 100 Sacramento, CA 95814 -2- a F-875 T-936 P-006 APR 12 196 13:16 California Association.of e . qD Public Hospitals and Health Systems 2000 Center Street, Suite 308, Berkeley, CA 94704 Phone 510 1549-7650 Fax 5101649-1533 Children's Hospital Association DSH Bill AB 2894, Author.Assemblyman Aguiar with Assembly Members Grantund,Baldwin, Bates,Tucker, Vasconcellos Co-authors: Senators Kelley and Petris Introduced February 22, 1996 Maior Provisions t Allows Children's hospitals meeting the Major Teaching Hospital criteria to be paid the higher per diem rate of either the Major Teaching Hospital Class or the Children's Hospital Class. The Children's Hospital Association calculates that this provision would inose DSH payments to all children's hospitals by approximately$72 million. * Provides an DSH payment add-on to high Medi-Cal CCS hospitals--those whose Medi- Cal days are at least 25% CCS. The add-on to the hospitals DSH per diem would grow gradually to a maximarn of$390 a day for hospitals' whose Medi-Cal days are 80% CCS or above. The Children's Hospital Association calculates that this provision would increase DSH payments to all children's hospitals by approximately $15 million. Impact on County Hospitals * Because AB 2894 selectively expands the program for children's hospitals,this proposal would, in effect,result in a direct cost-shift from county hospitals to children's hospitals. Counties would have to increase thei lr IGTs to provide the match for the additional f coding going to children's hospitals without receiving any corresponding increase in gross payments to their own county hospitals. County hospitals would lose$1 dollar for every $2 dollars that the children's hospitals gain resulting in a reduction of at least $43 million in all county hospitals' net benefit. * Although the Children's Hospital Association estimates that AB 2894 would increase DSH payments to children's hospitals by a total of about$87 million, that may be an underestimation based on out preliminary calculations. F-875 T-936 P-002 APR 12 196 13:13 California Association of e. 4D Public- Hospitals and Health Systems 2000 Center Street. Suite 30& Berkeley, CA 94704 Phone 5101649-7650 Fax 5101649-1533 Alameda A nI 1, 1996 Alameda county Meds►Center -p H Vhtand Carnpt6 —ra1t1ordCangkis Honorable Brett Granlund, Chair contra costa Assembly Health Conw-dttee Merralnew Memonal H0 State Capitol Room 6005 Fresno Sacramento, CA 95814 %W Medical center o1 Fmsno F.&M Subject: AB 2894 (Agaiar): OPPOSE rem Medicat Center Ups A metes Dear Assemblyman Granlund. Harbw&KXA Medial center h6gi'r Omen Floszatral ubc+usC Fecal center On behalf of 26 county hospitals throughout the state of California, I am MI.KaVOrtwMedrstcemer writing in opposition to AB 2894,authored by Assemblyman.Aguiar,which 0iYe �h�c will be heard on April 9. We come to this position reluctant) However, Rancho tr,B Arre�Os p Po y tAediCai G because this bill would result in a direct loss of $50 million to local Merced governments and would also threaten the stability and viability of the entire Medk:W Ca"7"feryf Medcaid Disproportionate Share Hospital Program (DSH), we are Montereycompelled to oppose it. tuayrAdad Medcal clEnter Riverside ale recognize that the issues raised by the proponents of the bill -- the r General trtat children's hospitals— have merit. They serve an important role in treating San Bemarrlino very ill children, and we all are facing declines in MediCal and other San Bernaraino revenue sources. Nevertheless, the remedy must not be at the expense of COunty mecticat ca`tter local government and the public safety net. Counties cannot be the deep Sao Francisco pockets for private hospitals and general health care shortfalls. San Frarimm cenerdi HMftw Laguna Hprtda kasarta! Ile DSH program (also known as the SB 855 program) was established to San Joaquin nrovide supplemental Medi-Cal funding to a limited number of hospitals that San Joaquin General Hasorol pp treat the largest numbers of low-income patients, including the indigent. San{sus Obispo Sar,urs{30e:oo 'le DSH program in California involves up to $2.2 billion per year which Gets Hosoi!W is distributed to about 120 public and private DSH hospitals that meet San%ateo certain criteria. 'The state share of the program ($1.1 billion) is funded San Mateo Gounry solei b public entities — counties, hospital districts, and UCs -- through Genera,Hasntmt y y p g GryssatSanngs Intergovernmental Transfers (ICI's). Neither the State nor private hospitals tly,abdriannn Canter contribute funding to the program. Santa Clara Santa Dara VW6W Mecrcat Gamer Because of the financing mechanism of the program the result of AB 2894 Sonoma i would be to revuire local government to contribute 50 cents for each extra cammuniv r+asonar dollar that a children's hospital would receive under the bill. This would be Stanistaus a direct subsidy by county government of these hospitals. Since this type StanWus McCicat Center of proposal would be the equivalent of creating a new program, we believe wolumne that it would constitute an unfunded mandate on local. government Tuou nne Genera$Hosprtat Ventura ,4m"a Courtly Mec icai Canter r F-875 T-936 P-003 APR 12 196 13:14 AB 2894 Page 2 The proponents of the measure estimate it would result in $100 million in additional revenues to six, maybe seven, children's hospitals -- an increase of 1.50% in payments to those hospitals. Half of that new revenue — $50 million — would be funded by counties with county hospitals. Los Angeles county,for example,would be required to pay about$25 million to subsidize a very few private hospitals. The DSH program is on shaky ground. Many local governments may soon no longer be able to support the program. This proposal would accelerate the likelihood of that occurring. The entire program—and the$1.1 billion in federal funds that it brings in--for nearly 124 hospitals.around the state is at stake. I also want to point out that county hospitals have seen their payments under the DSH program drop precipitously--33% —over the last four years. Although the children's hospitals payments have remained essentially constant,DSH payments to private hospitals as a whole have increased by 200%. Counties are in no position to further subsidize -- at their own expense — children's hospitals as would be required under the proposed legislation. Counties with a county hospital continue to provide the overwhelming majority of care to the state's medically indigent, working poor and uninsured population. Their share of the DSH dollars are critical to the ability to serve as the state's safety net as mandated by State law_ This proposal — however well-meaning --jeopardizes the safety net's role and,with it, access for all Californians. Finally, I would like to point out that the hospital industry is engaged in a process to attempt to develop a consensus proposal on ways to restructure the DSH program— in order to stabilize it and make it more equitable. We have committed, along with the rest of the industry, to try to address the issues raised by the children's hospitals in the context of that process. We oppose this proposal reluctantly. But, in light of the damage it would do to the public safety net, local government and the entire DSH program, we believe it is the only option. If you have any questions,please don't hesitate to call me or our Sacramento representative Terni Thomas as 441-2741. Thank you Sincerely, Denise K. iVJartin President and CEO c: The Honorable Members of the Assembly Health Committee Honorable Fred Aguiar Peter Anderson Teri Boughton F-875 T-936 P-004 APR 12 196 13:15 SB 855 Disproportionate Share Hospital(DSH) Payment Program C �� AB 2894 (Aguiar)t -- County Impact Assessment California Association of Public Hospitals and Health Systems County Impact Cost of AB 2894# Alameda $3,442,240 Contra Costa 926,571 Fresno 1,989,824 Humboldt 3,954 Kern 1,831,503 Los Angeles -23,911,622 Merced 200,081 Modoc 5,375 Monterey 245,290 Riverside 1,675,159 San Bernardino 2,385,648 San Diego 1,404 San Francisco 2,636,318 San Joaquin 736,692 San Luis Obispo 128,216 San Mateo 439,754 .Santa Clara 3,211,497 Shasta 1,896 Sonoma 262,756 Stanislaus 439,668 Trinity .7,051 Tuolumne 14,764 Ventura 768,709 Total County Impact: 45,307,197 Total Non County Impact: 4,692,803 Total Im act on Publics: 50,000,000 AB 2894(Aguiarl would iacrease SB 355 DSH Payments to Cltiidrens DSH hospitals. Half of the increased payments would be paid by pub3ic JSH hospitals. Tire Children';Hospital Association indicates their total incrt~ e would be SI00,0O ,000- t Cost distribution is bayed oa cach public DSH hospital's portion of 1995-96 SB 355 DSH Payments. u F-675 T-936 P-005 APR 12 196 13:16 0. O 0.4 00 'Z� � 4-4 � T �., CN }/yW to !'M Q. N ' opo cN Mda � Q o c I.. o � u V iii