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Additional Medi-Cal cuts hit four North Bay hospitals

PETALUMA, SONOMA, NAPA FACILITIES FACE MILLIONS IN LOST REVENUE

NORTH BAY – A trailer bill tacked onto the 2008 state budget has singled out six California hospitals for additional Medi-Cal reductions, four of which are in the North Bay.

Petaluma Valley Hospital is among the facilities whose rates were cut beginning Oct. 1, and officials say it could cause losses.

Assembly Bill 1183 calls for an additional reduction in Medi-Cal reimbursement rates on top of an across-the-board 10 percent cut for hospitals that do not have a Medi-Cal contract with the state in certain regions.

Hospitals in this category are exempt from the cuts if their area has less than three acute-care hospitals, which involves all non-contract facilities except six, including Petaluma Valley, Sonoma Valley Hospital, Queen of the Valley Medical Center and St. Helena Hospital.

Petaluma Valley Hospital Chief Financial Officer Jim Suver told health care district board members last month that the additional cuts “will be absolutely devastating” and could put the hospital under budget.

The Legislature did consider an amendment that would have protected Petaluma, but it was later vetoed. In total, Mr. Suver estimates the hospital will lose about $3.1 million.

“The state is hurting, there is no question about that, and they are looking for any way they can save money. But for us, we operate on a really tight profit margin,” said Petaluma Health Care District Chief Executive Officer Daymon Doss.

“I understand their strategy. I just don’t think it’s fair.”

Though the only other hospital in Petaluma’s region is Sonoma Valley, both were bypassed for the exemption because a state-owned hospital, the Sonoma Development Center, is licensed for 12 acute-care beds, though it does not have an emergency room or see patients without developmental disabilities.

In Napa, Queen and St. Helena also missed the exemption and will lose dollars because of a skilled nursing home and state hospital in the same region.

An official with the California Department of Health Care Services, which created the legislative analysis of the bill, said the provision was meant to expand Medi-Cal accessibility by encouraging more hospitals to contract with the state rather than function on a fee-for-service basis.

“We have had 25 hospitals drop their contract with the state in the past five years,” said Stan Rosenstein, chief deputy director for the state health care services department.

“Medi-Cal is the second-largest general fund expenditure, second to K-12 education. … It is a major issue, and it has to be part of solving the state budget issues.”

Mr. Suver said Petaluma sees all patients regardless of their ability to pay and added the cutback more likely would limit access for Medi-Cal and other patients.

Sonoma Valley Hospital Chief Financial Officer Jim McSweeney said facilities that contract with the state are reimbursed at a rate lower than fee-for-service hospitals and far below what it costs the hospital to provide the care. He said the change will cost Sonoma Valley about half a million dollars this year.

The analysis of the bill estimates the change will save the state about $11.5 million in the 2008-2009 budget cycle, out of a $38-billion general fund.

A spokesman with the office of Assemblyman Jared Huffman, D-San Rafael, said the legislator is working to draft a bill that would amend the Medi-Cal provision so that North Bay facilities could be exempt.