Hanging on in California
California's budget delay (the state is now two months without a budget) has emptied out a $2 billion contingency fund to pay the state's Medicaid bills. So the state has stopped paying some clinics, clinical laboratories, home-health agencies and other providers who care for low-income Californians with the safety-net insurance.
Now the California treasurer is offering no-interest loans to community clinics and rural hospitals to prevent a cash crunch among healthcare providers. The treasurer says the state's Health Facilities Financing Authority would lend up to $750,000 per provider and up to $9 million in total to bridge the gap.
Not all California providers will have to wait to be paid. That's because the 2009 economic stimulus law said states, in order to receive some of $87 billion in extra Medicaid relief, must pay hospitals and nursing homes.
But the list of those that won't get paid is far-reaching and includes free and community clinics; chronic dialysis and surgery clinics; air ambulance transportation; and programs for breast cancer detection, tribal health and home or day care for the elderly or disabled.
For officials at the George G. Glenner Alzheimer's Family Centers, one of eight organizations to receive a no-interest California loan, the delay comes as no surprise after California's repeated failure in recent years to settle up on time. But this year, the suspended Medicaid payments have compounded financial stress from the prolonged economic downturn, says Kelly Focht, the organization's chief executive.
The adult day care, based in San Diego, lost roughly $180,000 to California's prolonged budget crisis nearly two years ago and could see further cuts, she says. Donors to the Glenner Centers have scaled back their contributions. Banks are more reluctant to extend credit. The Glenner Center has not exhausted an existing line of credit, but the weak economy has forced the organization to dip into its credit line, she says.
In response, Focht says, the centers have sought to trim administrative costs and secured a grant to hire a development director to pursue more private grants.
The Glenner Centers notified its vendors quickly after the state said in late August it would halt Medicaid payments, she says. Four out of 10 of the Glenner Centers clients have Medicaid benefits, which reimburses the day care for medical care such as nursing and physical therapy. She says the state's routine budget delays are “both stressful and frustrating.”
The California Health Facilities Financing Authority awarded the Glenner Centers $130,192, the smallest of eight initial loans. Once California resumes Medicaid payments, the state will automatically reimburse the finance authority loans' from providers' claims, she says. The largest loan, $400,000, went to the Mendocino Coast Clinics, a sliding-fee scale clinic in Fort Bragg.
