Healthcare Business News

Hospital association questions Calif. budget plan

By Paul Barr
Posted: January 6, 2012 - 2:00 pm ET

California Gov. Jerry Brown's proposed budget for 2012-13 (PDF) would reduce Medicaid revenue for hospitals in the state by $86 million and could cause problems for rural health clinics, seniors and people with disabilities, according to a media statement from C. Duane Dauner, president and CEO of the California Hospital Association.

Brown proposes the state cut spending on Medi-Cal by $842.3 million, spending $59.7 billion in total on the state's Medicaid program, according to the budget's introduction (PDF).

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The association took issue with where some of the cuts are aimed, though it acknowledged that the state needs to address its budget challenges. “The administration's proposal to redirect nearly $43 million from private and non-designated public hospitals is disappointing,” Dauner wrote in reference to Brown's proposal to tap into a hospital stabilization fund. “These stabilization funds were intended to cover costs already incurred by hospitals. And, because these funds are matched by federal dollars, the loss to hospitals would be almost $86 million,” he wrote.

Dauner also wrote that the proposal to move to a risk-based payment system for federally qualified health clinics and rural clinics, from its current cost-and-volume approach, could pose operational challenges for rural providers with limited resources.

The CHA also wants to work closely with the state as it works to increase the number of state-covered residents using managed care and combines services providing care for those on both Medicaid and Medicare.

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