Various healthcare providers and managed care organizations are required to pay the fee, which is then used to increase reimbursements to hospitals that depend on Medi-Cal. This especially helps hospitals with a high percentage of Medi-Cal patients maintain healthy balance sheets. For instance, Children’s Hospital Central California in Madera relies on the state Medicaid program for 71 percent of its gross revenues and received $80.4 million in net payments from the provider fee program in 2012, according to Moody’s. The fee program was originally due to expire at the end of this year but will now extend through December 2016.
CMS must still approve the fee program, although the legislature’s timely approval of the program several months before its expiration date will likely lead to CMS to expedite its approval as well, according to Moody’s.
This positive development for hospitals that rely on Medi-Cal comes in the midst of the state’s enactment of Medicaid cuts. In August, the California Department of Health Care Services released its implementation plan for a 10 percent cut in provider reimbursements under the state’s Medicaid program, Medi-Cal, starting this month. Medical transportation and dental care providers were scheduled to feel the cuts first Sept. 5. Durable medical equipment providers will see the prospective payment reduction kick in starting Oct. 24. Physicians, clinics, pharmacies and distinct part nursing facilities will all experience the cuts beginning Jan. 9, 2014.
Although the cuts won’t affect hospitals directly, the physician reimbursement reductions will hurt them indirectly as the medical foundations through which hospitals contract physicians will post deeper-than-normal losses, placing a heavier burden on hospitals’ financial statements, according to Moody’s Investors Service. Moody’s has rated the reduction as a credit positive for the state but negative for its hospitals.
More Articles on Medi-Cal:
California Outlines Medi-Cal Provider Cut Plan
Committee Approves Medicaid Provider Fee for California Hospitals
Circuit Court Strikes California’s Medi-Cal Restrictions
