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$10 Billion Medicaid Deal Expands Coverage, Increases Reimbursement of L.A. County Costs

Federal approval of a $10 billion Medicaid waiver deal for California that expands coverage for the poor should also help ease the Los Angeles County healthcare system’s debt, officials said today.

“(The) waiver deal is encouraging and exciting news, especially for those of us eager to implement national health care reform,’ said Supervisor Gloria Molina. “This waiver is truly a bridge to that reform.’

An earlier waiver expired Aug. 31. The new, long-negotiated agreement is set to last five years and is intended to establish the terms of federal funding through health care reform in 2014.

The waiver may be a life raft for the county’s Department of Health Services, which is operating with a deficit of about $429 million this year and $200 million from last year. County officials have been counting on federal funding from a variety of sources, including the Medicaid waiver, to help close that gap.

Otherwise, they warned in July, as many as 420,000 people might have to be dropped from the county’s healthcare system.

The waiver offers some of the help the county needs, though the DHS’ interim director said he couldn’t yet quantify how much.

“We don’t yet know how much impact it will have on the county’s budget,’ said John Schunhoff.

The waiver expands Medi-Cal eligibility to childless adults with income below 133 percent of the federal poverty level, or $14,404 for a single person.

As a result, the number of county residents covered could double to 130,000, Schunhoff said, though he warned that was a “very rough estimate.’

The county is already absorbing healthcare costs for many of those residents through emergency room visits and other unreimbursed care, so costs to the county under the new agreement would not be likely to increase much.

But based on the estimate of 130,000 newly insured, the waiver rules could generate an additional $65 million in reimbursements to the county.

The agreement also removes caps on existing patient reimbursements which could free up another $11 million for the county.

Investment funding of $600 to $700 million annually for hospitals statewide is another element of the waiver, but Schunhoff said it wasn’t possible to estimate how much of that money the county was likely to receive.

The hospital funding will be tied to meeting milestones for better patient care and lower healthcare costs, but the waiver doesn’t provide details.

“It’s not specifically set out in the broad language of the waiver,’ said Schunoff. “We’ve got a lot of work to do over the next two months’ to determine what will be required.

The department may have to shift some of its current priorities to align with federal objectives.
But Molina applauded the progress that had already been made.

“Because of this waiver, we can now expand Medi-Cal coverage to low-income adults, better manage the complex health care needs of seniors and persons with disabilities, and we can begin some of the necessary infrastructure and quality improvements that we have needed for a long time,’Molina said.

“Most importantly, with this waiver, we have the opportunity to transition our system into one that increases people’s access to primary care services.’

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