MediCal cuts would cause disruptions, hospital closures

Dear Cindy Mann
Centers for Medicaid and Medicare
Gloria Nagle
Associate Regional Administrator, Region IX Centers for Medicare and Medicaid Services,

The Plumas County Economic Recovery Committee (PCERC) wishes to voice its opposition to the California Department of Health Care Services (DHCS) submitted State Plan Amendment (SPA) 11-010, which seeks authorization to reduce MediCal reimbursement rates for certain facilities, including skilled nursing facilities (SNFs) and sub-acute-care units that are distinct parts of hospitals, to 2008-09 rates less 10 percent. If approved by the Centers for Medicare and Medicaid Services (CMS), the reduced rates will be effective retroactively to June 1, 2011.

Plumas County, like most small rural mountain counties, will most likely lose its SNFs as well as see an additional financial impact to hospitals. Our county has seen a large shift in demographics because of the regulatory shifts in the management of our public lands within the county. Approximately 70 percent of the county is public lands and the loss of jobs due to these regulatory changes has led to a loss of our young families. The age group of individuals moving to Plumas County is now of retirement age. This demographic shift coupled with our existing aging population has led to a higher percentage of families and individuals of Medicare and MediCal age.

Plumas County does not have alternative facilities that current or future residents, who need SNFs, can be moved to or move into. To close our doors on our existing SNFs will mean those individuals or couples will have to be moved out of county. This causes disruption in their lives, as well as those of the families who live nearby, as well as causes families to travel our dangerous highways to visit these family members.

PCERC is concerned how these cuts could affect the overall hospital facilities that remain in the county. We have already lost one of our four area hospitals due to the economic impacts associated with the loss of jobs due to the public land management changes. It is highly likely that we could/would lose one of our three remaining hospitals if these MediCal cuts are approved.

Currently Eastern Plumas Health Care (EPHC) would face a 23 percent (by going back to 2008 rates) MediCal cut in payments to its hospital skilled nursing facilities. In addition, the cuts will be retroactive, causing EPHC to have to underwrite care it has already given, back to June 1. Since a staggering 93 percent of its SNF patients are on MediCal, this amounts to a $1.1 million hit per year — an unsustainable reduction in revenue to a fragile hospital system that has already scaled back services and been forced, continually, to do more for less, while making sure it meets shifting regulations on every front.

EPHC is hit especially hard by this ruling, because its SNFs are a large part of its business, with facilities in both Loyalton and Portola, and a total of 59 patients. Contrast this with its nine acute beds, only three or four of which usually are filled, and you get a sense of the gravity of the problem. Further, as Chief Executive Officer Tom Hayes has said repeatedly, the hospital has “zero days of cash on hand,” which means it can’t ride these cuts for long.

Because the hospital has very little time to come up with what amounts to $100,000 per month in cuts, everything from wages, to cuts in staff, cutting other programs that MediCal-dependent residents count on (but are operated at a loss), as well as cutting other services are under consideration.

Our small rural county does not have the same options available that urban communities and counties do. PCERC hopes that you will consider these impacts as well as what the loss of another hospital would mean to our overall social and economic wellbeing. We urge you to deny the SPA.


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