California Hospital Association to take legal action against MediCal cuts

Delaine Fragnoli
Managing Editor

It took a week longer than expected, but the California Hospital Association will move ahead this week with either a request for an injunction or a temporary restraining order to halt MediCal cuts from going into effect until its suit challenging the legality of the reductions can be heard.

The change in timing came after the state announced it would take at least three or four weeks to implement the cuts. More hospitals have also signaled that they want to participate in the suit.

Linda Satchwell, public relations coordinator for Eastern Plumas Health Care, said she and Lorraine Noble, director of nursing at EPHC’s Portola skilled nursing facility, continued last week to take declarations from patients for possible use in the case.

The lawsuit is in response to a decision last month by the federal Center for Medicare/Medicaid Services to approve a request from the state to cut its MediCal reimbursement rates for “distinct part” skilled nursing care by 10 percent. MediCal is California’s Medicaid program. The 10 percent cut is based on 2008 rates and is retroactive to June 1, 2011.

The decision amounts to a 23 percent cut, or $1.1 million annual hit, at EPHC. Ninety-three percent of its 59 skilled nursing patients at facilities in Portola and Loyalton are on MediCal.

Tom Hayes, chief executive officer at EPHC, laid out a six-point plan for relief last week.

—Exempt rural and fragile, vulnerable hospitals from the cuts.

—Delay implementation of the cuts so hospitals have time to respond and, if necessary, move patients.

—Exempt rural and tenuous hospitals from the retroactive repayments.

—Reduce, waive or restructure loan payments to the USDA. EPHC currently pays $53,000 a month on these loans, which were used primarily for construction and remodeling of the district’s two skilled nursing facilities.

—Assist EPHC to find grants or other funding sources to offset cuts.

—Suspend some regulatory timetables. The state requires 120-day notice to patients before transfer. EPHC will have to keep patients for those four months even though its reimbursement for their care during that time will drop by 23 percent. “It’s a real Catch-22,” said Hayes.

Noble continues to work on that transfer plan. She said she would not transfer fragile or hospice patients. Those with the most seniority would stay. Those admitted most recently would be the first to go.

The state plan requires family meetings and physical and psychological evaluations of patients. EPHC would then give a 30-day notice, and patients would have 60 days after that to move.

Hayes met with patients and families at both facilities last week. “Families are very upset at the government,” Hayes said. “They say they don’t know what they’ll do. They wanted to know, if we have to downsize, if they’re the ones who will have to leave.”

EPHC is looking at the possibility of downsizing. “We are analyzing what patient level we need to break even,” Hayes said.

Jeri Nelson, chief financial officer, has been running numbers to determine overhead and staffing levels.

Officials at EPHC are hoping it won’t come to that. If CHA were successful, an injunction would buy time — a lot of time. These types of cases historically take years to litigate and often go through the appeals process. The lawsuit may very well outlive many of the patients it seeks to protect.


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