MCDH Ad Hoc Fee/Structure Committee explores funding options
The Mendocino Coast District Hospital (MCDH) Ad Hoc Committee on the Hospital Fee/Structure met Tuesday February 28 to gather information from Consultant Lloyd Bookman regarding potential structural changes to improve MCDH revenues.
Healthcare financing is very complex and constantly changing in this current political environment and our hospital has been struggling and juggling to keep afloat for years. The MCDH/MCHD Board of Directors and staff are exploring a new option which may potentially add millions to the budget bottom line if all the figures line up and process changes are supported by the community.
The meeting was primarily a primer on Medicaid Provider Taxes, which is a federal and state program that taxes some private medical institutions which is then used as a match for federal funds and returned to some entities, such as nonprofit hospitals, to pay for healthcare for very low income people. The Medicaid Program, known as MediCal in California, was expanded under the Affordable Care Act (ACA) to people living within of 138% poverty guidelines, which translated into coverage for over 4.7 million Californians.
A major factor in the MCDH financial shortfalls is the fact that MediCal pays much less than other providers and especially impacts Obstetrics, which has over a one million dollar loss the Board is trying to mitigate. This population is rapidly increasing here and may be up to 30% of MCDH patients. Many of the expanded group is heavy users as they may have not had any medical care in decades. Add to the increasing number of enrollees is the issue that California has one of the lowest Medicaid reimbursement rates in the Country causing more red ink.
Currently, as a district healthcare district hospital, MCDH is not eligible to receive monies from the Medicaid Provider Tax fund although, as a rural Critical Access Hospital (CAH), it does receive other special reimbursements. To participate in this program, potentially receiving higher Medicaid/MediCal payments, MCDH would need to become a nonprofit hospital. The Mendocino Coast Healthcare District (MCHD) would be required to successfully conduct an election to authorize this change. It would also require re-licensing as well as much policy, procedural and legal modifications. The hospital and clinic would then be operated by a separate nonprofit Board of Directors, a couple of whom could be current MCHD Board Members. While the current MCHD/MCDH Board would be relinquishing some controls over operations, safeguards including an exit strategy, can be built into the new contracts.
While this is a very simplified overview, given the increase in qualified low income patients and hospital shortfalls, it may be an effective strategy to keep our hospital and community healthy. The next step the Committee authorized is for staff to calculate the numbers of patients and reimbursement programs to assess the potential net gain.
While not many other districts are currently pursuing this strategy, our Medicaid population is a high enough in relative to the entire budget, it may pencil out. If the Board decides to proceed with the project it will probably take a year and cost $250,000 although if it brought 3-6 million dollars in revenue, it certainly would be worth it.
There are many unknown factors that will affect the decision making process as this inquiry proceeds. The entire medical financing picture is in flux nationally given this bizarre political climate, with talk of repealing the ACA, slashing domestic spending, hacking Medicaid regulations, cutting benefits to undocumented immigrants and the list goes on. It requires a great deal of research and investigation on the complicated legal and taxing issues. It will require a tremendous amount of community education, information and communication so it rebuilds its trust because it will take strong support to succeed. It is a positive step forward under the capable leadership of Committee Chair Steve Lund.
Mendocino TV will continue to report on MCDH/MCHD progress on this encouraging endeavor at www.mendocinotv.com. If you want to hear more details, you may watch the meeting.