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historically been utilized by the state to help subsidize the uncompensated care of furnishing services to Medi-Cal and uninsured individuals in public hospitals.  This caused major changes to the manner in which hospitals were reimbursed and has been successful in increasing federal funding to hospitals and related clinics.  

The waiver created the “Safety Net Care Pool” (SNCP) from three sources of payments:

1.

The dollar difference at that time between the cost of providing hospital care by the designated public hospitals and the Medicaid upper payment limit (UPL) for those hospitals.

2.

The remaining UPL transitional spending authorized under federal law in 2000.

3.

$180 million in federal funding, which was the annual average dollar amount in the Los Angeles County Waiver.

California also established the “DSH swap” whereby approximately $400 million ($200 million federal) in historical annual DSH payments made to private hospitals were instead paid as supplemental Medicaid payments under the private hospital UPL.  The freed up DSH funds were then paid to the public hospitals netting an increased federal funding of over $200 million annually.   

Under the Section 1115 waiver, California was able to:

1.

Replace historical general fund commitments to the regular Medi-Cal inpatient hospital payment rates made to public hospitals by utilizing CPEs as the funding source of such Medi-Cal payments;

2.

Continue subsidizing both hospital and non-hospital uncompensated care costs for uninsured individuals through the establishment of the SNCP;

3.

Convert the financing of the historical DSH payments made to public hospitals up to 100 percent of the hospital-specific DSH limit from IGTs to CPEs;

4.

Access its 175 percent DSH authority for public hospitals utilizing IGTs derived from county tax dollars and by replacing historical DSH payments made to private hospitals with Medicaid supplemental payments funded by the state general fund;

5.

Establish the Coverage Initiative, which provided federal matching funds for local health coverage programs;

6.

Draw down a federal match for state health care programs such as California Children Services (CCS) and Genetically Handicapped Persons Program (GHPP), and nursing home care, freeing up state general fund for use in paying for private hospitals and for

Health Management Associates/Harbage ConsultingPage 47

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