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transition to premium payments.


Establish a rate system to promote efficiency.  Evaluate moving from a per diem rate reimbursement system to a discharge payment system similar to other Medicaid programs.  This would promote efficiency and reduce the administrative cost of the prior authorization process.  This system could be tied to quality to avoid paying for medical errors or avoidable readmissions.  


Realign inpatient and outpatient hospital payment rates.  Rebalance payments between inpatient and outpatient hospital services to take away the disincentive for treating people in lower cost settings.


Reassess Medi-Cal provider payments.  Review the way payments are allocated in the Medi-Cal program to assess whether the historical formulas still apply and whether they properly reflect the cost of providing care to the Medi-Cal and uninsured populations.  


Remove the current ban on a hospital tax.  A hospital (or other provider) fee has the potential to generate increased Medi-Cal rates. For hospitals (or other provider types), federal law permits the collection of tax revenue up to 5.5 percent of hospital (provider) revenue, which can be used as the non-federal share of increased payments up to the Medicaid upper payment limit (UPL).  


Find qualified but unmatched state and local health spending.  Identify additional State and/or local only health programs for which no federal matching currently occurs and request federal match on those programs.  The basis for this request would be the ability to generate capital to reform the health delivery systems.  Other States have been granted this approach, but it has been on a time-limited basis.


Use DSH funding for public clinics.  Consider seeking a federal law change that would allow DSH to also be used for public clinic systems so that care can be shifted to lower cost settings.


Expand the use of public hospital provider based federally qualified health centers (FQHCs) to increase federal reimbursement.  Currently 5 public hospitals have this status.  California could amend its current State plan to add more county provider-based FQHCs.  IGTs could be utilized to pay for any additional non-federal cost.


Better integrate managed care payments into payments for the safety net.  Increase the use of IGTs that will have the dual benefit of improving the status of hospitals and acceptance of the managed care program.    


California’s current budget deficit has been reported to be as high as $26 billion.  The Governor’s 2009/10 budget, as adopted by the Conference Committee, proposes to seek

Health Management Associates/Harbage ConsultingPage 49

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