St. John’s Threatens to Drop Medi-Cal in Fee Dispute

St. John’s Regional Medical Center in Oxnard has threatened to cancel its Medi-Cal contract in four months if the state does not increase its reimbursement rates.

Last year, the hospital treated 5,500 Medi-Cal patients, but took a loss of more than $3 million in the process because of what hospital officials describe as inadequate reimbursement from the state. Losses this year are projected to top $5 million.

Hospital officials complained that two months of negotiations with the California Medical Assistance Commission, which determines varying reimbursement rates for participating hospitals, have failed to arrive at an acceptable increase.

The cancellation will take effect in September if the 200-bed hospital does not reach an agreement with the commission in a meeting next month. Eliminated would be non-emergency, elective health care including childbirth and most surgery for beneficiaries of Medi-Cal, the state’s insurance program for the poor.

Threat Part of Strategy?

“The state is not fulfilling its obligation to provide care for this group of patients,” said hospital president Dan Herlinger.

But the director of negotiations for the California Medical Assistance Commission said such threats by hospitals sometimes are only a part of a broader negotiating strategy.

“It’s not that rare to threaten cancellation,” said James C. Foley. “Many of the notices we get are a means of negotiating a new contract. It’s a means of getting our attention.”

He said that only 40 hospitals have terminated their Medi-Cal contracts since the program was started in 1983.

Nine hospitals eventually renewed their contracts. Medi-Cal services were otherwise restored in 5 hospitals, and 17 hospitals went out of business, leaving only 9 former Medi-Cal providers still denying services.

Foley also noted that the commission is usually receptive to appeals of negotiated settlements.

But St. John’s officials found little comfort in Foley’s words.

“If the state knows something we don’t know, I wish they’d tell us,” said Judy Bellamy, the hospital’s director of public relations and marketing communications. “So far, our negotiations have not been successful, and we’re taking the matter seriously.”

The commission negotiates varying rates for participating hospitals based on the kinds of services provided and the number of competing hospitals.

Hospital officials said the state has not increased its reimbursement rates for St. John’s since 1983, despite an average annual increase of 7% in the cost of care for those patients.

Some Not Covered

St. John’s treated approximately 5,500 Medi-Cal patients last year in the hospital at a loss of $3.2 million on gross in-patient revenues of $73.1 million, hospital officials said. During the same period, the hospital provided an additional $3 million in care to indigent patients not covered by Medi-Cal, officials said.

Medi-Cal losses are expected to increase to about $5.2 million on revenues of $80.6 million during this fiscal year, when a reduction in beds available at Ventura County Medical Center increased the number of Medi-Cal patients seeking treatment at St. John’s, Bellamy said.

Emergency care, which hospitals are required to provide under state law, is reimbursed by Medi-Cal uniformly to all hospitals and would not be affected by a cancellation, Foley said.

Seven other hospitals in the county provide in-patient care for Medi-Cal patients, he said.

St. John’s is run by Catholic Health Care West, a chain of 10 hospitals in California and Arizona affiliated with the Sisters of Mercy nuns.