Blue Cross Sets Up Funds as Budget Crisis Stopgap

Blue Cross of California, the state’s largest health insurer, has established two short-term assistance funds for hospitals providing Medi-Cal services during the state budget crisis.

The Woodland Hills company said the funds are designed to assure that emergency room, obstetric and pediatric services continue despite the budget impasse.

The first fund of $15 million will provide short-term “bridge” loans to hospitals contracting with Blue Cross under its CaliforniaCare health maintenance organization or its Prudent Buyer Plan preferred provider organization. The loans will be interest-free until 30 days after the governor signs a 1992-93 budget or 90 days total, whichever is first.

Another $10 million fund will redeem at face value state warrants issued to hospitals as reimbursement for services to Medi-Cal beneficiaries, if banks refuse to honor the warrants.