State to Side With County in Medi-Cal Fight


State officials indicated in a letter released Wednesday that they will side with Los Angeles County in its battle to win reimbursement from the federal government of millions of dollars in Medi-Cal claims--a long-running dispute that could leave the county with a huge hole in its budget.

In the draft letter to the County Board of Supervisors, state health officials call a decision by federal authorities to postpone action on the reimbursement claims “unfair and unjust.”

The letter from the state Department of Health Services is expected to be finalized Friday and sent to the federal Health Care Financing Administration, which has expressed doubts about reimbursement claims by Los Angeles and other California counties.


According to the letter, federal health care officials fear that paying off California’s reimbursement claims will set a precedent in other states. Federal officials have projected that Medicaid costs nationwide could rise by $10 billion. State and county officials dispute that assessment.

“I believe that if we can dispel the notion that paying California’s claim will have a significant adverse effect on the Medicaid budget, we will then be in a better position to resolve the remaining issues,” board Chairwoman Yvonne Brathwaite Burke writes in a letter sent Wednesday to Health and Human Services Secretary Donna Shalala.

The county is seeking $640 million in reimbursements for the administrative costs of running its Medi-Cal program over the last three years. The sum has been included in the county’s 1994-95 fiscal year budget, and its subtraction could force more budget cuts.

The state, in its draft letter to the federal government, notes the possible dire consequences of that prospect.

“County budgets were designed based on the expected receipt of (reimbursements),” the letter states. “HCFA’s deferral of payment of . . . claims puts county health programs at risk of closure.”