County to Press U.S. to Extend Funding Waiver
More accustomed to hearing pleas for money than making them, Los Angeles County’s five supervisors will press the federal government today to extend a billion-dollar health care waiver--although the county has not fulfilled all the promises it made to win the exemption four years ago.
The waiver, a change in federal rules governing Medicaid spending that helped the county stave off bankruptcy in 1995, does not expire until next year. But county officials have already begun a full-court press to renew and expand it. That effort will culminate today, the final day of the supervisors’ annual visit to Washington, when a White House meeting will allow them to personally lobby the Clinton administration.
“It’s a huge issue for us and the future of the health care system in Los Angeles,” Supervisor Don Knabe said.
Without the waiver, the health department would face an annual deficit of more than $300 million, probably forcing the county to slash a network of hospitals and clinics that serve millions of uninsured patients.
But Knabe and his colleagues are in an awkward position because their ambitious project to restructure the county health system into a more efficient, outpatient-based network has not been as successful as was predicted in the frantic days when the first waiver initially was granted.
Although the county has more than tripled the clinics serving the county’s rising uninsured population and cut the number of patients using its expensive hospital beds, it remains more than $200 million short of its savings goal. Moreover, 900,000 fewer patients than predicted have utilized the county’s outpatient clinics.
County officials acknowledge these shortfalls, but say that they have tried hard to meet the waiver’s intentions and must secure an extension.
“If I were making a judgment on the waiver, I would probably say to the county, ‘Why would I give you an extension if you haven’t achieved your goals?’ ” Supervisor Gloria Molina said. “But the reality is that we need this extension desperately in order to keep the system operating.”
Officials in the Health Care Financing Administration are expected to make the decision on the waiver renewal sometime next year, and they have been studiously silent on how they are leaning. An agency spokesman said that generally, key criteria are whether the local government working under a waiver has maintained quality access to care and not spent more federal money than it would have without an exemption.
But it won’t hurt the county’s efforts that the decision will be made during the presidential campaign of Vice President Al Gore, who has worked hard to build support in California and has close ties with supervisors.
After a day of dashing from one congressional office to another with an entourage of county managers--including the district attorney and sheriff--supervisors attended a reception in the Rayburn Office Building and said they are hopeful concerning the waiver.
“I’m optimistic that we will have a waiver extension,” said Supervisor Zev Yaroslavsky, noting that the board has had good relations with the Clinton administration. “If we don’t, then we turn the clock back to where we were in 1995, which saw the health care system of Los Angeles County teetering on the brink. And nobody wants to go back to that.”
Supervisors spent Wednesday buttonholing members of Congress--or sometimes having to settle for junior aides--to help push the county’s agenda, which the waiver tops.
“Our congressional delegation is 100% with us,” Supervisor Yvonne Brathwaite Burke said. “The waiver has been a godsend to us.”
What’s more, despite Washington’s high-profile assistance, county officials can point out that cuts and quirks in federal financing have led to Los Angeles County receiving $100 million less in federal health care money than it did in pre-waiver days.
“We’re doing exactly what they asked us to do,” Knabe said, “and still we have more to do.”
Supervisors also want to expand the waiver in its next five-year incarnation to allow them to tap into as much as $100 million more annually. And, sometime in the hopefully not too distant future, they want parts of it to become permanent.
The waiver allows the county a way around widely criticized rules requiring that Medicaid dollars be spent on pricey hospitals rather than cheaper clinics, but supervisors say that the exception must be broadened and made permanent. For example, even under its waiver, the county only saves a small amount of money when it cuts the number of patients in hospital beds because the revenue that accompanies them dries up.
“The current funding streams from the federal government don’t make sense,” Knabe said. “They can’t ask us to move to outpatient but make the payments to inpatient.”
Gore will not attend today’s White House meeting; instead, he will inspect tornado damage in the Midwest. A wide array of White House aides and other administration officials--including Maria Echavaste, White House deputy chief of staff; Kevin Thurm, deputy secretary of Health and Human Services; and Michael Hash, deputy administrator of the Health Care Financing Administration--will meet with supervisors in the Roosevelt Room.
Publicly, county officials are careful not to take anything for granted. “We haven’t started negotiating yet, and one is wise to be careful about what is going to happen during negotiations,” county health Director Mark Finucane said.
But privately, the conventional wisdom at the county Hall of Administration is that, just as in 1995, the political calculus favors the supervisors. Then, Clinton was gearing up for his reelection campaign and was lobbied heavily by both supervisors and the Service Employees International Union, which represents most county workers. He announced the waiver in a dramatic news conference on the tarmac at Santa Monica Airport.
Still, the county--which relies on federal money for 20% of its $14.3-billion budget--is wary of looking as though it is seeking a handout.
Pilot Project
Over the past months officials have gone out of their way to describe the waiver not as a “bailout”--as it was called in the panicky days of 1995--but by its official bureaucratic title, a “Medicaid Demonstration Project.”
Sixteen similar waivers from the federal Medicaid rules have been granted to states from New York to Tennessee. Los Angeles County, more populous than most states, is one of only two counties with a waiver.
County officials said that it only makes sense that the federal government will allow them to continue what is essentially a pilot project.
“People think about permanent bailouts, but that’s not what we’re proposing,” said Finucane. “What we’re proposing is to change the way we get paid for services to our indigent population.”
Though the waiver’s expiration date is more than a year away, county officials have for months been working on the mammoth extension project.
Chief Administrative Officer David Janssen and Finucane flew to Washington in January to meet with health care officials. Supervisors last week approved a draft proposal for the extension. And the waiver is constantly discussed in the supervisors’ Washington meetings this week.
Finucane and others have said that the county overestimated the money that it could save by restructuring the $3-billion health department, which is larger than some federal cabinet-level agencies, and that the shortfall on clinic visits is because the health care crisis of 1995 chased away more patients than expected.
The health department’s application has several new elements, including a proposal to provide financial support to nurses in county school districts that the federal government has hinted it could approve, and a plan to use federal money to retrain hospital workers for jobs in the county’s growing public health and outpatient departments.
“The extension is warranted,” Finucane said, “because our work isn’t done.”
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Nicholas Riccardi reported from Los Angeles and Richard Simon from Washington.
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Status of County’s Health Services
The following are some of the goals the county’s Department of Health Services has and has not accomplished since 1995, when the Clinton administration provided a package worth more than $1 billion to avoid deep cuts in Los Angeles County’s health system. Four years later, county supervisors are revving up their campaign to extend the federal aid, even though some goals are unmet.
Achievements
Outpatient clinics: Increased number to 149 from 45, primarily through contracts with private providers, and conducted surveys to track use and public health needs.
Hospitals: Decreased the number of beds in the budget by 28% and the average number of patients staying in hospitals each day by 24%, five times the average statewide reduction, and cut inappropriate use of emergency room by 27%.
Cost savings: Cut work force by 15%, a reduction of 4,300 positions, through attrition and layoffs. County relies on $174 million less in federal funds per year, despite money from waiver.
Unmet Goals
Outpatient clinics: Failed to increase visits to clinics by 50%. County officials say that, because patients abandoned the county health system during its financial crisis, they are 900,000 visits short of goal.
Cost savings: Up to $200 million short of savings projected over several years through re-engineering and cost-cutting process. County says it overestimated speed at which it could save money.
Source: Los Angeles County Department of Health Services
