Bush Plan May Close Some Public Hospitals

A Bush administration plan to cut the funding of public hospitals could cost Los Angeles County up to $125 million a year and force the closure of hospitals and clinics, health officials said Wednesday.

The potentially devastating cut would be the result of efforts by the federal Center for Medicare and Medicaid Services to change the rules for reimbursements to states. California hospitals overall stand to lose $250 million in health funds, according to government officials.

With the federal budget increasingly tight, the agency hopes to make the change by the end of October, though it is uncertain how soon health care agencies would feel the impact.

California’s undersecretary for health and human services, Glen Rosselli, said the move would destabilize hospitals that serve the poor. “For some it could be traumatic, and for the public it could be life-threatening,” he said.

County hospitals are already starved for cash, and many private medical centers are tottering on the brink of insolvency. Hospital officials warn that new cuts could deliver a critical blow to California’s health care network.

“We’re approaching the precipice very quickly, and we’re concerned this action will send some of us over,” said Catherine Douglass, president of a coalition of private hospitals that serve low-income areas.

Los Angeles’ share of the cuts amounts to the cost of running Harbor-UCLA and Olive View-UCLA medical centers. Though local officials have not begun to make plans, they say the cuts would force them to contemplate closing hospitals and clinics.

It is possible that the cuts will take effect by Jan. 1 or be phased in over several years, officials say.

The Bush administration calls the rule change necessary to protect taxpayers from fraud.

At issue is the so-called upper payment limit, which allows some public hospitals to receive up to 150% of the Medicare rate of reimbursement for treating patients. This extra money is intended to compensate hospitals for treating large numbers of uninsured people.

Several states--though not California, state officials say--have abused the financing system in years past through complex schemes that essentially let them use reimbursements to pay for projects like roads and bridges. The Clinton administration and Congress restricted the program last year to public hospitals to stem such abuses.

But the new director of the Center for Medicare and Medicaid Services, Tom Scully, has said more needs to be done. At a luncheon in Washington last week, he called the rule “the single biggest outrage I have ever seen in the history of government finance.”

“I love the Medicaid program. I love helping poor people get health care,” he said, according to a Modern Healthcare story. “I hate the financing scam, and that’s what this is.”

A spokeswoman said she could not comment further because the change is still under consideration.

By the end of October, the center is expected to trim reimbursements to 100% of the Medicare rate by issuing a new rule that could take effect as early as Jan. 1. As a regulatory action, the move would not need congressional approval.

With the budget surplus in Washington rapidly vanishing, critics charge that the administration is trying to pay for its tax cut by trimming health spending.

Bush’s budget counts on $17 billion in savings from the move over 10 years. Congress has estimated the savings at $11.7 billion.

“The Bush administration should not be attempting to balance the budget at the expense of health care for working families,” said Bart Diener, assistant general manager of the Service Employees International Union Local 660, which represents Los Angeles health workers.

Elected officials and associations of public hospitals have launched a lobbying effort to kill the rule change. California Sens. Barbara Boxer and Dianne Feinstein and Gov. Gray Davis wrote letters last month to U.S. Health and Human Services Secretary Tommy Thompson, urging him to make no cuts.

“The end result [would be] that high volumes of low-income Californians could lose access to health care,” the senators wrote.

During a visit to Washington next week, Los Angeles County supervisors are expected to argue against the cuts. Coalitions of local labor, medical and religious leaders are holding rallies across the state today, including a midday gathering at County-USC Medical Center, to draw attention to the issue.

“It’s completely scary,” said Melinda Paras, chairwoman of Alameda County’s Health Authority, which has calculated that it would have to close the emergency room of the county hospital should the cuts be approved. “If we can’t stop it, I wouldn’t know where to go.”

In Los Angeles, the possible reduction is just the latest in a series of financial woes for the county’s vast and fraying health care network. Another cut in federal assistance last year means that the health department will face an $884-million deficit in four years.

The county’s trauma network is on the verge of collapse from dwindling state assistance for the private hospitals that are the prime destination of injured people needing emergency treatment.

“We’re looking down the barrel of a huge deficit,” said Fred Leaf, the county’s interim health director. “Managing that deficit is going to be a Herculean task.”