Plan to cut hospital funds draws uproar

A proposal to divert funds from a federal program that reimburses hospitals for the cost of treating illegal immigrants has angered lawmakers in California and other border states.

Under the proposal the House Appropriations Committee planned to consider today, some of those funds would be shifted to help states cover shortfalls in a children’s health insurance program.

But the plan, which would affect hospitals nationwide, drew a sharp response from lawmakers from border states, where hospitals struggle with the cost of care for illegal immigrants unable to pay their bills.

House aides were scrambling Wednesday night to scrap the proposal and find other ways to make up the shortfalls in the children’s health insurance program.

The staffers had proposed tapping the funds used to pay hospitals for illegal immigrant healthcare because they incorrectly believed that hospitals had forfeited the funds, which are left over from previous years.

California hospital officials were optimistic Wednesday night that the plan would be scrapped.

With almost half of California’s hospitals operating in the red, lawmakers such as Rep. Lucille Roybal-Allard (D-East Los Angeles) and Sen. Dianne Feinstein (D-Calif.) expressed concern about the added financial strain the move could impose.

California’s 430 hospitals spent an estimated $700 million to cover healthcare costs for illegal immigrants in 2006. Under the reimbursement program, the state received $73 million.

“California hospitals shouldn’t have to bear the burden of uncompensated care provided to individuals who come into this country as a result of the federal government’s failure to properly police the borders,” said Jan Emerson of the California Hospital Assn.

She stressed that problems in the California medical system stem from a wide variety of causes, such as underfunded Medicaid programs, required anti-earthquake renovations, and the fact that one in five people who enter a California hospital do so without insurance.

The 14 states with a shortfall in their child health insurance programs overspent their allotments. None of them are on the southern border.

Sen. Jon Kyl, the Arizona Republican who spearheaded the original reimbursement program, organized a bipartisan group of nine senators who issued a letter Wednesday urging continued funding for hospitals.

“This much-needed program is working,” said the senator’s spokesman, Ryan Patmintra, “and Sen. Kyl will oppose any effort to raid these funds to pay for other initiatives.”

In their letter, the senators argued that a 1986 federal law requiring hospitals to give care to anyone who needs it, regardless of legal status, places “a disproportionate burden” on their states that threatens the ability of U.S. citizens to gain access to care.

The reimbursement program came into being as part of the Medicare Modernization Act of 2003. It set aside $1 billion over four years to reimburse hospitals, doctors, ambulance companies and others specifically for the treatment of undocumented immigrants.

It was the first time the federal government made funds available to cover these costs, something a coalition of border-state hospitals had been advocating for years.

But the program started several months behind schedule. When it did begin, the administrative steps to make a claim involved a cumbersome, paper-based system that hospitals found expensive and hard to use, as most handle claims electronically now.

The result is that $233 million went unused in fiscal 2005 and 2006.

Under the program, those funds still remain available to hospitals, and the industry says there is no question they will tap them. There is a constant shortfall of funds, and more hospitals are enrolling in the program.

There has been a steady growth in the number of claims, the number of enrolled providers and the total value of payments.

In the first quarter of the program’s existence, the administration received 14,217 claims worth $25 million.

By the fifth quarter, from April to June 2006, hospitals filed 59,318 claims and received payments of more than $50 million. Los Angeles County hospitals received $3.2 million for spending in that quarter.

In the last 10 years, more than 70 California hospitals have closed their doors, 11 of them since 2004, and most of those were primarily in the greater Los Angeles area.

“Our state is nearing a meltdown of its healthcare system,” said Emerson of the hospital association. “This money alone won’t save it, but it’s an important piece.”

nicole.gaouette@latimes.com