Hospitals impose fee to generate federal funds

California's hospitals have begun imposing a special fee on themselves in order to draw down as much as $5.7 billion in additional funds from the Medicaid program.

Hospitals began submitting the first of what will be several payments late last week to the California Department of Health Care Services, which is acting as an intermediary between the providers and the Centers for Medicare and Medicaid Services.

The fee imposed on the state's approximately 400 hospitals will total about $3.1 billion between now and the end of 2010. It will be used to draw down Medicaid matching funds, plus more than $2.6 billion in additional funding comprised of retroactive payments from fiscal 2009.

California's hospital community conceived the fee as a way to address deep funding cuts last year to Medi-Cal, the state's Medicaid program, as well as historically low levels of reimbursement. It is based partly on a fee the state's nursing homes imposed on themselves in 2005 to boost federal funding.

The fee required two separate pieces of legislation in order to satisfy CMS, which is on the threshold of approving the plan. However, some hospitals--particularly those in more affluent regions with few Medi-Cal patients--will have to pay the fee and receive no additional reimbursement.

For more:
- read the Daily News article
- read the California Hospital Association bulletin