“Safety Net” Financing in Los Angeles County: Where do

we go from here?

Steven Asch, MD, MPH

Jeffrey Wasserman, PhD

September 29, 2004

Purpose of This Part of the Project

–Collect ideas to stimulate discussion

–No true policy analysis

Major Contributors to Safety Net

Other11%

LA County Special

Allocations5%

Realignment6%

Medi-Cal, DSH, SCHIP

78%

How is the Financial Burden Distributed Across Hospital Types?

Type of hospital

N

Distribution of adjusted

inpatient days

Distribution of costs

Payments relative to

costs

DHS owned 6 24% 39% 79% Non-DHS owned, receiving SB-855 payments

35 38% 32% 88%

Non-DHS owned, not receiving SB-855 payments

65 38% 30% 89%

Observations on Safety Net Financing

– Mind boggling level of complexity

– System is rife with conflicting incentives and objectives

– Why?

– No magic bullet, but…

Methods

• Interviewed 40 stakeholders late 2003– LA County– State, Federal, Santa Clara County, and

Alameda County

• Synthesized themes– Missed Opportunities– Current Problems– Potential solutions

Missed Opportunities

• LACDHS unprepared for advent of Medi-Cal managed care

• DSH allotments do not match burden of safety net patients

• LACDHS clinics need to obtain FQHC status

• Need to maximize enrollment in safety net insurance programs

Problems

• Burgeoning demand, increasing costs

• Micromanagement at political level

• Poor care coordination/ lack of service integration

• Uneven management of safety net institutions

Solutions: Increasing Revenue

• Expand or ease coverage– Simplifying enrollment forms– Enroll children at birth– Expand SCHIP (First Five)– Uncompensated care pool– Change Maddy fund rules– Less incremental approaches (SB-2)

• Broaden funding sources– Sin taxes– 911 tax– Market safety net providers to privately-insured patients

Solutions: Reducing Costs

• Exclude elements of safety net population (e.g., non LA county residents, undocumented immigrants)

• Prioritize and reduce scope of benefits in safety net programs (e.g., Oregon Medicaid)

• Increase copayments to reduce utilization

• Negotiate better volume discounts for drugs, supplies

Solutions: Increase Efficiency

• Improve staffing flexibility

• Disease management programs

• Better coordination between safety net providers– Safety net card– Information exchange

• Shift care to more efficient venues – Urgent care visits for low acuity ER patients– Regionalization of procedures

Solutions: Better Matching of Funding to Need

• Change DSH facility caps

• Increase level of safety net care required from nonprofit hospitals

• Allow SCHIP funds to be spent on population based public health

• Change governance of safety net (Denver example, Alameda counterexample) to spread burden more equally

Guide for Discussion

• Many potential solutions not new: why are they still on the shelf?

– Politically divisive?– Infeasible?– Cost ineffective?

• Innovative ideas