SHCHD board discusses changes in Medi-Cal; new board members to be sworn in Thursday

Virginia Graziani

Redwood Times

Two newly elected members of the Southern Humboldt Healthcare District governing board will be sworn in at a special board meeting this Thursday, Dec. 6 at 2 p.m.

David Ordonez and Judi Gonzales will officially begin their terms 10 hours later, at midnight, Dec. 7. Current board vice-chair Corinne Stromstad will also be sworn in for her third term on the board.

Current board president Nancy Wilson is retiring after decades of service to health care in SoHum. Board member Clif Anderson, who was appointed to fill a vacancy on the board last summer, will also be stepping down.

The public is invited to attend the ceremony and a brief business meeting, which will take place at the Dimmick meeting room in the Garberville hospital.

Projected income from Medicare, the district’s largest source of income, is lower than expected for the past fiscal year, but the district is still in good financial shape, SHCHD administrator Harry Jasper reported to the current governing board at their monthly meeting last Thursday, Nov. 29.

Medicare pays SHCHD for patient services on a regular basis but uses a complicated formula based on costs of providing those services. At the end of each fiscal year SHCHD submits a cost report to Medicare, and Medicare then determines if it owes additional money to SHCHD or vice versa. The cost report also determines the rate at which it will pay for services in the following fiscal year.

For fiscal year 2011/12, which ended on June 30, SHCHD estimated an additional payment of approximately $400,000. Following review, Medicare determined that it owes the district only $163,000.

But this is still a positive result, Jasper said. The district’s total net income for the year is $550,000. The past fiscal year is the fourth successive year of net income exceeding $500,000, Jasper said.

This discussion led to a teleconference presentation from Ralph Llewellyn, M.D., of Eide-Bailly, a consulting firm that has been working SHCHD on improving financial performance.

Under this method, Medicare pays a set amount for each reimbursable service to a Medicare-enrolled patient based on allowable costs incurred by the district for overall patient care, as well as the proportion of the services that are used by Medicare patients.

Allowable costs include salaries, supplies, depreciation of building space and equipment used for patient care, and overhead (the daily cost of keeping the hospital and clinic functioning), but not costs Medicare considers to be unrelated to patient care, such as advertising, lobbying, and recruitment.

The rate per hospital day or outpatient service is based on the previous year’s cost report until the current year’s cost report is filed, resulting in either good or bad news about Medicare’s adjustment.

Dr. Llewellyn then addressed the question of "Why is it so difficult?" by citing some of the "many moving parts" involved in calculating costs. For example, as patient days or services increase, the overall cost of service goes down. Changes in amounts charged for services, the number of Medicare services charged, and increases and decreases in expenses also affect the outcome.

Many of these changes occur simultaneously. Cutting costs, such as eliminating some positions so the district spends less on salaries, lowers Medicare reimbursements to the point where the cost cutting is ineffective in the big picture.

Medical personnel, including doctors and nurses, need to be better educated in the complexities of cost-based reimbursement, Dr. Llewellyn said, since a knowledge of how it works can help them make the most of this complicated system.

Medi-Cal, the state-funded assistance program for low-income persons, is presenting a new challenge to rural healthcare providers. (See related story about RRHC in this issue.)

As part of the governor’s proposed budget for the coming fiscal year that begins in July 2013, rural counties will be required to join a managed care system, in which each patient chooses a primary care provider who manages his or her care. Providers are paid per patient rather than per service.

Board members Barb Truitt and Gary Wellborn, along with Jasper, attended a rural health conference in Southern California earlier this month. Medi-Cal managed care was one of the main topics of discussion.

Truitt and Wellborn were disappointed that the state representative did not seem prepared to discuss specifics of the program, which is supposed to become effective late next year if the legislature adopts it as part of the state budget in June.

"Things are still up in the air. It’s still too big for them. It’s a mess," Wellborn said. Jasper explained that concern over results of the presidential election, which were likely to determine the future of the Affordable Care Act, contributed to the state’s uncertainty.

One of the provisions of the ACA (commonly called "Obamacare") calls for states to establish "health exchanges" where people can choose their health insurer from a centralized database of plans offered by commercial insurance companies.

Medi-Cal managed care would depend on a similar system. Commercial insurers will bid on contracts with the state, and each county will choose an insurer for its Medi-Cal program from those approved by the state.

Another option is a "county-organized health system" in which the individual counties administer their Medi-Cal programs. With the support of all local healthcare providers, Humboldt County board of supervisors has already petitioned the state to allow Humboldt to establish a county-organized health system.

Jasper indicated that local providers would prefer to work with Partnership Health. On its website,, Partnership Health is described as "a public/private organization designed to provide a cost-effective health care delivery system to Medi-Cal recipients in California’s Solano, Napa, Yolo, and Sonoma Counties."

But the state allows each insurer to serve only a limited number of counties, and Jasper was not sure whether Partnership Health would be eligible to work with Humboldt County.

On the positive side, Jasper reported that clinic visits for the month of October were up nearly 18 percent. Although clinic visits are still somewhat below budget, this is a significant increase. Jasper credits Dr. Marcin Matuszkiewics, who is seeing patients five days a week. Jasper has heard complimentary reports from patients about the new doctor, he said.

SHCHD staff, including Jasper and Director of Nursing Sarah Beach, have been meeting with their counterparts at Redwood Memorial Hospital in Fortuna to discuss working more closely, especially regarding telemedicine and emergency room transfers.

Getting a telemedicine program up and running is a major goal for SHCHD. Jasper recently met with the executive director of the California Telehealth Network, and Beach is working on a grant application for funds to buy equipment that will enable SHCHD patients to be examined by a dermatologist or an ear-nose-throat specialist at a remote location.

Likewise SHCHD staff continue to investigate potential vendors for an electronic health records (EHR) systems, and will soon make an onsite visit to the hospital in Weaverville to see if their EHR system would be a possible choice for SHCHD.

The board was so pleased with the positive Municipal Service Review recently approved by the Local Agency Formation Commission (see related story in our Nov. 20 issue) that board members suggested using copies of the MSR as a public relations and recruitment tool. Jasper said he had placed a "stack" of them at the Garberville-Redway Chamber of Commerce office.

The board’s next monthly business meeting is scheduled for Thursday, Jan. 24 starting at 1 p.m. in the Dimmick meeting room.