The newsroom includes access to CHA News, which provides timely information to members every Monday and Thursday and is at the core of CHA benefits. In addition, it is also home to resources such as toolkits and talking points designed to help member hospitals and health systems communicate with internal and external audiences on a range of current health care-related issues. Links to CHA media statements and press releases can also be found here.  

White House Releases Report on Sequestration

The White House has released its report on the automatic budget cuts, known as sequestration, mandated by the Budget Control Act (BCA) of 2011. BCA requires a 2 percent cut to Medicare, representing an $11 billion cut to Medicare in fiscal year 2013. CHA estimates California will lose $1 billion in payments to all Medicare providers. 

Additional cuts in non-defense discretionary budgets would come from the National Institutes of Health ($2.52 billion) and funding for health insurance exchanges created by the Affordable Care Act ($66 million). In the report, the White House calls on Congress to replace the “blunt and indiscriminate instrument” of sequestration with a balanced deficit package. CHA will continue to work with Congress to ensure Medicare payments to hospitals are not threatened further. The report is available at

In addition, the American Hospital Association (AHA) has estimated the number of jobs that could be lost due to sequestration in a report included in CHA News earlier this week. The AHA report is available at

Hospital Leaders Meet with California Congressional Delegation

Hospital leaders from throughout California traveled to Washington, D.C., Sept. 11 to deliver the message that hospitals cannot withstand further cuts to Medicare and Medicaid. The group, gathering for the first of three advocacy days hosted by CHA and the American Hospital Association, met with nearly half of the California congressional delegation as Congress returned from its five-week recess.

Congress must act on a bill to fund the federal government by Sept. 30. However, Congress is expected to wait until after the November elections to confront the most significant legislative issues, including the end of the current freeze on Medicare payments to physicians, expiration of the Bush and Obama tax cuts and automatic cuts to domestic and defense budgets known as sequestration. Hospital leaders are encouraged to participate in upcoming advocacy days on Nov. 29 and Dec. 11. For more information, visit

House Subcommittee Passes Labor-HHS Appropriations Bill

The House Appropriations Subcommittee on Labor, Health and Human Services (HHS), Education, and Related Agencies held a mark-up of its fiscal year 2013 appropriations bill today, reducing the HHS discretionary budget by $1.3 billion below current levels. If signed into law, the bill would restrict use of any HHS funds to implement the Affordable Care Act and would rescind funds authorized for the Consumer Operated and Oriented Plan (CO-OP) Program, Center for Medicare & Medicaid Innovation, Prevention and Public Health Fund and Patient-Centered Outcomes Research Trust Fund. The legislation also would eliminate the Agency for Healthcare Research and Quality effective Oct. 1, 2012. Members of the California congressional delegation on the subcommittee voted along party lines, with Rep. Jerry Lewis (R) joining the majority to pass the bill, and Reps. Lucille Roybal-Allard (D) and Barbara Lee (D) opposing the bill. While the legislation will likely pass the full appropriations committee, it will not pass the Senate. CHA expects a final budget to be resolved in a conference committee.

Governor Signs State Budget

The Governor signed the fiscal year 2012-13 state budget bill June 27, after the Legislature passed the remaining 21 trailer bills earlier in the day. To close the $15.7 billion budget deficit, the $92 billion budget contains many deep and controversial cuts, including reductions to health care and welfare programs. One of the key trailer bills, AB 1494 (Committee on Budget), transitions all children in the Healthy Families program to Medi-Cal beginning Jan. 1, 2013.The transition will occur in four phases over 12 months and is expected to save the state $13 million in the budget year and $73 million in subsequent years. AB 1468 (Committee on Budget) implements the dual eligible demonstration project in eight counties. Current law authorizes the Department of Health Care Services to establish dual eligible demonstration projects in up to four counties to provide dual beneficiaries, who are eligible for both Medicare and Medicaid services, with a continuum of services that maximizes coordination of benefits between Medicare and Medicaid beginning no sooner than March 1, 2013. The demonstration projects are expected to achieve significant savings over the next several years. 

Agreement Reached on Key State Budget Issues

The Governor and Democratic leaders announced June 21 that they reached an agreement on changes in the proposed fiscal year 2012-13 state budget regarding the Healthy Families program, subsidized child care and CalWORKS. Under the agreement, all children in Healthy Families will shift to Medi-Cal, which is what the Administration proposed earlier this year.

Under this latest proposal, the transition will take place in three phases over 12 months, beginning January 2013. The first phase will include children in both Medi-Cal and Healthy Families — approximately 415,000 children. The agreement was unexpected because last week both the Assembly and Senate agreed to shift only 187,000 children into Healthy Families, while the Administration wanted to dissolve the program and move all 880,000 children into Medi-Cal. The move is expected to save the state $13 million in the first year. The proposal must be approved by the Centers for Medicare & Medicaid Services. The Senate Budget Committee is expected to take up this issue in a trailer bill on Monday, along with other trailer bills. Both the Senate and Assembly are expected to take up the trailer bills on Tuesday. Discussions on the Coordinated Care Initiative, which includes moving dual eligibles into managed care, are still taking place between the Administration and Democratic leaders. 

Budget Subcommittee Approves Redirecting Hospital Stabilization Funds

Assembly Budget Subcommittee No. 1 on Health and Human Services voted May 31 to approve the Administration’s proposal to redirect $43 million in unpaid private and nondesignated public hospital stabilization funds to the state’s General Fund. As a result, a number of nondesignated private and public disproportionate-share hospitals will not receive $86 million for services provided from 2005 through 2010. The proposal, part of the Governor’s revised fiscal year 2012-13 state budget, has already been approved by the Senate.

In other action, the subcommittee rejected a proposal — estimated to save $75 million General Fund — to establish a process for value-based purchasing in the Medi-Cal fee for service system. However, the subcommittee did approve $30 million in General Fund savings that will be realized as a result of Medi-Cal no longer paying for services directly related to potentially preventable hospital admissions. The subcommittee took these actions during its final hearing for the budget year. Budget items were voted on with no discussion or public comment since they had been discussed at previous hearings. The full Assembly Budget Committee will most likely meet next week and take action on remaining open items, including decreasing hospital reimbursement by a total of $325 million, as proposed in the Governor’s May revision. For a summary of these proposed cuts, see May 25 CHA News article. In addition, CHA  has issued an Advocacy Alert to members. For more information, see

Budget Subcommittees Leave Issues on Hold

CHA testified in opposition this week to three proposals in the Governor’s revised fiscal year (FY) 2012-13 state budget that would negatively impact hospitals. Both the Assembly and Senate budget subcommittees on health held hearings on most of the May revision proposals released May 14 by the Governor. In an effort to close the state’s $16 billion budget gap, the Governor put forth a number of new proposals that include cuts to health and human services. Combined, the three proposals would provide $325 million to the state General Fund and impact hospitals in different ways.

One proposal would increase payments from the hospital fee program made by private hospitals to the state for children’s health care coverage by $150 million in FY 2012-13 and $75 million in FY 2013-14. In addition, designated public hospitals would give up some of the fee-funded direct grants and managed care payments to generate $41.5 million in state General Fund savings for FY 2013-14. 

Another proposal would decrease waiver funds to designated public hospitals by $100 million in FY 2012-13 and $9 million in FY 2013-14. This funding, under provisions of the FY 2011-12 budget, would have gone to designated public hospitals for expenses they have already incurred for services to low-income Californians, but it is now being redirected to the state. The third proposal would require non-designated public hospitals to implement a new payment methodology for Medi-Cal inpatient fee-for-service effective July 1, 2012. This proposal would generate $75 million in ongoing savings to the state General Fund beginning in FY 2012-13. Both budget subcommittees decided to hold these items open to allow for more discussion. The committees could decide on these issues next week, or delay making a decision for a couple of weeks.

In other budget news, the budget subcommittees rejected the Administration’s proposal to move the entire Healthy Families population of 875,000 children to Medi-Cal at this time. They decided to start by moving the “bright line” children, beneficiaries who are at or below 133 percent of the federal poverty level, approximately 200,000 children. The May budget revision also proposes a $15 co-pay for non-emergency use of emergency departments, and between $3 and $5 for prescription medications. So far, both the Assembly and Senate are holding this item open. 

The Legislature is expected to send the Governor a balanced budget by the June 15 deadline. 

Budget Hearings Under Way on Health Care Cuts

Two critical hearings will be held this week to address proposed cuts to hospitals and other health care-related areas in Gov. Brown’s revised fiscal year (FY) 2012-13 state budget released last week. The revised budget plan includes deep cuts to California hospitals to help fill the state’s $16 billion budget gap. The revised budget proposes to cut an additional $150 million from private hospitals and $100 million from public hospitals in FY 2012-13. Non-designated public hospitals would be required to convert to a certified public expenditure payment methodology that would save the state $75 million. These cuts are in addition to an $86 million reduction to certain disproportionate-share hospitals included in the January budget. Cuts to hospitals proposed in the budget revision amount to $325 million in FY 2012-13. Additional proposed reductions to hospitals amount to $145 million for FY 2013-14. CHA will testify at the hearing in opposition to these reductions. CHA believes the proposal goes against a 2011 agreement between hospitals and state government that would generate more than $920 million in new money to the state General Fund between July 1, 2011, and Dec. 31, 2013, through the hospital fee program. Hospitals cannot sustain the kinds of cuts in the proposed budget and continue to serve their communities at current levels.

Gov. Brown Releases Budget Revision; Hospitals Impacted

Gov. Brown’s May revision to the state budget for fiscal year (FY) 2012-13 includes $325 million in savings for the state General Fund that will have a direct impact on hospitals. The May revision estimates the budget deficit at $15.7 billion, up from $9.2 billion, due to a decrease in revenue, higher expenses, and decisions by courts and the federal government to block previous budget cuts from being implemented.

Overall, the governor’s new budget plan proposes $4.1 billion in spending reductions, in addition to the $4.2 billion already put forward earlier this year. Budget solutions related to Health and Human Services include the following:

Hospital Fee Program – Increase payments made by private hospitals to the state for children’s health care coverage by $150 million in FY 2012-13 and $75 million in FY 2013-14. In addition, designated public hospitals would give up some of the fee-funded direct grants and managed care payments to generate $41.5 million in state General Fund savings for FY 2013-14.

Diagnosis-Related Group (DRG) Transition – Freeze DRG base payments for FY 2013-14, which is expected to save the General Fund $75 million and cost hospitals $150 million in FY 2013-14. The transition to a DRG payment system would be delayed by six months to July 1, 2013.

Waiver Funds – Decrease unexpended prior year waiver funds to designated public hospitals by $100 million in FY 2012-13 and $9 million in FY 2013-14.

Payment Changes to Non-Designated Public Hospitals – Transition non-designated public hospitals to a Certified Public Expenditure methodology for inpatient fee-for-service in the Medi-Cal program. This would generate $75 million in ongoing savings to the state General Fund beginning in FY 2012-13. The state would seek increased federal funding through the Safety Net Care Pool and delivery system reform incentive payments for these hospitals.

The May budget revision also includes a proposal to reduce the number of counties in the Coordinated Care Initiative (CCI) for individuals who are eligible for both Medi-Cal and Medicare (dual eligibles) from 10 to eight. The start date of CCI would be delayed from Jan. 1, 2013, to March 1, 2013. The Governor’s revised plan maintains previously proposed changes, including reducing Healthy Families managed care rates to the same level that it would cost to cover enrollees under Medi-Cal, transferring the Healthy Families Program to Medi-Cal beginning in October 2012, and reducing stabilization payments to private disproportionate-share hospitals by $43 million in state General Funds ($86 million in total funds).

CHA is disappointed that the Governor’s May revision goes against a 2011 agreement between hospitals and state government that would generate more than $900 million in new money to the state General Fund between July 1, 2011, and December 31, 2013, through the hospital fee program. Hospital services must be preserved through balanced solutions to the state’s fiscal problems. Several viable alternatives were offered to the state that would minimize the negative impact to hospitals and the patients they serve; however, they were not included in the May budget plan. CHA issued the attached media statement this morning.

DSH Task Force Urges Congress to Protect Medicaid

CHA has joined with California’s safety-net hospitals on the Disproportionate-Share Hospital (DSH) Task Force to send a letter to members of the California congressional delegation urging them to protect the Medicaid program from any additional cuts to hospital payments. As the House searches for spending reductions to offset the elimination of cuts to defense spending, proposals have emerged to reduce states’ ability to use Medicaid provider taxes and DSH payments. These programs provide critical means for hospitals to bolster their ability to preserve health care services for the state’s most needy patients. CHA will continue to advocate against further cuts to hospitals as the House continues its budget reconciliation process. The DSH Task Force letter is attached. 

Press Contact

Jan Emerson-Shea
Vice President, External Affairs
(916) 552-7516

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