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July 12, 2002
Mr. Speaker, I have had the privilege of representing California and Los Angeles County for 22 years, and over that time I have learned that California’s public health system is one of the most unique in our great nation. Unlike most states which run their own hospitals or states which have no public hospitals at all, California relies on a network of county-supported public hospitals working in conjunction with a network of private safety-net hospitals. Together, these public and private hospitals care for over 5 million Californians eligible for Medicaid and an additional 7 million uninsured Californians.
Obviously, supporting this network of health care for low-income Americans requires a reliable source of funding. California, like a number of other states, relies heavily on federal dollars paid through Medicaid’s Upper Payment Limit program. The safety-net hospitals in Los Angeles County, four of which reside in my Congressional District, receive over $120 million dollars annually through the UPL program.
UPL was initiated a decade ago based on the recognition that public hospitals are the hospitals of last resort for the most needy of patients. It is a mechanism that allows qualified public hospitals to receive reimbursement for services at 150% of the Medicare allowable payment rate. Only city and county public hospitals which provide trauma and emergency room services to a large number of uninsured and low-income patients are eligible for the UPL program. The reason for the increased payments is very simple: There is no market incentive for hospitals to offer emergency services to patients who will never have the means to pay for expensive procedures.
So it was with dismay, last January, that I learned that the Center for Medicare and Medicaid Services had instituted a rule to lower the UPL and reduce Medicaid reimbursements for city and county public hospitals to 100% of the Medicare allowable payment rate.
Mr. Speaker, implementation of this rule will have immediate and devastating consequences for the public health system in my home state of California. By the time final implementation of this new policy is complete, California will lose over $300 million dollars in Medicaid funding annually – an amount that cannot be replaced by any state or local source.
The stated explanation for reducing UPL is that certain states were misallocating UPL payments and using them for non-Medicaid related expenditures. While several states were identified as misusing federal Medicaid funds in this manner, California was not among them. Indeed, California has never spent any federal Medicaid dollars on anything other than public health care. In its haste to close the so-called UPL loophole, CMS has issued a regulation with too broad a stroke. Quite simply, this lowered upper payment limit punishes not only the states that were abusing federal funds, but those, like California, which were operating properly under a program approved by multiple administrations for more than 10 years.
Moreover, this regulation ignores the will of this Congress in regards to the upper payment limit for public hospitals. When the allegations of misused UPL funds came to light several years ago, this body responded by severely limiting these supplemental payments and by fixing the upper payment limit at the 150% level. The House and Senate reached a bipartisan agreement that was codified when the Medicare and Medicaid Beneficiaries and Improvements Act was signed into law during the 106th Congress. By lowering the Medicaid upper payment limit to 100%, CMS is undoing a carefully crafted compromise that balanced the Federal Treasury with the need to ensure that health care remain available to the most vulnerable of our constituents.
Mr. Speaker, as I stand here today, there may be skeptics out there today who say that when compared to the overall Medicaid budget for the state of California, the $300 million received under the 150% upper payment limit is nothing more than a drop in the proverbial bucket. Well, to that let me say that the financial situation in California, and indeed in many of our state and local governments across this country, is so constrained that not one federal dollar can be cut from the federal Medicaid allocation without it adversely affecting the availability of care for Medicaid patients. Just recently, Los Angeles County revealed that it plans to close nearly a dozen community health clinics and lay off over 5,000 health care workers because of a lack of budgetary resources. What alarms me the most, however, is that the County’s budget does not include the tidal wave of federal Medicaid cuts that are scheduled to go into effect next year, including the reduction in the UPL.
The fact is, if the UPL reduction is implemented by CMS, health care for low-income and uninsured patients will be compromised as a result. If the counties across California are forced to reduce hospital services because of decreased federal support, those patients faced with long waits at the few remaining open public hospitals will turn to private hospitals for emergency care. While Federal law prohibits private hospitals from refusing to treat uninsured emergency care patients, it does not prohibit them from closing their emergency room doors. Faced with overflowing emergency rooms and inadequate Medicaid reimbursements, this is the choice that many private hospitals would be forced to make.
Therefore, a decreased upper payment limit would force both public and private hospitals in California to curtail emergency and trauma care services, resulting in an absurd situation where a constituent of mine from Claremont, California could conceivably be forced to drive over 30 miles in rush hour traffic to LA-USC Medical Center to find an open trauma center. The prospect of such an occurrence is simply unacceptable.
Mr. Speaker, I want to make clear that in stating my opposition to the reduction of the UPL, I am not asking for special treatment for California. I am asking for fair treatment for California. Under its federally-approved Medicaid UPL, California follows some of the most stringent requirements for UPL eligibility. To access those funds in California, more than 25% of a hospital’s patients have to be Medicaid eligible or uninsured. I reiterate that California has exclusively spent the money it has received under the UPL program on health care.
To punish California for the misdeeds of others is unwise and unfair. We are all aware that California provides more tax dollars to the Federal Treasury than it receives in federal support. And our state is third to last in Federal Medicaid spending per capita. We can afford to fall no further. The public health system in California is at a critical juncture and we must act now to prevent a crisis that will affect tens of millions of California taxpayers.
Yet I am very cognizant of the fact that our nation is currently at war, and because of that we face significant budgetary limitations this fiscal year. I do not believe, however, that we should reduce health care services for our most disadvantaged populations in our efforts to reduce costs. Such action will undoubtedly cause more instability and expense in the long run than any benefit would provide in the short term.
Mr. Speaker, because implementation of the reduction of the upper payment limit is not scheduled for California until fiscal year 2004, we have a unique opportunity to address these concerns without impacting the budget of this Congress – if we take action this year. That is why I stand here today to ask for your support and the support of my colleagues on both sides of the aisle to find a common-sense solution to this impending crisis and protect California’s public health system from financial attack. My constituents deserve no less.
Mr. Speaker, I would like to thank my California colleagues on both sides of the aisle for their continued hard work on this issue of the Medicaid upper payment limit. We remain united as the California delegation in our dedication to preserving the California public health system.
