The question of federal funding

Community Medical Centers has been in the news lately regarding the federal government disputing several million dollars in special Medi-Cal-related funding that was distributed to Community last spring. Here’s some background and the current situation as Community knows it:

As part of Community’s Medi-Cal rate renegotiation last year, the state urged Community to enlist the county’s help to take advantage of an “intergovernmental transfer” process (IGT) by which the county forwards money to the state, and the state in turn secures federal matching funds. Most of the new, larger amount then comes back to the designated health care beneficiary, in this case Community, to help cover the costs of Medi-Cal services provided.

Through this IGT process, Community received some $17 million in new money last fiscal year, in addition to the $18 million that the county would normally pay Community under the 1996 contract to provide services to the County’s indigent population.

Community was told recently by Fresno County that, based on a phone call, the federal government has apparently decided to disallow the IGT and that Community might be asked to pay back all or some of the special funding to the federal government.

“Community is certainly capable of doing this, if necessary,” said Steve Walter, Community’s chief financial officer. “Right now, however, we have many more questions than answers. We have yet to see any formal notice of disallowance from either the federal government or from the state, which was the primary architect of this funding solution. We have been in contact with state and federal officials and hope to know more in the near future.”

Whatever the outcome, Community officials said Community’s financial stability does not hinge on this IGT funding.

“Our recovery plan has included several strategies, among them new service lines, higher trauma charges, benchmarked cost controls and better reimbursement contracts,” Walter said. “And I’m happy to say that these strategies have produced several consecutive months of very encouraging operating performance – the real key to a financially stable future for Community.”