In a move that threatens to drive some private hospitals out of the business of providing maternity care to illegal aliens, state auditors are seeking repayment of millions of Medi-Cal dollars paid to hospitals throughout the state for providing obstetrical care to medically uninsured mothers.
The action has sent shock waves through the medical community and drawn sharp criticism from many state legislators. In a letter to Kenneth Kizer, director of the Department of Health Services, more than 40 lawmakers blasted the "new conservative and aggressive policy of denying Medi-Cal payment for the normal hospital delivery of American citizens, born to undocumented mothers. . . . "
State officials contend that Medi-Cal should not have to foot the bill for non-citizens.
Review the Matter
But the outcry has prompted health officials to hold off on actually demanding repayment of the funds, while top policy analysts thoroughly review the matter. They said they do not know how much money may be at stake or how many of the 550 hospitals that are reimbursed by Medi-Cal may be involved
If state health officials do not back down, their decision is likely to be challenged in court, resulting in a protracted legal battle that may prompt some hospitals to suspend maternity service to illegal aliens.
Those hospitals treating large numbers of undocumented women stand to lose the most money. These include Los Angeles County hospitals such as Harbor-UCLA Medical Center, where auditors are attempting to recoup $2 million for 1983-84, county health official Irving Cohen said. The five hospitals administered by the University of California stand to lose $10 million over several years, an attorney for the UC Regents said.
Warren Tetz, vice president of finance at White Memorial Medical Center in East Los Angeles, said that auditors have so far sought reimbursement from his institution for $1 million and that the hospital's total liability over a three-year period may amount to as much as $3 million.
Statewide, he said, his "educated guesstimate" is that hospitals stand to lose as much as $100 million from 1983 through 1986.
"If we don't get some sort of reassurance, I don't know how much longer we can continue providing this kind of care," Tetz said.
He said he is "seriously considering" discontinuing obstetrical service for about 2,400 indigent women a year that are referred to the medical center by the County of Los Angeles.
The county Department of Health Services contracts with more than a dozen private hospitals such as White Memorial to handle an overflow of about 10,000 births that cannot be handled in county hospitals, which deliver 32,000 babies a year.
The majority are born to illegal aliens, who are not eligible for Medi-Cal, county officials said. But traditionally, the mother's obstetrical cost has been charged off to Medi-Cal, submitted under the name of her baby, who is eligible for Medi-Cal at birth, officials at various hospitals said.
But Tom Elkin, chief of the Medi-Cal benefits branch at the state Health Department, has written in a letter obtained by The Times: "Billing for obstetrical delivery services to the mother under a Medi-Cal number subsequently obtained for the baby is incorrect. . . . "
John Rodriguez, in charge of the state's Medi-Cal program, said, "We want to make sure that Medi-Cal is paying just for the baby's nursery care and not any costs beyond that."
He said that in the past, he believes that Medi-Cal has also absorbed the cost of the mother's acute hospital care, and "it's not right."
New federal legislation ensures reimbursement by Medi-Cal for obstetrical care provided to illegal aliens. But that provision, contained in the Omnibus Budget Reconciliation Act of 1986, is not effective until 1989.
In the meantime, county health official Cohen said that "it's crazy" for the state to be changing the rules of reimbursement "three to four years" after the fact.
It puts the County of Los Angeles in a uniquely disastrous position, he said.
He said that the county hospitals, which deliver a tremendous number of babies born to illegal aliens, can expect a huge bill--and so can the hospitals which contract with the county to treat the overflow of 10,000 patients.
Not all these hospitals have received the results of the state Medi-Cal audits, he said, but they should all be braced for a blow. "The way our contract with these hospitals is written," Cohen explained, "the hospitals first seek reimbursement from Medi-Cal. And if they don't recover from Medi-Cal, then they can come after us."
"It's a disaster for all of us," he continued. "It caught all of us by surprise."
He said that the county will probably sue the state if its policy-makers do not overturn the state's "over-rambunctious auditors."
'We're Losing Money'
Tetz at White Memorial, which is the biggest contract hospital for obstetrical care, said it is unrealistic to think that the county has the funds to make up the hospital's projected multimillion-dollar shortfall. And he stressed that the hospital cannot afford to write off the cost.
"We're losing money on our (obstetrical) unit as it is," Tetz said. "We're not talking about cutting into a profit margin."
At the California Assn. of Hospitals and Health Systems, Linda Nelson pointed out that hospitals "cannot afford to carry the burden of uncompensated care"--either in their trauma centers or their maternity wards.
The issue of obstetrical care, she said, is "just part of the larger picture" of what to do about the problem posed by growing numbers of uninsured Americans.