Indigent fund reduced

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Council > Reduced GRT, increased demand prompt changes

By Arin McKenna

At Tuesday's meeting, the Los Alamos County council voted 6–1 to adopt a plan to keep the county's healthcare assistance program (the indigent fund) afloat.

Deputy Count Administrator/Chief Financial Officer Steven Lynne called the changes "an interim first step" that will need to be revisited as the federal Affordable Care Act comes into full effect in 2014.

Staff alerted council of impending deficits in the fund during the FY 2014 budget hearings. Since 2004, claims have nearly quadrupled. Claims rose 35 percent in the first three quarters of FY2013 while the gross receipts tax funding the program has dropped by 19 percent. The combination is expected to leave the program with a $130,000 deficit.

Healthcare assistance is funded by a 1/8 GRT increment. By law, 50 percent of that increment goes to the State-supported Medicaid program. Another 25 percent is committed to the Sole Community Provider fund, which is also administered by the State and is leveraged nearly three-to-one by federal funds.

That leaves 8 to 10 percent for administration costs and only 15 percent for healthcare assistance claims, or approximately $250,000 in FY2014.

Councilor David Izraelevitz questioned the administrative costs. Lynne explained that the county processes and approves all sole provider claims as well as managing the county's indigent program.

"Back in '96 when I got here, we had eight clients and one account clerk who spent an hour a week on it, and now we have over 300 clients and we have three healthcare specialists sharing this workload," Lynne said.

During budget hearings, council voted to augment the fund with $300,000 from the general fund. However $130,000 of that is will be required to pay for this year's $130,000 deficit. When the fund goes into the red, providers still get paid but at a slower pace.

Staff projected next year's deficit would be $115,000 of no changes were implemented.

"There are really two factors that drive the overall costs. One is the quantity of participation in the program, which has been escalating, and the quality–how much service we actually provide," Lynne said. "This policy is intended to focus more on the quality side and still provide as much service to as many people as we think is practical at this point."

Lynne outlined what would happen if council chose to maintain the current policy.

"If there was no policy change and no new revenues, claims would just pile up and they'd be paid on a very slow basis," Lynne said. 'I think in the long term it would not be sustainable, because providers would eventually drop out. They wouldn't want to wait six months or 12 months or 18 months until we got around to paying their claims as the cash was available."

A major contributing factor to the deficit is not just the sharp escalation in claims, but a 2004 decision by council to increase the number of eligible services to include such things as dental and vision care. Most of the FY2014 cutbacks reduce services to acute care.

The changes  that will be implemented July 1 when the FY2014 budget kicks in are:

Reimbursement: Instead of issuing a prepaid card for services to clients, providers will be reimbursed after a medical event.


  • 225 percent of poverty level versus the current 275 percent of poverty level.
  • A liquid asset limit of $10,000 instead of $50,000 for families and $5,000 instead of $25,000 for individuals.
  • 20 percent of active clients will no longer qualify with these changes.


  • Eligible: a focus on acute care, which includes hospitals (Sole Community Providers),  ambulance, alcohol or substance abuse treatment, mental health treatment, pharmacy (limited to SCP hospital) and other follow-up healthcare services as designated & funded by the county (based on budget).
  • Ineligible: nursing home, home health and hospice, primary or prenatal care (community-based health programs), oriental medicine, dental, vision, durable medical equipment and day habilitation services.

Limitations: $15,000 a year per person (currently $25,000) and a $50,000 lifetime limit (currently $100,000).

Providers: the current 70 providers will be reduced to 10 to 20 percent of that total, with a focus on providers that provide the highest volume to the county.

Several councilors questioned dropping preventative and prenatal care.

"Those are items that if you address those issues early, that has a multiplier effect of avoiding larger, more acute problems later," Izraelevitz said.

Lynne agreed with that and said that staff had struggled with that issue.

"But our constraints and circumstances are such that we felt we had to back off of that. And the apparent intent of the act is to provide that safety net situation," Lynne said.

Staff reported that the primary source of prenatal care is the public health office and that many basic services for pregnancy and children's healthcare are eligible for Medicaid. Staff also believes issues such as prenatal care can be addressed through agreements with the hospital and other approved providers.

The staff proposal also takes an incident-based approach, which includes all follow-up care after initial visit for an acute situation. Someone who has a hip replacement after a fall will be eligible for follow-up care such as physical therapy and possibly nursing home rehabilitation.

Councilor Pete Sheehey made a motion to approve the staff proposal but to restore the lifetime and yearly limits to current levels, noting that one emergency room visit alone could cost $15,000. Lynne said the lifetime limits should not limit acute care for patients.

"What the payment limits do is limit what the hospital gets," Lynne said. "As a sole community provider, they're still providing the service, regardless of what our payments are. A lower payment from us will increase their uncompensated care cost, but should not be limiting the care that clients receive. That's part of being a sole community provider hospital."

Sheehey also proposed an amendment to included preventative, prenatal care and emergency dental work in eligible services. He argued that the cost of providing these should be covered when the Affordable Healthcare Act is implemented at the beginning of 2014. Demands on the indigent healthcare fund should drop dramatically as many of the people the county is covering become eligible for Medicaid.

"I think we should not be too drastic in cutting these programs. We want to manage these citizens of our county in a way that is humane and points them to the help they can get," Sheehey said.

Other councilors were concerned that the State may not be prepared to implement those changes immediately and by how broad a term such as "preventative care" could be. They were also reassured by staff's explanation of prenatal care.

Council voted 6–1 to approve the staff proposal without amendments, with Sheehey voting against the motion.

Council also adopted  a new meetings calendar which includes one Friday meeting every other month. The dates for the remaining calendar year are May 10, July 26, Sept. 27 and Nov. 22.

Council also approved new minimum standards of reasonable notice which comply with new requirements passed in this year's legislative session.  The policy now requires agendas for all public meetings to be posted 72 hours in advance, with no provision to amend the agenda with 36 hours notice except in emergency situations. The New Mexico Attorney General must now be notified within 10 days of an emergency meeting in order to determine if it was warranted.