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HomeMy WebLinkAboutRESOLUTION 2002-71Suggested by: Administration City of Kenai RESOLUTION NO. 2002-71 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA SUPPORTING THE DEVELOPMENT OF A DENTAL CLINIC IN KENAI. WHEREAS, Central Peninsula Heath Centers Inc., a nonprofit entity that provides health care services to under and uninsured residents of the central Kenai Peninsula including Medicaid eligible patients, intends to expand its operations to include dental services by establishing a new clinic in Kenai; and, WHEREAS the State of Alaska has agreed to provide financing to Central Peninsula Health Centers Inc. through the disproportionate share hospital (DHS) payment program; and, WHEREAS, the DHS program requires local participation in the form of an intergovernmental transfer of funds to the State; and, WHEREAS, the State of Alaska Department of Health and Social Services (DHSS), has determined that Medicaid regulations allow the local participation funding to be returned to the local government along with a reasonable administrative fee; and, WHEREAS, due to their deadline for budget development, the State of Alaska DHSS is seeking immediate approval from the City of Kenai to pursue this project; and, WHEREAS, the City administration is performing due diligence work with the goal of determining, and if possible eliminating, the risks of City involvement in this project; and, WHEREAS, at this time the administration recognizes that Medicaid regulations are extremely complex and that there are risks to the City of Kenai that are not completely quantifiable. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the City of Kenai supports the Central Peninsula Health Centers Inc. dental clinic project and directs the administration to continue its due diligence work and to bring an appropriation ordinance before the council so that the council can aPprove or reject the City's financial participation in the project. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of October, 2002. ~ " ./'~OHN J~~I'I~LIAMS, MAYOR ATTEST: ~/ ~ Carol L. Freas, ~ity C~erk Approved by Finance' ~ (10/11/2002) jc DEPT. OF HEALTH AND SOCIAL SERVICES OFFICE OF THE COMMISSIONER P.O. BOX 110601 JUNEAU, ALASKA 99811-0601 PHONE: (907) 465-3030 FAX: (907) 465-3068 Honorable John Williams, Mayor Citv o f Kenai o 210 Fidalgo Avenue, Suite 200 Kenai, Alaska 99611 September 16, 2002_ ; :.":e !8 Dear Mayor Williams' Thank you for your interest in the Alaska Medicaid Program, support of the Disproportionate Share Program (DSH), and the Department of Health and Social Services' efforts to facilitate a DSH payment to Central Peninsula General Hospital to provide Medicaid dental services in the Kenai area. Often, difficult funding issues arise while the legislature contemplates fiscal year appropriations. This year, an even greater challenge is unfolding as the legislature debates the use of new taxes to fund services. The involvement with the DSH program and its contribution to the non-federal Medicaid funding is a major factor in keeping the level of services offered under Alaska's Medicaid Program in place for Medicaid-eligible persons. In working through the concept of Intergovemmental Transfers (IGT), we understand there are concerns about the IGT, which provides the general fund match amount, and concerns about the IGT from the public hospital to the local government. Health care financing operates under many complicated laws and regulations, so such concerns a~'~ reasonable and under~tandabl~. This is especially true with respect to federal funding of Medicaid. Federal law, specifically Social Security Act 1903(w)(6)(A), indicates that the Secretary of the U.S. Department of Health and Human Services may not restrict a state's use of funds where such funds are transferred from units of government within a state as the non-federal share of expenditures. The Division of Medical Assistance has worked with the Department of Law to draft the Intergovemmental Transfer agreement and deems the agreements to be allowable and consistent with the intent of this law. The Department of Health and Social Services (DHSS) has worked on many fronts to improve access to Medicaid dental services. This DSH payment provides important funding to the Cottonwood Clinic, which is necessary to establish Medicaid dental access in the Kenai area. 06-F38LH ~ pdnted on recycled paper CITY OF KENAI 210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794 TELEPHONE 907-283-7535 FAX 907-283-3014 ~ 1992 MEMORANDUM TO: F} OM£ DATE' Rte Mayor John J. Williams and City Council Members Cary R. Graves, City Attorney and Larry Semmens, Finance Director October 10, 2002 Cottonwood Health Clinic / DSH Program The Mayor requested a memorandum regarding the proposal by the State's Division of Medical Assistance to fund part of Cottonwood Health Clinic. The clinic, as we understand it, would provide dental care to Medicaid recipients and indigent people without access to dental care. The memorandum focuses on the funding method proposed by the State. It is not meant to discuss the public policy considerations of whether the City should support the idea of the clinic. What is the DSH program? DSH is an acronym for the Disproportionate Share Hospital Payment Program. The program is mn by Medicaid (specifically an agency called the Health Care Financing Administration) and is intended to compensate those hospitals that serve a large share of Medicaid and uninsured patients. The idea is that because of low Medicaid reimbursement rates, and uninsured and poor patients, hospitals with large numbers of those patients lost money because of the uncompensated health care. The program was started in the early 1980's, and grew slowly until the 90's when states realized that a unique "matching grants" segment program allowed them to get extra Medicaid money without providing a real matching grant. DSH spending grew from $1.4 billion in 1990 to $15 billion in 1996. The concept is called an IGT (Intergovernmental Transfer). Here's how it works. Step 1' The State receives an IGT from a local government. In this example, it is $10 million. Step 2' The State makes a $12 million payment to a DSH eligible hospital. The $12 million consists of the original $10 million donation and $2 million in an extra DSH payment. The hospital uses part of the $12 million to refund the original $10 million IGT to the local government. Mayor John J. Williams and City Council Members October 10, 2002 Page 3 of 3 dental care; 3) $25,000 goes to the City of Kenai as an administrative fee; and 4) $25,000 goes to CPGH as an administrative fee. One concern we had was the fact that the City was in essence receiving $25,000 in FFP money that would go to non-Medicaid purposes. The answer is that while the federal government may not like it, it does appear to be legal. The federal government is aware of such expenditures and has declined to prohibit them. Vol. 66 Federal Register 3164-65 (2001). Another concern is that the normal definition of a "match" does not apply. While the City's contribution of $795,000 is critical to obtaining the $1.1 million of federal funding, no part of the City's money actually ends up in the project. Conclusion- The proposal is probably legal under Medicaid regulations. While probably legal, it is an aggressive interpretation of the federal regulations and could be determined to be illegal. If the federal government decides the plan is not allowed under the Medicaid roles, it will not reimburse the State the $1,099,702. In that case, the State could seek to recoup its money from Central Peninsula General Hospital. Central Peninsula General Hospital would then seek to recoup its $819,785 from the City. If that happened, the City would be out that money with no real recourse. We asked if the State would indemnify the City against such a possibility. The State personnel indicated it would not. My understanding is that the State will give a verbal promise to not recoup the money, but it will not put that in writing. There is some question whether it could lawfully indemnify us, or promise not to recoup the money in such a situation. We also asked for an opinion from the Attorney General's Office that the State's proposal is legal under Medicaid roles. We have not yet been provided with such an opinion. In short, there is a risk that if the federal government decides the proposal is not allowable under Medicaid roles the City could lose the $794,785 it granted to the Division of Medical Assistance. We cannot quantify the likelihood of such an event. Given the large amount of the City's money involved ($794,785), we are uncomfortable with the risk unless the State gives us adequate assurance of indemnification or the federal government indicates the program is allowable under the Medicaid roles. Please let us know if you have any questions. CRG/sp