Local Provider Participation Fund

“It is a misnomer……….it should be called the Taxpayer-Consumer Participation Fund…..” – Homer G. Farnsworth, M.D.

Local hospitals continue to pay for uninsured patients


EDINBURG –The debate about curbing tax increases to create a possible “healthcare district” has been heated over the past year, but all the local hospitals have been paying millions each year since 2013 to help the county leverage matching federal funding for uncompensated care.

Hidalgo County commissioners held a public hearing recently to review and approve the annual local hospital payments that total $76.5 million to help pay for local healthcare programs.

“I think it’s been a tremendously beneficial program for not just Hidalgo County but the entire border region,” Carlos Zaffirini Jr. president of Adelanto HealthCare Ventures, an Austin-based consulting company for the healthcare industry told commissioners during the meeting.

The program is called the Local Provider Participation Fund and it was created in 2013, when legislation carried by state Sen. Juan “Chuy” Hinojosa was signed by the governor.

Hidalgo County collects $20,000 each year of the payments for administrative fees, as permitted by law. The mandatory payments are based on 2010 figures of patient revenue of $1.2 billion across all the hospitals.

For example Doctors Hospital at Renaissance is set to pay $25.1 million in 2016 – or 6 percent of its net patient revenue that was calculated in 2010. Likewise, Edinburg Regional Medical Center is set to pay $21.6 million; Mission Regional Medical Center, $6.9 million; and Rio Grande Regional $10.8 million. Knapp Medical Center is mandated to pay $7.7 million.

When contacted directly, local hospitals deferred comments to Zaffrini.

About five years ago, Hidalgo County was eligible for about $820 million worth of what is called 1115 Medicaid waiver funding, but the program requires a local match and the county didn’t have enough in its tax base to cover it.

Instead, the new law allowed some leverage from hospitals through this fund. The Medicaid waiver currently supports $602 million worth of healthcare access between 78 different programs including local clinics like Su Clinica.

But healthcare programs are not the equivalent of health insurance, and while hospitals may write off millions each year in charity care, patients are still expected to pay the bill for medical care whether they are underinsured or lack any coverage.


Separately, Hidalgo County is required to set aside up to 8 percent of its general fund to help pay its indigent care program. For the FY 2016 budget, commissioners are considering to set aside about $5.5 million for the 1115 waiver program. After it’s multiplied by federal funds, the program has about $12.8 million to operate.

There are about 10,000 applicants each year for the indigent care program that covers up to $30,000 worth of medical services for eligible individuals, but only about 5,000 are enrolled. Often though, patient bills do not reach the maximum limit each year.

“Theoretically those other 5,000 that did not qualify show up at the hospital and say, ‘I don’t have insurance,” and those people become part of the ‘uncompensated care’ costs,” said Eddie Olivarez, chief administrative officer for the Hidalgo County health department.

The county’s share has shifted over the years, from its peak of $9 million in 2014 to only $6 million in 2015. In 2014, that $9 million contribution, including matching dollars, meant the county had $21 million to spend on local healthcare programs, but it only spent $10 million.

When the “healthcare district” was presented on the November 2014 ballot, most residents reacted to concerns about the potential for a significant tax increase – voted it down – and many continue to battle against the idea.

Critics of the healthcare district have been calling for the county to lower its tax rate this year after collecting more property taxes due to higher valuations. Commissioners approved a 59 cent tax rate for $100 valuation for the upcoming year.


For the most complete version of this story, log in or subscribe to MyMonitorNews.com.