Redwood Memorial Hospital and Jerold Phelps Community Hospital are among 66 small rural hospitals exempted from the state’s decision to withhold Medi-Cal payments in the month of August.

Trinity Hospital in Weaverville will also continue to receive Medi-Cal payments in August.

The state Department of Finance and state Sen. Dave Cox negotiated the deal.

“I think we’re the only ones exempted from the payment deferral, but it’s not an exemption to the 10 percent cut in July,” said Deborah Scaife, chief administrator of Jerold Phelps Community Hospital in Garberville.

“It was going to kill some of them,” said Amber Wiley, legislative advocate of the Association of California Healthcare Districts. “Some of them only had a few days’ cash on hand.”

The state normally defers Medi-Cal reimbursement at the end of June until July. It relies on a reserve fund to make payments if the budget is not passed by the constitutional deadline of June 15.

But that reserve fund ran out in late July last year. The state has already announced its intention to help its cash flow problems by deferring reimbursement to institutional providers in the month of August.

“Many legislators who hear that payments will be withheld in August from ‘institutional’ providers may think these institutions have the financial capacity to render services for a month without payment,” said Bill Barnaby, lobbyist for non-emergency medical transport providers. “Not so for most NEMT providers, many of whom survive from Medi-Cal check-write to check-write.”

Mad River Community Hospital and St. Joseph Hospital are not exempt from the deferral and must plan to do without.

“It’s not retail anymore if we’re not getting paid for providing services,” said Doug Shaw, chief executive officer of Mad River Community Hospital. “It’s like going to the store to buy milk and then being told by the state milk is free all month long. How do you gird up for having to give away free services?”

Shaw said his hospital will see 500 Medi-Cal patients in a two-week period and started looking at staffing levels and vacation time two months ago in an attempt to plan for what he fully expects to be a changing situation.

“The state seldom follows through when it says it’s going to do something,” he said.

Wiley said the exemption for Humboldt County’s two rural hospitals means nothing if the state fails to pass a timely budget. Everyone will be in the same boat: no state money to float their businesses.

“There’s so much division, but there’s a lot of pressure on them to pass one,” Wiley said. “The longer this drags on, the worse they look.”

“Why aren’t we getting half the payment?” Scaife asked. She remembers doing without last year and does not understand how the state can hang onto the federal matching funds in the Medi-Cal program.

“We are sort of lucky because we are a health care district and we have that tax assessment money at the county treasury to take out when we need it,” she said.

“But there’s only a finite amount of that. No more is going in there until December.”

The Garberville hospital also got a boost last month with a $3,000 contribution from People Productions and a pledge to give another $3,000 for increased staffing required during the annual Reggae Rising event.

The Garberville hospital has a surge of activity in the emergency room during Reggae Rising. The combination of increased staffing and problems with debt collection led to a guesstimate of a $12,000 loss for the hospital during an event Scaife described as “so good for the community.”

“We are satisfied,” said district President Stephen Bowen. “If later we find we were wrong, we now have a dialogue and we can readdress the situation.”

“We have always strived toward a good working relationship with the hospital and never intended to cause them extra expense or burden,” said David Moss of the Reggae Rising Operations Team.

Reggae Rising organizers also offered the hospital a booth and help in staffing the booth.

Bowen said he “gratefully accepted” and thanked People Productions for “being the one and only group to address this situation.”