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How Sole Community Provider funding works

Editor's Note: In case you have, as I have, been wondering exactly how Sole Community Provider funding works, here's an article explaining it.

Gila Regional Medical Center is in the middle of a controversy, because of a decision to cut 70 employees by 50 percent in hours and pay. The decision has been explained by administration as required because of Sole Community Provider funding having been frozen by the Centers for Medicare and Medicaid, due to a state calculation error in the New Mexico Human Services Department.

This is an explanation of how the Sole Community Provider program works.

What is SCP?

The Sole Community Provider Program (SCP) is a system of payments for indigent patient care to SCP hospitals under a special program in New Mexico's Medicaid Plan, which is a federal/state partnership. The federal share, which provides 75 percent of the funding, is funded by Medicaid dollars. The state's share, 25 percent, is funded by counties via an intergovernmental transfer.


In 1993, a state law was established under the Indigent Hospital and County Health Care Act to be funded by counties, but administered by NM HSD. The SCP Fund is held in the State Treasury. Grant County's money for the SCP Fund comes from the Indigent Fund gross receipts tax.

The amounts available for allocation were initially based on the amount of SCP Hospital claims, as processed and approved by its county for the previous fiscal year. A change, explained later, came in 1999/2000.

The criteria for SCP Hospital designation are based on federal Medicare guidelines in the Social Security Act.

How does SCP work?

The SCP Hospital, which GRMC is so designated for Grant County, makes an annual request for approval by the County Commission by January 15.

The state makes its adjustments and advises the county on its allocated amount to SCP hospitals and that county's quarterly obligations for the fiscal year. The county pays its quarterly obligation and the state matches it with Medicaid dollars.

The state pays the SCP payment directly to the SCP Hospital, usually in the month following the end of the quarter.

The SCP Hospital submits inpatient and outpatient claims to the County Indigent Program for processing on a continual basis, based on guidelines established by each county. In the case of GRMC and Grant County, the claims are processed once a month and approved by the County Commission.
Once the claims are approved, these claims are not paid directly to the SCP Hospital. They are credited against the funds they expect to receive from the SCP program.

For the past few months, County Manager Jon Paul Saari has explained to commissioners that, although the out-of-county claims, which are from facilities outside the county and are generally few in number, are being paid, the in-county claims are not being paid because the SCP funding from the state is not being sent to GRMC.  The state is not receiving the funding from the Centers for Medicare and Medicaid, because, until the alleged error is corrected, the funds are frozen at the federal level.
GRMC was notified of the problem in January, so until then the SCP funds were being received and claims paid for.


In 1999/2000, an Upper Payment Level (UPL) component was added as a one-time, once a year, supplemental payment. The payment is determined by a complex formula managed by the HSD Medical Assistance Division. It is based on the difference between what Medicaid pays hospitals versus what Medicare pays hospitals for the same services. By the calculation, Medicaid pays less than Medicare, so the supplemental payment takes hospital payments "up to" the Medicare level, hence the UPL.

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