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Report: Digital Health Records Might Cost $283M

Department of Health Services Director Mitchell Katz presents an updated budget forecast to the Los Angeles County Board of Supervisors.

Los Angeles County will need to spend an estimated $283 million over a five-year period to convert paper health care records to electronic ones, the director of the county's hospital system said Tuesday.

The shift from paper to digital records is required under the Affordable Care Act and is ultimately expected to improve care and save money.

About $100 million of the conversion cost is expected to come from federal incentives. The county is hoping to fund its share through long- and short-term borrowing, which is expected to cost about $30 million in annual principal and interest payments, according to Department of Health Services Director Dr. Mitchell Katz.

That $30 million amounts to "a relatively small variance" within the department's estimated $3.6 billion budget, Katz said.

Katz presented his updated budget forecast for 2012-13 to the board Tuesday. Though he cautioned that the numbers were still preliminary, they anticipate a $73.4 million shortfall, due in large part to rising contributions required to fund employee retirement accounts.

Supervisor Zev Yaroslavsky said the department used to anticipate deficits in the hundreds of millions of dollars and he would be pleased if Katz' estimates held.

Katz responded that he was confident the budget could ultimately be balanced without service cuts. The department should end this fiscal year with a surplus of $9.6 million.

One solution to next year's deficit could be an increase in rates charged to the state to offset the cost of in-home care for the elderly. That could generate an estimated $54 million in revenue.

Another option under discussion is amending a waiver that governs reimbursements under the federal Medicare and Medicaid system for individuals covered by the Ryan White HIV-AIDS Program. As those patients transition into coverage newly available under Healthy Way L.A., payments under an amended waiver could be worth as much as $43 million.

The proposed waiver amendment is pending approval by the federal Centers for Medicare and Medicaid Services.

Given the amount of money at stake, Yaroslavsky asked that the issue be added to the board's agenda for May meetings in Washington, D.C.

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