Senate Budget Pits Hospitals Against Each Other

There’s a fight brewing in the Capitol over how the state should pay hospitals for providing care to the poor, elderly and disabled.

A move by the Florida Senate to redistribute more than $300 million in Medicaid “automatic rate enhancements” and provide $50 million in new funding for hospitals could result in reductions for some of the state’s largest community-owned facilities but yield a windfall for some for-profit hospital chains.

A preliminary analysis of the Senate’s proposed health care budget shows that Jackson Memorial Hospital could have its Medicaid payments reduced by as much as $58 million and Orlando Health by nearly $9 million, while HCA Healthcare, a for-profit chain which owns 43 facilities in the state, could see nearly $40.5 million in Medicaid increases.

Tenet, which owns nine hospitals in Florida, would see a nearly $4 million increase in Medicaid payments under the Senate plan, and Community Health Systems, which owns 23 hospitals in Florida, would see as much as a $7.7 million bump in Medicaid payments.

Meanwhile, the House’s proposed spending plan for hospitals essentially remains unchanged for the upcoming year. Under the House proposal, Jackson Memorial would have its Medicaid rates reduced by $8 million in the coming year, instead of the $58 million reduction floated by the Senate.

And, instead of a $40.5 million bump in its rates, HCA’s rates would be pared back by $14.6 million under the House proposal. Similarly, the House’s proposed spending plan would result in rate reductions, not increases, for CHS and Tenet.

The enhanced payments currently are provided to 28 hospitals that in 2015 had Medicaid utilization rates of 24.75 percent or greater.

The automatic rate enhancements are payments made to hospitals in addition to the base rates. Critics of the enhancements argue that the automatic rate enhancements are no longer necessary because the state now uses diagnostic-related groups, or DRGs, to pay hospitals.

The list of providers that no longer will have their rates automatically increased includes Nicklaus Children’s Hospital in Miami, Nemours Children’s Hospital in Orlando, Shriner’s Hospital in Tampa, Johns Hopkins All Children’s Hospital in St. Petersburg, Orlando Health, and Miami-based Jackson Memorial Hospital.

Instead of giving those facilities additional payments, the Senate budget redirects the money to increase the base Medicaid rates paid to all hospitals. The Senate plan would increase from $3,426 to $4,049 Medicaid base rates paid to hospitals for each admission.

Because the base rates are increased, the Senate plan benefits any system that owns more than one hospital, such as HCA and Tenet. But it also benefits large not-for-profit providers, such as BayCare, which owns 10 facilities, and Adventist Health System, which owns 15 hospitals.

The proposed changes have the support of Senate President Joe Negron, R-Stuart, who told reporters last week that “it’s time” to make sure the distribution of Medicaid funds is “fair to all hospitals.”

“I think that you will see the Senate take a very comprehensive look at how hospitals are paid,” Negron said.

In addition to redistributing the Medicaid payments among the providers, the proposed Senate budget includes $50 million to help offset reductions the Legislature made to hospital payments last year. Because the cuts are “recurring,” they will continue annually unless lawmakers agree to put in additional money. The $50 million the Senate allocates would draw down a federal match and decrease the reductions by nearly $131 million.

The House’s proposed budget does not include any additional funding to offset the $520 million in recurring reductions the Legislature agreed to make last year.

House and Senate spending committees will vote on the proposed budgets this week, and the full chambers likely will consider the measures next week.

Rep. Jason Brodeur, a Sanford Republican who is in charge of the House’s health care budget, downplayed the differences between the two chambers’ spending plans. The differences in hospital funding and other issues will be hammered out during the budget conference process, Brodeur said, adding that “the House is happy with the current budget.”

Meanwhile, hospitals are divided about the House and Senate spending proposals.

“HCA likes the Senate plan,” longtime HCA lobbyist Bill Rubin told The News Service of Florida. “We think this model helps allow the dollar to follow the patient.”

Not surprisingly, Jackson Health System CEO Carlos Migoya thinks otherwise.

“This is certainly alarming for South Florida, however it is still early in the process. We trust that the Miami-Dade delegation will fight fiercely --- as it always does --- to protect the people who rely upon Jackson for world-class care,” he said in a statement.

The hospitals that no longer will receive automatic rate enhancements under the Senate budget include Johns Hopkins All Children's Hospital, Nicklaus Children's Hospital; Nemours; Shriner's Hospital; St. Mary's Medical Center; Lakeside Medical Center; Homestead Hospital; Broward General; UF Health Jacksonville; Sacred Heart Hospital; Westchester General Hospital; North Shore Medical Center; Orlando Health; JFK Medical Center-North; Gulf Coast Regional Medical Center in Bay County; St. Joseph's Hospital, Inc.; Jackson Memorial; Palms West Hospital; Plantation General Hospital; UF Health Shands; Coral Springs; Calhoun Liberty Hospital; Hialeah Hospital; Kendall Regional Medical Center; Palmetto General Hospital; Lee Memorial Hospital; Tampa General; and Memorial Regional in Hollywood.

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