A top state health official said Tuesday that Gov. Rick Scott’s proposed budget contains changes in Medicaid funding to fix an “unfair, not easily understood” payment system but also may trigger huge reductions for many hospitals, including the Jackson Health System.“Hard decisions have to be made,” said Liz Dudek, secretary of the Agency for Health Care Administration, in a telephone interview. She said Medicaid costs have been “spiraling out of control,” and the Scott administration was trying to bring fairness to a hospital payment process that she said “mystified” and “horrified” her with its complications.
The damage for the state’s hospitals could be huge. All of Scott’s proposed Medicaid cuts, if enacted, could cost Florida hospitals $1.6 billion, according to an analysis by Safety Net Hospital Alliance of Florida.
Overall, Miami-Dade hospitals overall would lose $405 million, while Broward stands to lose $211 million, according to the Alliance.
Jackson Health System, which lost $86 million in fiscal 2011, could see its state Medicaid payments reduced during the next fiscal year by $258 million, AHCA reported — a drop from $861.5 million to $603.2. That includes reductions in direct payments and other funding through the Lower Income Pool and Disproportionate Share program.
The Safety Net Alliance calculated the bottom line loss for Jackson at a slightly smaller amount — $233 million — based on some savings in other Medicaid categories. The loss for Memorial Regional in Hollywood is estimated at $77.2 million and for Broward General in Fort Lauderdale, $58 million.
Anthony Carvalho, head of the Safety Net Alliance, said Tuesday that the cuts “make no sense at a time when the healthcare safety net is trying maintain access to care for 3 million Floridians without any health coverage and receives less than the cost of care for another 2.5 million people who are in low-income families, the elderly or disabled patients in the Medicaid program. This will hurt the quality of health care. It will cost jobs.”
Jackson spokesman Edwin O’Dell issued a cautious statement: “We are working with elected officials and others to preserve and to move Jackson forward in the evolving healthcare climate. We are demonstrating our willingness to reform and turn around Jackson and seeking alternative funding sources.” Dudek said the state has to act forcefully because Medicaid expenditures have more than doubled since 2000 — climbing about six times faster than general revenue. For the fiscal year ending June 30, the state expects to spend $20.3 billion for Medicaid.
Dudek said the Scott administration proposes to cut Medicaid costs and provide fairer payments through a system called “rate banding,” in which similar hospitals — such as children’s hospitals or teaching hospitals — would be paid similar rates.
Karen Zeiler, AHCA’s chief of staff, said Medicaid payments in Miami-Dade for the 13 general acute-care hospitals range from $602 per patient day to $1,794. These hospitals are in the same rating band and would receive similar payments under Scott’s proposal.
For Jackson, categorized as a teaching hospital, the Scott proposal would cut patient payments from $2,589 per day to $1,470, a 42 percent decline, Zeiler said.
Statewide, the rate-band changes could save $1.3 billion — money the governor could use for a $1 billion increase in education funding, a push he emphasized during his speech to the Legislature Tuesday.
Scott’s Medicaid reductions also include several other items, such as not paying for patients who spend more than 23 days in the hospital and limiting the number of emergency room visits.
The Safety Net Alliance calculated that the total effect of the measures would be $876 million in savings for the state. Florida hospitals would also lose another $1.2 billion in federal matching funds.
Zeiler said she wasn’t certain how much federal money would be lost, but acknowledged it would be “a significant reduction.” Linda Quick of the South Florida Hospital and Healthcare Association said she didn’t understand why the Scott administration was charging ahead with the rate-banding system when the Legislature last year approved a widespread Medicaid reform plan that within a few years will shift virtually all recipients into health maintenance organizations with a different payment system.
Dudek said she’s been discussing with Jackson Chief Executive Carlos Migoya the possibilities of funding alternatives, including ways that Jackson could obtain more money from the federal government.