|Tallahassee, FL -
Published by the LEDGER TALLAHASSEE BUREAU on Saturday, January 21, 2012 at 11:27 p.m.
Gov. Rick Scott's controversial plan to cut $1.9 billion in Medicaid payments to Florida hospitals may not win backing in the Legislature this year.
But legislative leaders and the governor agree they need to overhaul the way hospitals are paid to take care of Florida's poorest and sickest residents. And ultimately it will mean less money for the hospitals, which were hit with a $510 million rate cut this year.
Sen. Joe Negron, chairman of the Senate budget subcommittee that oversees health care spending, cited the cuts that hospitals, nursing homes and other health care facilities endured in the past year as the state struggled through an ongoing budget crisis.
"I'm going to be very resistant to just taking the easy way out," Negron said about a renewed effort to cut rates.
Negron, R-Stuart, suggested lawmakers could look at more targeted cuts in health care and state social service programs before turning to across-the-board rate cuts for health care providers.
But at the same time, Negron said his committee would be charged with finding $850 million in health care reductions this year as lawmakers try to write a new $66 billion state budget at same time trying to find an additional $1 billion for schools while also agreeing not to raise taxes or fees. It means hospitals as well as other health care and social service programs will face more cuts in the new budget year, which begins in July.
Negron also said while he had reservations about Scott's hospital plan, it would remain under consideration as the Senate develops its budget in the next few weeks.
The House has already rejected Scott's proposal.
House Speaker Dean Cannon, R-Winter Park, released a preliminary outline of the House's budget plan, which included $1 billion for schools but did not call for a deep cut in hospital reimbursement rates. Instead, Cannon said the House would pursue a plan to overhaul hospital rates based on a system similar to Medicare, the federal health care program for the elderly.
Medicare reimburses hospitals based on the patient's diagnosis. Each patient is assigned to diagnostic related group (DRG) which sets a rate for the specific illness.
Sen. Don Gaetz, R-Niceville, said the Senate would consider a DRG plan as well as Scott's proposal.
The problem is it will take time to establish a DRG system for Medicaid — up to two years — and it could cost as much as $3 million to implement.
The DRG plan for Medicaid would pay the hospitals less than what they receive for Medicare patients — but exactly how much less will be one of the key points in the debate. Another major issue will be creating a system that takes into account special cases that would fall outside the normal DRG payment plan.
Scott, a former private hospital executive, remains determined to curb Medicaid costs. He keeps a chart in his office showing the escalating cost of hospital care for Medicaid patients.
"The amount that we're paying in patient rates has gone up dramatically faster" than inflation, personal income or the amount of general revenue that the state collects each year, he said.
While acknowledging that his plan could be adjusted to take into account special services that some hospitals provide, Scott said it was reasonable to look at cutting hospital rates given the state's projected $1.7 billion budget shortfall and the need to find more money for schools.
"It doesn't make any sense that Medicaid would continue to grow at the rate it's growing. It's not sustainable," Scott said, noting the cost was rising five times faster than the growth in general revenue. "You just can't do that."
Scott also said his plan would bring more uniformity to a system where hospitals now receive widely varying reimbursements for treating similar patients.
But opponents say Scott's plan — which also includes limits on hospital stays for Medicaid patients — would have dire financial consequences for Florida's hospitals, with the largest cuts falling on the hospitals that serve the largest numbers of low-income patients.
Jackson Memorial in Miami-Dade County would be the biggest loser at $244.5 million.
In Polk County, Lakeland Regional would lose $34.7 million, Heart of Florida $9.4 million, Winter Haven $11.8 million and Lake Wales $1.34 million.
In Alachua County, Shands would lose $114 million. And in Marion County, Munroe Regional would lose $18.3 million.
"I appreciate that we're trying to put more money into education," said state Sen. Rene Garcia, R-Hialeah. "I for one cannot be quiet and sit here and take these cuts. I just refuse to go along with cuts of such a dramatic nature."
Senate Democratic leader Nan Rich of Weston said there isn't enough money in the budget proposals for either schools or hospitals. "This is just pitting one against the other," she said.
Rich is among of group of lawmakers that have urged Scott and Republican legislative leaders to look at additional revenue sources, such as applying the state sales tax to Internet sales or ending some tax exemptions to provide additional money for the state budget.
"We have to go back to the drawing board," Rich said about Scott's plan. "This is not a good model because it's going to devastate hospitals around the state."
Negron said he was concerned about the potential $1.9 billion hospital cut, since it would only yield $388 million in general revenue that could be shifted to other state programs.
It would result in the loss of more than $1.2 billion in federal funding, since the federal government pays 58 percent of Florida's Medicaid costs.
Tony Carvalho, head of the Safety Net Hospital Alliance of Florida, which opposes Scott's rate-cut plan, said the loss of those federal dollars would be unacceptable for the state.
Carvalho said unlike rejecting federal funding for a high-speed train or a road project, the costs for treating Florida's sickest and poorest residents would remain, unlike a rejected road project.
Carvalho said the hospitals were open to working with the governor and lawmakers on a DRG plan, while adding one of the key components would be deciding how to handle "outlier" cases. But he also cautioned that a DRG program that results in rate cuts in the range of more than $1 billion would not work either.
"There is no silver bullet," Carvalho said.