Legislature kills move to cut hospital Medicaid rates again

The following article was published in the Florida Current on June 17, 2011:

Legislature kills move to cut hospital Medicaid rates again

By Christine Jordan Sexton

A projected $82 million surplus in Medicaid this year helped spare hospitals what would have been a 7.7 percent retroactive rate cut for the last six months.

Despite the surplus in Medicaid the Agency for Health Care Administration pitched a proposal to legislative budget staff to approve a plan that would allow the state to reduce inpatient and outpatient Medicaid rates paid to certain hospitals to shore up what was a $45 million shortfall in the amount of “intergovernmental transfers” or IGTs that are used to fund hospital rates. 

This collection of money – which primarily comes from local taxes and money – is just one source of Medicaid funding and like other sources it is used to help draw down federal dollars.

But legislative leaders on Friday rejected the proposed cut.

They refused to consider the cut at an upcoming meeting of the Legislative Budget Commission, scheduled for June 24 in Tallahassee. The commission is a panel of state lawmakers which has the power to make changes to the state budget.

Rep. Denise Grimsley, R-Sebring and House budget chief, said in a statement that the reduction–in addition to a 12 percent rate cut hospitals face in the upcoming fiscal year– is a “considerable and unanticipated reduction.”

Grimsley said the options are to allow the $82 million overall surplus in Medicaid to roll forward into next year’s budget and pay the hospitals then or to use the money in the current fiscal year and avoid the proposed cut touted by AHCA. The next fiscal year starts on July 1.

 “In any event, the obligations must be paid,” Grimsley said.

Sen. Nan Rich, D-Weston, and a legislative budget commission member, said she would have voted against the cut had it been included on the commission’s agenda.

“This is not necessary.There is no deficit in the Meidcaid porgram,”  Rich said adding, “we’ve already done quite a job on our hospitals this session. “

While there is a shortfall in the money from local governments, the entire Medicaid program has a projected $82 million surplus for the year that’s ending June 30.

Rep. Matt Hudson, R-Naples, also would have opposed the amendment had it been on the agenda.

“If we are able to absorb the problem then we wouldn’t be going out there looking for additonal resources,” Hudson said.

Hudson, chairman of the House health care appropriations subcommittee, was critical of AHCA’s handling of the shortfall, first identified in a May 24 letter from AHCA Secretary Liz Dudek to Florida hospitals.

Dudek advised the hospitals of the shortfall and gave them seven days to collect $45 million or face Medicaid rate reductions. Because the $45 million is matched by federal dollars the rate reductions would have led to a total cut of $125.7 million according to LBC staff documents.

After criticism from Hudson, the agency extended the deadline by 20 days giving the hospitals until June 20 to contribute the $45 million. 

AHCA cannot, though, cut Medicaid rates without legislative approval which is why it needed lawmakers to bless the deal.

If AHCA had reduced the rates paid to hospitals it could have translated to additional dollars for Medicaid HMOs that reimburse hospitals based on Medicaid rates. Not all hospital inpatient days are paid by managed care plans, though, so the reduction would not have been a complete windfall for Medicaid HMOs.

The overall health care budget for fiscal year 2011-12 included in SB 2000 appropriates nearly $30 billion for health care and human services, or a 5 percent increase. But there are also plenty of cuts in parts of the final budget. Hospitals will have their Medicaid reimbursement rates cut by 12 percent, county health departments’ rates will be cut 10 percent, nursing home rates will be cut by 6.5 percent and development disabled providers will receive a 3 percent rate cut. The budget also cuts money set aside for biomedical research.

Findt his article here:  http://www.thefloridacurrent.com/article.cfm?id=23442591