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Medicaid cuts top Broward Health’s concerns for the 2013 legislative session

By Karla Bowsher, BrowardBulldog.org

Broward Health CEO Frank Nask Photo: Karla Bowsher

Broward Health CEO Frank Nask Photo: Karla Bowsher

Broward Health could lose at least $6.5 million a year if Tallahassee lawmakers ignore their pleas not to reduce Medicaid health insurance payments. That’s on top of $179 million the north Broward public hospital system expects to lose to federal cutbacks over the next decade.

Preventing cuts to current Medicaid payments and expanding Florida’s Medicaid program are Broward Health’s top priorities during this year’s 60-day session of the Florida Legislature, which began March 5.

“Those are the two biggest issues that we monitor every day,” said Broward Health Chief Executive Frank Nask. “We talk about them every day.”

Other priorities include securing continued funding for its Memory Disorder Center and its health center at Deerfield Beach High School.

The Patient Protection and Affordable Care Act, also known as Obamacare, allows states to expand their Medicaid programs to provide health insurance for all adults whose income is up to 133 percent of the federal poverty guidelines – or $15,281 a year for an individual. Currently, Medicaid insurance is only available for certain low-income individuals.

If Florida expands its program, between 800,000 and 1.3 million people currently without insurance would become eligible for Medicaid. That includes as many as 107,000 Broward residents.

Broward Health, whose legal name is North Broward Hospital District, is a tax-subsidized health care system that includes four so-called safety-net hospitals that treat paying patients as well as indigent patients with the help of property tax revenue from Broward homeowners who live roughly north of Griffin Road.

In 2011, the district netted $154 million from property taxes, according to financial reports.

Broward Health is governed by a seven-member board of commissioners appointed by the governor.

This week, Nask and Broward Health CFO Robert Martin, chief lobbyist Charlotte Mather and three commissioners – Joel Gustafson, Jennifer O’Flannery Anderson and David Di Pietro – are taking their concerns about Medicaid to Tallahassee.

MEDICAID EXPANSION

In states that accept it, the Affordable Care Act would increase federal funding to cover 100 percent of the costs to expand state Medicaid programs between 2014 and 2016. Federal funding would cover at least 90 percent of those costs starting in 2017.

Federal and state governments jointly fund Medicaid. In Florida, federal funding typically covers 58 percent of Medicaid costs.

Broward Health Chief Lobbyist Charlotte Mather

Broward Health Chief Lobbyist Charlotte Mather

Gov. Rick Scott’s unexpectedly announced last month that he now supports President Obama’s Medicaid expansion option, but his support does not guarantee that Florida will expand Medicaid.

Other state officials, including Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater, still oppose expanding Medicaid. And the day before the session began last week, the House Select Committee on Patient Protection and Affordable Care Act voted 10-5 against expansion. The vote split along party lines, with Republicans against and Democrats in favor.

On Monday, the Select Senate Committee on the Patient Protection and Affordable Care Act voted 7-4 against expansion, with the vote again split along party lines. Instead, the committee proposed the state accept the extra federal funding for expansion but use it to help uninsured, low-income people obtain private insurance. It’s currently unclear whether the proposal will go any further, however.

Broward Health wants Medicaid expanded in part because the Affordable Care Act will cut special funding for safety-net hospitals that treat a high percentage of uninsured, indigent patients. The federal law assumed there would be fewer uninsured residents because of the Medicaid expansion option.

Currently, eligible hospitals receive what’s known as disproportionate-share hospital (DSH) funding via Medicaid and Medicare, the federal health insurance program for people age 65 and older. In 2011, Broward Health received $40 million in DSH payments from Medicaid and another $18 million from Medicare, according to Broward Health’s financial reports.

The federal law will cut Medicaid DSH funding by 50 percent between 2014 and 2022, and Medicare DSH funding by 75 percent starting next year. That means Broward Health stands to lose $179 million in DSH funding over the next 10 years, according to lobbyist Mather.

“We’re really looking for Tallahassee to be fair, to make sure that they’re looking at what the impact of expanding or not expanding is on your safety-net hospitals and all hospitals,” she said. “The legislators are the ones who are actually now addressing this, and the ball’s in their court.”

MEDICAID PAYMENTS

Gov. Scott’s proposed budget for the 2013-2014 fiscal year calls for a 2 percent cut to the Medicaid insurance payments that hospitals receive for treating hospitalized patients covered by Medicaid.

Broward Health opposes the cut because it could cost the hospital system $3.2 million a year, Mather said. Lawmakers will decide whether to approve the governor’s proposal.

In January, the Agency for Health Care Administration (AHCA), which administers the state’s Medicaid program, announced its proposal for a new Medicaid payment model.

Currently, Florida’s hospitals receive Medicaid payments based on a flat daily rate regardless of the type of illness treated, called a “per diem” rate.

Under AHCA’s new payment model, hospitals will receive Medicaid payments based on the type of illness treated, which the industry calls a “diagnostic related group” (DRG) rate.

The DRG payment model ensures all hospitals receive the same payment for treating a given illness, whether it’s an ankle sprain or a heart attack.  AHCA hopes this will reward hospitals that reduce their treatment expenses.

Broward Health does not oppose the idea of a new payment model but disagrees with some of the ways AHCA has tweaked its model.

For example, the DRG model is set to take effect July 1 without a transition period.

Mather said it also lacks a wage-area adjustment, which means it doesn’t take into consideration the higher salary costs paid by hospitals in metropolitan areas like South Florida.

Lobbyist Ron Book, who works with Broward Health and other hospital systems, said the proposed DRG model also gives preferential treatment to stand-alone children’s hospitals. That means All Children’s Hospital in Miami-Dade County, for example, would fare better than the Chris Evert Children’s Hospital, part of the Broward Health system, and the Joe DiMaggio Children’s Hospital, part of the Memorial Healthcare System, he said.

“They should not be treated any different,” Book said. “That is a very big factor in the DRG fight.”

Broward Health stands to lose at least $3.3 million a year under the DRG payment model as it’s currently proposed by AHCA, Mather said.

“We just want to make sure that, if they’re going to switch to this methodology, the model that they use is based on criteria that’s fair to all hospitals,” she said. “That is something that we’re watching carefully.”

BEYOND MEDICAID

Broward Health is also counting on lawmakers to renew annual funding for its Memory Disorder Center and its Deerfield Beach High School Health Center.

The district is seeking $223,000 for the memory center, one of 13 state-designated clinics that receive annual funds to treat patients and conduct research on disorders like Alzheimer’s disease.

The district wants $367,000 for the school health center, which provides a variety of medical services, including school physicals, immunizations, dental care and gynecological exams. The center primarily serves students and nearby residents, but is open to the public.

Book is concerned about how it will fare in the Senate this legislative session.

“The Senate will cut a lot of programs,” he said. “Everything that’s on the project list has a concern.”

Karla Bowsher can be reached at kbowsher@browardbulldog.org.

 

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