Senate Medicaid plan would cut funding for Jackson, safety-net hospitals

Miami’s Jackson Health System could see its crucial Medicaid funding cut by $46 million, or about 13 percent of what it was expecting, under a bill that is scheduled for a floor vote in the Senate by the end of the week.

Jackson isn’t the only South Florida hospital that would take a hit, according to a preliminary analysis by the Safety Net Hospital Alliance of Florida. Miami Children’s Hospital would face a $15 million cut to its anticipated Medicaid funding, the report concluded. And Memorial Healthcare System and Broward Health would each shoulder about $3 million in reductions.

All told, the state’s safety-net hospitals would lose out on an estimated $104 million, according to the analysis. For-profit hospitals, meanwhile, would benefit to the tune of about $81 million.

“This would put a tremendous roadblock in front of us,” said Carlos Migoya, CEO of Jackson Health, which would still receive about $315 million in Medicaid money.

Migoya and other safety-net hospital CEOs are running out of time to make their case. The proposal will be read on the Senate floor on Wednesday, and will likely receive a vote on Thursday.

The safety-net hospitals will also have to overcome the proposal’s supporters, who say it helps end disparities between hospitals.

“Contrary to what some naysayers are saying, the for-profit hospitals have taken severe cuts over the last three years in the tens of millions of dollars, while tax district hospitals have taken little to no cuts as they have bought back their rates by utilizing taxpayer dollars,” Associated Industries of Florida President Tom Feeney said in a press release.

Legislators could soften the blow, at least in the short-term, by accepting billions in federal money to expand Medicaid under Obamacare. The conservative House opposes the expansion, which would help safety-net hospitals pay for charity care that they say drives the need for more Medicaid dollars than for-profit hospitals.

Feeney on Tuesday called on lawmakers to consider the extra Medicaid money, and pointed to a report from Moody’s Investor Services that indicated the bond rating of charity-care hospitals could be hurt without the additional Obamacare money.

Asked about the report and the federal Medicaid money the Legislature might not accept, Gov. Rick Scott said that he’s “still confident that the House and Senate understand that we’ve got to take care of taxpayers in our state. But we’ve also got to take care of people who don’t have health insurance. So I’m optimistic they’re still going to do the right thing.”

For now, however, lawmakers are focused on the funding formula.

The Senate and House are each considering different formulas for reimbursing hospitals under a new payment model known as diagnosis-related groups, or DRGs. Rather than paying hospitals based on how long patients stay, as Florida currently does, the new model would dole out money based on patient services.

The two chambers’ different approaches need to be reconciled in the coming weeks amid talks over the state’s mammoth health-care budget.

The main difference: what to do with local tax dollars that counties use to draw down for extra federal funds. The Senate plan redistributes a portion of that money statewide; the House plan allows the money to remain in the counties where it was received.

The House also includes adjustments for teaching hospitals and for hospitals that serve a large percentage of poor patients. And it allocates $76 million beyond the Senate proposal to help offset the hit to safety-net hospitals.

Safety-net hospitals have panned the Senate version, saying it disproportionately hurts hospitals that serve low-income patients and train new doctors.

“Our state’s teaching, public and children’s hospitals are alarmed that the Senate’s plan would result in such deep funding cuts to facilities that educate our next generation of doctors and provide specialized care to some of our state’s sickest children,” said Tony Carvalho, the president of the safety net alliance. “This is a major redistribution of dollars from safety-net hospitals to for-profit hospitals.”

Carvalho and others are rallying behind the House plan, which wouldn’t cut Medicaid funding for Jackson. Broward Health would lose about $524,000 under the House proposal — far less than what the upper chamber is suggesting — while Miami Children’s would come out about $4.6 million ahead of the $92 million it would have received under the old formula, according to the analysis from the safety net alliance.

The House plan would benefit the state’s for-profit hospitals, too, albeit to a lesser degree than what the Senate has proposed. Baptist Health South Florida, for example, would gain about $7 million under the House plan, as compared to about $10 million under the Senate plan, the analysis shows.

Still, a Baptist spokeswoman said in an email that it prefers the House plan because it’s better for “our community.”

A spokeswoman for Senate President Don Gaetz told the Herald/Times that the Senate was not aware of the criticism of its plan. The Senate is still finalizing its official hospital-by-hospital report of how funding will be distributed.

But earlier this week, Sen. Denise Grimsley, R-Sebring, penned a letter to her Senate colleagues, noting that the change in payment method would “produce winners and losers.”

At Jackson, Migoya doesn’t want the state’s largest Medicaid provider to lose out on any more money.

“We are hoping that as we go through this process, we will get to something that is reasonable,” he said.

Miami Herald staff writers Marc Caputo and Daniel Chang contributed to this report. Kathleen McGrory can be reached at kmcgrory@MiamiHerald.com.

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