House Hospital Funding Plan Picks Winners and Losers

by | May 1, 2017

Hospitals are about to get hammered in the state budget, to the tune of $651 million in funding cuts. The only question is who is getting hammered the hardest. And right now, the Florida House has picked Medicaid, indigent and charity patients as the biggest losers. The winners? Struggling hospitals who will be shielded from some of the steepest cuts, despite getting a massive influx in federal funding.

The Florida House is stubbornly clinging to an outdated model that fails to account for $1.5 billion in funding from the federal low-income pool (LIP funding). When the House model was originally put forward, the state had not yet secured a commitment from the federal government for the LIP money.

The model made perfect sense at the time: without LIP funding, the House rightly took charity care into consideration when it decided which hospitals would bear the brunt of the funding cuts. House lawmakers developed a model that rewarded charity care and service to low-income patients, splitting Florida hospitals into four “tiers,” based on the level of Medicaid and indigent care they provided. Those that did the highest percentages of that work were placed into Tier 1. Those same hospitals, in turn, received the smallest percentage of funding cuts from the state budget, while other hospitals with lower percentages of charity care received larger cuts.

The measure wasn’t supposed to be punitive to larger hospitals, it was simply designed to be fair in a budget year where tough cuts were coming, and all hospitals were going to feel the pinch. At the time, House leadership had no other way to equitably distribute $651 million in funding cuts without factoring charity and Medicaid care into account.

But the influx of $1.5 billion in LIP funding has changed the calculation dramatically. The House plan is not just obsolete, it takes federal dollars intended for patients and directs a portion of that funding toward failing or struggling hospitals.

With the LIP funding in place, the Senate plan makes more sense, because it reimburses Medicaid and charity care through LIP, exactly as the program is intended, and leaves those programs out of the state funding calculations.

The Senate plan is patient-focused, not hosptial focused. In other words, it doesn’t earmark federal LIP money to prop up failing hospitals, it targets those dollars where they need to go: directly to patient care. Safety net hospitals doing a large percentage of indegent care will still be reimbursed through those LIP dollars. The Senate plan then divides the state funding cuts equally across all hospitals, after taking LIP funding and indegent care out of the equation.

This week, the House and Senate will try to find some middle ground as budget negotiations heat up in the final days of session. But House lawmakers who have fought long and hard all session to avoid picking winners and losers must be scratching their heads at the notion of Florida’s state government doing exactly that when it comes to hospital funding.



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