Florida Governor Proposes Changing Funding Structure for Hospitals

by | February 4, 2015

By Kathleen McGrory

A recommendation tucked into Gov. Rick Scott's proposed budget could help Jackson Health System avoid a $40 million budget cut.

Scott wants to repeal the so-called "hospital tiering" law set to take effect later this year. Under the controversial policy, counties that use local dollars to attract federal matching funds for healthcare would have to share the money with counties that don't raise local funds.

Hospitals like Jackson that serve a large number of poor and uninsured patients say the new funding formula would cost them millions.

"We not only applaud the governor on this [recommendation], we believe it is the right thing to do," Jackson CEO Carlos Migoya said Monday. "Hopefully, the Legislature will follow suit."

Legislative leaders, who will spend the next three months crafting Florida's $77 billion budget, were receptive.

"The governor's recommendations are similar to the ideology in the Senate right now," said Sen. René García, a Hialeah Republican and chair of the Health and Human Services Appropriations Subcommittee.

Even if both chambers move forward with the repeal, there will still be sizable budget issues to tackle.

Among them: how to handle the $1.9 billion in healthcare funding due to sunset in June.

Florida will soon lose access to the special pot of federal money known as the Low Income Pool under an agreement with the Centers for Medicare and Medicaid Services, a federal regulatory agency. Scott has said he hopes to negotiate an agreement to keep the money in place next year. If the funding falls through, he has recommended using trust fund money to cover the gap.

Jackson could lose $167 million if no solution is reached, Migoya said. Lawmakers are also debating whether to accept separate federal money to extend healthcare coverage to one million poor Floridians by expanding Medicaid.

For the third year in a row, the Senate has expressed a willingness to accept the funds. But leaders in the House insist the state-federal health insurance program is broken and should not be expanded in Florida. The tiering law passed in 2011 as part of a larger effort to reform Medicaid in Florida. The new funding formula, which divides hospitals into three tiers, was supposed to take effect in 2014.

During the last legislative session, however, the state's safety-net hospitals raised concerns about the potential impact on their budgets, prompting lawmakers to postpone the measure for one year.

Absent any action this session, the law will kick in at the start of the new fiscal year in July.

Other safety-net hospitals would feel the sting. Tampa General Hospital would lose about $15 million, CFO Steve Short said.

But Short said he was encouraged by Scott's recommendation.

"We were very glad to see [Scott's recommendation] because it was a very difficult methodology to implement and it didn't seem to be fair," he said. "We're happy to see him move away from that."

Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, said he was optimistic about the law's chances of being repealed.

"Hopefully, tiering will go away and we can focus on other issues," he said.

(c)2015 Miami Herald