Session over, but Florida hospital funding fears remain

Published May 13, 2013

ST. PETERSBURG — With only days left until the end of the legislative session, All Children's Hospital last month faced losing up to $18 million in Medicaid payments.

It was time to hit the panic button.

Hospital officials rallied community leaders with emails. The lobbying team hit up Tampa Bay legislators. A worried mom sent a state senator photographs of her daughter, a spinal surgery patient at All Children's.

In the end, a sigh of relief.

When the session ended May 3, legislators had reworked the formula that had steered more public dollars to the state's for-profit hospitals. All Children's now could see a $3.4 million increase in payments. Tampa General Hospital, which had feared as much as a $6.6 million loss, now expects an estimated $1.3 million gain.

But for hospitals waiting to see what will happen next, a sigh of relief is hardly a hosanna. Over the last two years, Gov. Rick Scott, a former executive at for-profit hospital giant HCA, has ordered a study on doing away with public hospitals and proposed cutting $2 billion in funding for hospitals that care for large numbers of poor patients.

Neither scenario came to pass. But the just-concluded session shows the political climate for Florida hospitals could be growing friendlier to the for-profit sector — though, like their nonprofit colleagues, they face huge challenges in the year ahead:

• The new Medicaid formula, though adjusted to help hospitals like All Children's, is a substantive start to redirecting more money to the for-profit sector. All told, these hospitals realized a $48 million gain in Medicaid dollars. And observers expect further changes in the formula to be an ongoing battle.

• HCA, a heavy political contributor, wasn't entirely successful in loosening restrictions on opening new trauma centers. But it did make progress in widening its access to this potentially lucrative line of business — much to the dismay of nonprofit hospitals trying to protect their long-standing trauma centers.

• Both for-profit and not-for-profit hospitals urged legislators to accept $51 billion from the federal government that would have given Medicaid coverage to 1 million poor adults. Despite Scott's endorsement, House Republican leaders jettisoned the plan.

But that's not all that was lost in the Medicaid refusal. For years, Florida hospitals have benefited from a special pot of federal dollars to care for the poor. That will start going away next year — Washington assumed there would be no need for it once many poor people could get Medicaid.

Rep. Mark Pafford, a West Palm Beach Democrat, said the GOP-led Legislature laid groundwork for tougher times ahead for the safety net hospitals.

"I don't think it's all going to be in one big swoop," he said. "Some of these things take years to put in place."

Rep. Matt Hudson, a Naples Republican who led a key health care committee, said such fears are unfounded. After all, he said, the Medicaid formula was adjusted, and Washington did delay cuts to charity care.

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"From that standpoint, they made out pretty well," Hudson said.

Dr. David Guzick, president of University of Florida and Shands Health System, takes another view.

"It does seem to be a battle each year in the sense of trying to preserve the ability of safety net hospitals to deliver on their mission," he said.

• • •

Medicaid, the state-federal insurance program for the poor, reimburses hospitals for each day a patient spends there. Rates are lower than what Medicare pays, and far lower than what private insurance pays.

But overall, Medicaid — which also covers nursing home care — is so costly, legislators have been seeking to rein it in.

Last year, legislators agreed on a concept that pays hospitals flat fees based on patients' diagnoses. The goal: Do away with the incentive to keep patients in the hospital longer.

"There's no intentional favoring or disfavoring a hospital or type of hospital," said Tamara Demko, executive director of Tax Watch Center for Health and Aging.

Hospitals did not oppose the new payment system, which is how they have long collected from Medicare. But the first versions of the formula slashed funds from safety net hospitals, which say they see a greater share of very sick Medicaid patients. Meanwhile, it steered more to the for-profit hospital chains, which say they can provide care more efficiently.

"We were on pins and needles," said Stephen Mason, chief executive officer of the nonprofit BayCare Health System, which serves significant Medicaid populations. Though some of his hospitals lost funds, the cuts weren't as bad as feared.

In the end, legislators, who had more revenue to work with this year, adjusted the formula so that safety net hospitals will get $16 million more next year.

The for-profits will get a $48 million increase — $29 million of which goes to HCA hospitals.

With nearly 40 hospitals in Florida, HCA is a leading provider of Medicaid and uncompensated care admissions, said J.C. Sadler, a spokeswoman for the chain's West Florida division.

She commended the new law, saying, "The Florida Legislature is moving forward with a system that rewards hospitals providing quality efficient care."

HCA, which has opened five new trauma centers across the state, was also leading the push to make it easier to open still more. Legislators gave the greenlight for new trauma centers in only two rural areas, at least one of which will benefit HCA.

Sadler said the move "will create an opportunity to enhance access to trauma services in underserved parts of the state."

Others, however, say that building more centers for costly trauma care without firm proof they are needed will only add to the soaring cost of hospital care.

Bruce Rueben, president of Florida Hospital Association, which opposed deregulating the trauma system, said he's worried HCA will be back for more.

"The trauma issue is indicative of this relentless push by some to deregulate everything because somehow all regulation is bad and there's this myth that the free market can fix everything," he said.

• • •

HCA's political committees contributed $1.6 million to Florida candidates, political parties and other committees in the last election cycle, and another $233,100 this session, according to state contribution records. HMA, the next biggest hospital donor, gave nearly $701,000 last year and $4,000 this year.

By contrast, the Safety Net Alliance contributed $51,500 last year and $6,500 this session.

Alan Levine, a senior vice-president at Naples-based HMA, said money doesn't tell the full story. The Safety Net Alliance includes influential institutions, such as Shands and Tampa General, recently ranked the top hospital in the state by U.S. News. BayCare Health System is the top hospital group in Tampa Bay.

And the for-profit hospitals aren't always even on the same side: HMA this year acquired Bayfront Medical Center, which has lost business to HCA's new trauma centers. And HMA opposed HCA on the trauma fight.

One thing all the hospitals agreed on was extending Medicaid coverage to more adults.

"If their (campaign) contributions were supposed to make a difference,'' said Hudson, the Republican legislator from Naples, "we would've expanded Medicaid."

Jodie Tillman can be reached at or (813) 226-3374.