Clamor arises over 2011 law that cuts funding for many hospitals

Published March 2, 2014

TALLAHASSEE — Hillsborough and Pinellas hospitals are on track to lose $133 million next year as a new state law that spreads health dollars around the state takes full effect. And the biggest loser is Miami-Dade, whose hospitals are expected to take a $218 million hit.

The funding formula was a little-known part of Florida's 2011 Medicaid reform law, a Republican-driven overhaul of the federal/state insurance program for the poor. But its impact is only now becoming clear as the provision is scheduled to take effect in July. Hardest hit are hospitals in counties like Hillsborough, Pinellas and Miami-Dade that put their own residents' tax dollars toward the program.

Those local dollars are matched by federal funds. In the past, hospitals in the counties that raised the money got nearly all of those federal dollars back.

Now that money is being shared with communities that didn't seek out the federal match.

Hospitals and public officials on the losing end are fuming.

"We have enough need in our county," said Hillsborough Commissioner Sandy Murman. "No community wants their hard-earned tax dollars sent to another county."

Carlos Migoya is CEO of Jackson Memorial, the public hospital in Miami that stands to lose a whopping $140 million.

"The fact is, the voters have put on themselves taxes that deal with health care,'' he said. "Now, the Legislature is using some of this money to benefit other communities that chose not to tax themselves, as well as for-profit hospitals."

Even state Rep. Matt Hudson, a Naples Republican who played a key role in the Medicaid reform law, said the Legislature should rework the formula this session. He said the Legislature did not intend to have such an impact on counties that have been raising their own health care funds.

"It would really, really put a dent on some of the major treatment facilities in the state, be it trauma facilities or otherwise, and that would be a problem," he said.

State Sen. Jack Latvala, a Clearwater Republican, doesn't like the new formula, either. "To do what's been proposed potentially penalizes counties, local governments who have taken steps to provide for indigent health care costs locally," he said. "And now they'll be penalized, and I think that's wrong."

Hillsborough raises its money via the half-cent sales tax for indigent health care. Pinellas cuts a check out of its general fund budget, which is supported by property taxes. Now, instead of the full federal match, such counties are guaranteed only what they put up, plus 8.5 percent interest and some additional money based on a complicated system that has been criticized for lacking transparency.

Mainly due to this new funding formula, state analysts have predicted that local governments will cut back on their funding — and therefore the federal match — leading to a $565 million statewide decline in federal matching funds for hospitals.

Hudson is among those wondering why counties would continue taxing their residents to get a match that goes elsewhere.

"If they don't get that guarantee, why would you do it?" he said. "It doesn't make great sense."

While legislators could rework the formula this session, it's unclear how high a priority it will be. After all, the plan does create winners, too.

Counties that stand to gain money for their hospitals include both Hernando ($5.3 million) and Pasco ($2.5 million), according to new figures from the Safety Net Hospital Alliance of Florida. In a twist that shows how complex the funding formula is, Broward County — which raises its own health funds — could gain $31 million. But leaders at two large public hospitals there still don't like the law.

"Even if this could bring us more money this year, we oppose it," said Memorial Healthcare System chief executive officer Frank Sacco, whose hospital system would gain $12.8 million. "We are going to lose transparency. And in the future, we might not have any control over where the money goes."

Taken as a group, the state's safety net hospitals would be the biggest losers, taking a total $300 million hit. For-profit hospitals don't lose nearly as much, but they're still expected as a group to pull in $77 million less under the new arrangement.

The Tampa Bay area's largest hospital group, not-for-profit BayCare Health, would lose nearly $60 million, according to the Safety Net Alliance figures.

BayCare officials are pushing the local legislative delegation to rework the formula.

"These are communities that have said, 'We want to provide a layer of care,' " said Keri Eisenbeis, BayCare's director of government relations. She called the issue "an injustice."

Tampa General Hospital, the main teaching facility for USF Health, could lose $43 million in the new scenario. All Children's Hospital in St. Petersburg would lose $4.8 million.

HCA, the state's largest for-profit system and the bay area's second-largest provider, would take a net hit of $30 million to its nearly 45 hospitals in Florida — a lot of money but still much less than what Tampa General alone loses. Bayfront Health St. Petersburg, now owned by a for-profit chain, would lose nearly $9.7 million.

All this comes as hospitals already face financing changes.

They're still adjusting to the state's new Medicaid payment system. And the federal government hasn't yet told the state whether it will approve other changes to the Medicaid program, making it hard to plan for next year. State and federal officials are fighting openly over a state effort to limit payment for some Medicaid patients' emergency room visits.

Nonprofit hospitals tried to draw attention to consequences of the new distribution plan last year, but were overshadowed by other matters. Now they're running out of time.

Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, says the new funding system should be repealed. "We believe that it's an arbitrary methodology without a lot of basis in policy," he said. "And we believe the state is best served by deleting the whole section of law."

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