Senate Appropriations Chair Rob Bradley is undertaking something seen too rarely in the Legislative process: He is actually trying to clean up and improve Florida’s health care financing policy.
Bradley, an Orange Park Republican, intends to do this by finally eliminating “auto-payments,” a payment scheme that Gov. Rick Scott described in 2015 as arbitrary, inconsistent and bearing no relationship to improving access or quality of care.
This is not the first attempt to deconstruct the auto-payment policy.
Last year, the House acted to eliminate the policy for all but a small number of public hospitals that qualify as “safety net” providers.
The House accomplished this through a formula that requires hospitals receiving auto-payment money to have a Medicaid caseload of 25 percent or more. Then they added a complicated set of additional conditions designed to direct as much funding as possible to 11 large, government-funded hospitals.
The result was that out of 28 facilities that qualified for a piece of the $318 million in auto-payment funding, 92 percent – or roughly $292 million – went to those 11 facilities.
The argument those hospitals are making now is that they treat the highest percentage of Medicaid patients. What they don’t want you know is the state already recognizes their high Medicaid caseloads through other channels.
Those same 11 hospitals received $400 million of Low Income Pool funding. They got $163 million in Medicaid Disproportionate Share payments as well.
That’s a whopping $563 million in tax dollars already.
Many hospitals in rural Florida also treat high numbers of Medicaid and charity care patients, but the LIP formula has been manipulated to direct the money to public hospitals, so those rural hospitals now get little to nothing from LIP or the Disproportionate Share program.
Overall, these large, government-funded hospitals are doing very well.
Based on 2016 data, they had an average total margin of nearly 10 percent. That compares favorably with HCA at 9.6 percent or Tenet at 6.6 percent, two for-profit hospital corporations with their own Medicaid and charity care obligations.
About 1 in 6 patients served at an HCA hospital were covered by Medicaid and the company provided $122 million in charity care services. Tenet had a Medicaid percentage of 23.5 percent and provided $33 million in charity care.
Bradley is providing much-needed leadership by attempting to end payment formulas disconnected from any incentives for efficiency or quality of care.
His approach requires a smaller total cut in Medicaid payments to all hospitals compared to last year, specifically improves Medicaid payments for freestanding children’s hospitals and provides a special allocation to fund UF Health Jacksonville, one of those 11 hospitals that truly does need additional help.
Let’s hope this common-sense approach is embraced by both the House and Senate.