Governor, GOP lawmakers differ on ‘critical care’ funding for Medicaid patients

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As state legislators head into budget negotiations, both chambers have agreed to eliminate additional “critical care” funding for hospitals that treat the most Medicaid patients. Those dollars are used to give automatic rate enhancements to those hospitals. And Gov. Ron DeSantis, in his budget recommendations, included recurring funding for the hospitals.

But House budget writers didn’t just eliminate the so-called critical care fund. The House recommended removing an additional $100 million in state money (which is matched with federal Medicaid funds) currently used to reimburse hospitals and steer the money instead to help train future nurses. All told, it’s a nearly $252 million reduction to hospital inpatient and outpatient reimbursement rates and a $100 million bump to higher education.

House leaders defend the move because hospitals are getting money from a new supplemental Medicaid financing program called Direct Provider Payment or DPP. DPP is allowable under a federal waiver and lets hospitals use funds to bridge the difference between Medicaid reimbursements and their costs of providing the care. Florida does not contribute any state dollars to the DPP program. Instead, it is funded with local tax dollars generated by hospitals.

“They are contorting themselves because they believe they never should be cut,” said House Speaker Chris Sprowls, who pointed out that hospitals had their “second-best year” last year because of the enhanced funding they received. “They have a significant influx of money … and all we hear is ‘oh the sky is falling.’”

Sprowls also said it’s time to act because the state has a “significant nursing shortage,” and hospitals should have “skin in the game” to solve the problem.

Florida Hospital Association President and CEO Mary Mayhew, whose association commissioned the report that identifies the current and looming shortfall, said the goal to increase education funding is laudable. Hospitals currently partner with colleges and universities to train staff, she said. But, she noted, increasing education funding “really shouldn’t be supported at the state level through a cut to hospitals.”

Mayhew also said she is worried about the state’s commitment to helping fund the Medicaid program. Medicaid is administered and funded jointly by the state and federal governments. Mayhew said removing $100 million in general revenue is troubling.

She said just 4% of the general revenue in the current state fiscal year budget was spent on hospital funds.

“We are not driving general revenue (commitments),” she said, adding, “What is the problem we are trying to fix with all the money? There’s no hole; there is no general revenue hole in the state budget,” Mayhew said. “I recognize they are looking over the entire state budget, but I have to raise awareness around the consequences of cuts to hospitals and the care they provide to Medicaid patients.”

But amid all this, House budget writers include nearly $51 million in recurring revenue to help cushion proposed cuts to Tampa General Hospital, Johns Hopkins All Children’s and Plantation General, three facilities that did not participate in the DPP program in the Fiscal Year 2021-2022 but did receive “critical care dollars” because of the amount of Medicaid patients they treat.

Two of the three facilities happen to be in Sprowls’s district and also are the regional facilities that residents in Senate President Wilton Simpson’s district would be sent to if necessary.

Tampa General Hospital, which stands to lose more than $22 million in critical care funding, would be offset by more than $26.5 million in increased payments. Johns Hopkins All Children’s could lose $25.7 million in critical care funds if lawmakers eliminate the fund, but that would be offset under the House plan, which would provide the facilities $26.3 million in enhanced payments. Plantation General in Broward also would benefit under the House proposal but not to the degree of the other hospitals. The Broward facility would lose $332,435 if the critical care fund were eliminated but would receive $168,389 in enhanced payments bringing its loss to more than $164,000.

Other hospitals that receive critical care funds and also participate in DPP aren’t as fortunate under the House budget. Jackson Memorial Hospital would lose $71.7 million in critical care funds and another $12.5 million for a total $84.2 million hit. Lee Memorial Hospitals could lose nearly $2.4 million in critical care funds and reductions to their Medicaid reimbursement.

Sprowls, however, defends the extra payments to the three hospitals. He says all three wanted to participate in the DPP program, but they were “blocked” because it requires all the facilities in a region to join, and that didn’t happen in those two areas.

He said they were “left on the beach.” “We’re actually treating them completely fairly,” Sprowls added.