Peter Schorsch
In his opening address as House Speaker in November 2018, José Oliva took aim at the “hospital industrial complex,” railing against what he saw as hospitals enjoying substantial profits and duplicative government funding streams while patients remained powerless.
That started a multi-year fight by lawmakers in both chambers for a more equitable approach to hospital funding, one that would remove much of the subjectivity and treat more than 200 hospitals fairly.
For five years, the Safety Net Hospital Alliance of Florida managed to turn lemons into lemonade by convincing lawmakers to convert what was supposed to be a short-term stopgap solution for a one-year loss of LIP funding into five years of recurring $300 million payments.
Nearly all that money went to the alliance’s own members, even though those hospitals provide less than half of the state’s Medicaid care. This year, the Legislature was done with the charade.
After SFHA rebranded it as the “critical care fund” and tried to change the legislative intent from Medicaid reimbursement to caring for very ill babies, lawmakers cut down the lemon tree, zeroing out the fund.
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.
House Speaker Chris Sprowls said SFHA members were “contorting” themselves to justify their opposition to the change, noting that 2021 was a banner year for their bottom line due to the enhanced funding.
“They have a significant influx of money … and all we hear is ‘oh the sky is falling,” he said.
Hospital systems like HCA Healthcare, AdventHealth and Baycare — which collectively provide 35% of Medicaid services but have received a far smaller share of rate enhancement funding — were among the most vocal proponents of the change.
They have said for years that funding should follow patients. In 2022, the Legislature agreed.
One comment
Dana Ferrell Birchfield
April 1, 2022 at 5:08 pm
TO: Peter Schorsch, Florida Politico
FROM: Dana Ferrell Birchfield, Florida Association of Children’s Hospitals (FACH)
RE: “End of ‘critical care fund’ was a critical win to HCA, AdventHealth, Baycare” – March 24, 2022
In his opening remarks for the Legislative 2022 session, House Speaker Chris Sprowls asked Legislators “What are we willing to risk to improve the lives of the people of Florida?” When it came to the elimination of the Critical Care Fund (CCF), it seems the Legislature was willing to take a big risk. The CCF supported Florida Medicaid patients’ (who are overwhelmingly children) access to the highly specialized care they need. Legislators blamed duplicative funding and the “hospital industrial complex” for the cut.
It’s true there has been a multi-year effort to find an equitable approach to hospital funding in Florida. This is a complex and compelling endeavor, requiring more than just a cursory knowledge of funding sources, licensing requirements, current data and facts – not opinions – to be successful.
Unfortunately, the “critical win” for HCA, AdventHealth and Baycare – all major health systems in Florida – was a critical loss to individual children’s hospitals that serve high percentages of Medicaid patients. Florida’s children’s hospitals provide the majority of hospital care to newborns and children, and 72% of all inpatient hospital care for children 17 and younger. They operate 98% of pediatric transplant programs and 98% of pediatric open-heart surgery programs in the state. Most also operate a Level I, Level II or pediatric trauma center, and several are considered major teaching hospitals, recognized for providing hands-on training for future generations of pediatric nurses, doctors and surgeons.
Given the high percentage of pediatric Medicaid patients, Medicaid reimbursement is a key portion of most children’s hospitals’ revenue. But policy makers can’t really be sure just how much, because the 2019 Florida Medicaid Specialty Children’s Hospital Reimbursement Review commissioned by the Agency for Health Care Administration (AHCA) only collected Medicaid data from “stand-alone” children’s hospitals. Nearly 75% of Florida’s other children’s hospitals – ones connected to larger hospitals and licensed as “clinical laboratories” by AHCA – were excluded from the study.
The reason for the exclusion, according to the report, was that stand-alone children’s hospitals have lower Medicaid reimbursement rates and cannot cost shift, but the other Florida children’s hospitals can use revenue generated from care provided to patients with commercial insurance to make up for Medicaid losses. That’s faulty logic, and you don’t need to ask any commercial health insurer why.
The facts are these: A little more than half of Florida’s Medicaid population is under the age of 19. Most of Florida children’s hospitals treat disproportionately high numbers of Medicaid patients. And funding for Medicaid hospital services has consistently declined since 2014, even though nearly everything else is dramatically increasing in cost. Critical care funding may have been responsive to the coronavirus pandemic and benefitted Florida’s children, but it certainly did not produce a “banner year” for hospitals’ bottom line.
And yes, there’s a whole conversation to be had about the “hospital industrial complex” and the health care marketplace in general. But to malign Florida’s safety net hospitals is to malign some of the state’s best teaching hospitals, public hospitals and children’s hospitals, which not only “care for ill babies” but also perform pediatric heart surgery and catheterization, kidney, heart and lung transplants; provide perinatal intensive care; maintain pediatric trauma centers; and provide many other significant life-saving treatments and care.
Florida’s children’s hospitals are not in the business to make a profit; they operate because they know unhealthy children grow up to be unhealthy adults; that poor health and low income go hand in hand; and that the consequences of both on our state and nation are profound. And while policy makers still assert that Florida’s hospitals have sizable profit margins, data from 2020 shows that year’s profitability was actually less than it was in 2019 (profit margin data from 2021 is not yet available).
Despite this, the 2022 Legislature still cut $311 million in non-recurring critical care funding to 28 individual hospitals, not hospital systems. That’s roughly $11 million per hospital, although some hospitals received higher cuts and some received lower cuts. At the same time, the Legislature allocated about $85 million in recurring general revenue to five individual hospitals; four of these are children’s hospitals, one is not. That means once again, nearly 75% of Florida’s children’s hospitals were left out of consideration, maybe for many years to come.
This is grossly inequitable to Florida’s children, and we ask for an opportunity to work with the Legislature, AHCA and other relevant parties to rectify this moving forward. Our children deserve better.
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