State Representative Matt Hudson: Governors proposed cuts to Medicaid reimbursement challenging

The following article was published in the Marco Eagle on January 11, 2012:

Hudson:  Governor’s proposed cuts to Medicaid Reimbursement ‘Challenging’

By Ben Wolford

Rep. Matt Hudson, R-Naples, came out strongly Wednesday against the governor’s proposed changes to Medicaid reimbursements, which would gouge $1.85 billion from hospital income statewide.

Hudson, who chairs a key appropriations committee, had been reticent about the plan Gov. Rick Scott announced in December that calls for flat reimbursement rates for the state’s 242 hospitals. But during and after a meeting of the Health Care Appropriations Subcommittee, he skewered the proposal.

The state would forfeit more than $1 billion in federal matches along with millions lost to communities under the plan, ideas Hudson called “challenging.”

“In my little county of Collier County, you’re talking about almost $16 million in cuts to two relatively small hospitals,” he said. “I really struggle with the dynamics of how this works overall.”

Officials from the governor’s office appeared before Hudson’s committee Wednesday to discuss Scott’s plan. Scott, a former health-care executive, says hospitals can find efficiencies and improve quality as the state faces a $2 billion budget shortfall.

Currently the state reimburses hospitals at hundreds of different rates for treating low-income patients enrolled in Medicaid. Scott recommends establishing 10 rates and would group like hospitals into 10 different “rate bands.”

In the process, some hospitals would gain funding. Most would lose, to the tune of $1.85 billion.

Hudson and hospital groups say different facilities perform different services, and 10 groups is too drastic. They profiled disparate hospitals in opposite corners of the state that, under Scott’s plan, would receive the same reimbursement rate.

Scott’s “philosophy is that health care is a commodity,” said Bruce Rueben, executive director of the Florida Hospital Association. “They would argue every hospital in a category is similar. We would argue that is not the case.”

The number of categories is negotiable, said Karen Zeiler, chief of staff for the Agency for Health Care Administration, which administers Medicaid.

“This was a first step, and we’re happy to look at, whether it’s 10 bands or 20 bands, different ideas,” she said.

Paul Belcher, a lobbyist for the Florida Hospital Association, told the Republican-controlled committee that 80 percent of the reimbursement cuts — more than $1.3 billion — would come from counties they represent. He said that would translate to jobs and gross domestic product lost, citing a study the group commissioned from the University of Florida.

In addition to $16 million lost in Collier, Lee County hospitals would lose $40.6 million, according to state estimates. Hospital groups say the cuts would raise health insurance premiums.

And slashing state funding means losing federal dollars. Cuts to the Agency for Health Care Administration would cost $1.2 billion in federal matching funds, said Jane Johnson, a health coordinator in Scott’s budget office.

“As a state we have the opportunity to be able to give our taxpayers a return on their investment,” Hudson said. “By not accepting those dollars and potentially raising the cost of health care across the state of Florida, I don’t think that’s what the citizens of the state are looking for.”

Since announcing the proposal at the end of last year, Scott’s office has offered to free up money to help cover some losses. Through changes to the $1 billion low-income pool fund, which supplements Medicaid for hospitals that treat more low-income patients, the Agency for Health Care Administration would set aside $212 million in extra funding for some hospitals.

Before giving his opinion about the proposal, Hudson was waiting to see those low-income pool changes, which were released this week. He said $212 million is too little.

Though he said the state’s Medicaid reimbursement system is too complicated, the governor’s rate bands are overly simple. Hudson suggests reimbursing hospitals based on the services they provide.

“I had some concerns before,” Hudson said after the committee meeting. “Those concerns were confirmed when I saw the (low-income pool) model.”

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