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Hospitals want Medicaid to pay them more. They are willing to pay a new tax to get it

Hospitals and other health care facilities that accept Medicaid patients are looking to increase services by increasing Medicaid reimbursements. The city of Bradenton is in the midst of a pilot program that would use the existing tax laws to increase federal payments back to the state.
Hospitals and other health care facilities that accept Medicaid patients are looking to increase services by increasing Medicaid reimbursements. The city of Bradenton is in the midst of a pilot program that would use the existing tax laws to increase federal payments back to the state.

Florida ranks No. 2 in the nation for Medicaid enrollment with about 4.4 million residents participating. It represents more than 20 percent of the state’s population, which is 2 percentage points higher than the national average.

In Manatee County, Manatee Memorial Hospital and Blake Medical Center report that between 10 and 15 percent of their patients are on Medicaid, but enrollment numbers continue to increase. With the average reimbursement rate from the state and federal government being around 60 cents for every dollar of provided service, hospitals continue to take a financial hit.

In order to recoup more funds to increase Medicaid services, Bradenton has been selected — along with surrounding counties — by the Agency for Health Care Administration for an experiment that would increase reimbursements from 60 cents on the dollar to 80 cents.

It is essentially a tax law loophole that Texas hospitals exploited with some success and the same New York health care attorney who led the Texas effort is now helping Florida hospitals do the same.

“Medicaid is still a very significant different program run by the state and has a number of different ways it’s structured,” said attorney Charlie Luband.

The proposal is for local hospitals and healthcare facilities that offer Medicaid coverage to have the city of Bradenton enact a special tax assessment on themselves. Essentially, the hospital would pay a tax of up to 6 percent tax on the costs it incurs for each Medicaid patient.

The taxes would be paid to the city and eventually those funds would be passed on to ACHA, which could then reimburse the hospitals at a higher rate than they currently receive. The amount they would receive would exceed what they pay in special assessments.

ACHA has divided Florida into 11 regions, with Manatee County being in Region 6 where the pilot program is being launched. It will require all eligible hospitals to enter the program, and every municipality must adopt the special assessment.

“The whole theory is to set up a special assessment, but only on the hospitals and no one else,” said Bradenton City Administrator Carl Callahan. “It would be self funded by the hospitals and they want to charge themselves, pay it to us and we give it back to their fund so they can get federal help. There is no burden to the taxpayers.”

Local taxpayers would see no additional charges to their tax bills.

The entire process will eventually have to be approved by the Florida Legislature, but Bradenton took the first step at a special meeting on Tuesday by agreeing to move forward with preparing a resolution in support of the program.

Callahan said the resolution would have to be approved on an annual basis, so if there are any issues that arise showing city taxpayers are taking on a financial burden, the city council would have the opportunity to end the program.

It was a point pushed hard by Ward 3 Councilman Patrick Roff who insisted those organizing this effort ensure all potential administrative costs be bore by them and not Bradenton taxpayers. Luband said the program in Texas calls for most municipalities to contribute $20,000 to cover administrative costs, “so there is a risk.”

Hospital officials told the city that, if successful, it could bring up to $14 million back into Medicaid services for local patients. Medicaid is largely a low-income program that serves people of all ages. Children in low-income families represent the majority of Medicaid recipients and is financed by both the state and federal governments.

The only health care facility outside the city limits is Lakewood Ranch Regional Hospital. It is a sister hospital to Manatee Memorial, so it can voluntarily enter the pilot program under the umbrella of Manatee Memorial. Bradenton was chosen over Manatee County because four of the five health care facilities, including agencies like Centerstone, are within the city limits.

Kevin DiLallo, CEO of Manatee Healthcare System, said the city also was a better choice to not confuse this pilot program with Manatee County’s indigent health care program.

Luband said that under federal rules, states can require plans to make specific payments to specific providers, so the program isn’t a big leap from some smaller programs Florida is already using.

“Florida already has these kind of payments in a limited way,” Luband said. “The last legislative session directed similar payments to cancer centers and medical school faculty physicians. So this is a lot like those already in existence.”

DiLallo said the program provides hospitals an opportunity to increase Medicaid reimbursements, which in turn will help increase services to Medicaid recipients. What’s happening now is unsustainable, he said.

“Right now we get 60 cents for every dollar on Medicaid,” DiLallo said. “How do you keep doing business like that? These payments will not come back as a payment, they will come back as enhanced Medicaid services. There are a lot of moving parts to this. You have five counties and probably over 20 hospitals in this region. Where we start locally is an ordinance in Bradenton then it’s up to us to get the others involved. It won’t be a slam dunk by any means, but this is the first step.”

Breaking News/Real Time Reporter Mark Young began his career in 1996 and has been with the Bradenton Herald since 2014. He has won more than a dozen awards over the years, including the coveted Lucy Morgan Award for In-Depth Reporting from the Florida Press Club and for beat reporting from the Society for Professional Journalists to name a few. His reporting experience is as diverse as the communities he covers.
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