State Politics

Medicaid program has $300M penalty

TALLAHASSEE — State lawmakers learned this week that former Gov. Jeb Bush’s controversial Medicaid reform plan from 2005 includes a time bomb for hospitals: A $300 million penalty.

That’s the amount Florida could lose in federal charity health care money if legislators don’t expand Medicaid reform statewide within two years. Medicaid reform is an experimental program designed to shift more Medicaid patients to managed-care plans and make the public health system run more like private companies. It operates in Broward County and the Jacksonville area.

The state receives about $1billion a year from the federal government to reimburse hospitals for charity care. If the state doesn’t expand Medicaid reform by 2011, it would lose $300 million of the money.

Just informed of the penalty, legislative leaders now are scrambling in the waning days of the lawmaking session to pass special budget language that asks the federal government to give the state more time for Medicaid reform.

They’ll also decide whether to bank about $246 million in surplus hospital money. Tampa General Hospital and Miami’s Jackson Memorial Hospital, which would be hit particularly hard if Medicaid funds are cut, want the state to bank the money so it could help fill the $300million hole if the state fails to broaden the reform program statewide.

Some legislators want to kill Medicaid reform entirely.

“We’ve done the experiment. It has failed,” said Durell Peaden, the Senate’s health care budget chief. “The reports are unsettling. People couldn’t get to specialists, couldn’t get adequate care. And they couldn’t do it cheaply.”

But supporters point out that a recent University of Florida study found that Medicaid reform patients are highly satisfied with the program.

Former Bush health chief Alan Levine said the state needs time to make the program work. He said the federal government would likely grant an extension to Florida if it doesn’t expand Medicaid reform across the state in two years.

“There are things that work in Medicaid reform,” said Levine, who now heads Louisiana’s hospital system. “There are other issues that will take time to figure out.”

The threat of the $300 million loss in the 2010-11 budget year, however, has added a new dimension to the fight over Medicaid reform. It renewed a behind-the-scenes battle between private hospitals such as the Hospital Corporation of America and big charity-care hospitals such as Jackson Memorial and Tampa General.

The public hospitals want the state to save the surplus money this year in case of a future deficit. The private hospitals would rather see the state give each hospital its share of the $246 million in surplus Medicaid cash now.

The reason for the difference in opinion lies in complicated Medicaid funding formulas. Basically, the charity-care hospitals get proportionately more Medicaid money. But if there’s a deficit, they stand to suffer a proportionately deeper cut than those that treat fewer poor people.

So Tampa General and Jackson could face a larger cut in two years than they stand to gain this year from the current surplus.

But HCA and other private hospitals face the opposite situation: They stand to suffer a smaller cut in two years and gain a larger share of the surplus now.

The two legislators in charge of negotiating the issue this weekend, Miami Republican Rep. Marcelo Llorente and Lake Wales Republican Sen. J.D. Alexander, say they’re both concerned with Medicaid reform.

“This issue is so complicated that we’re going to need some time to figure it out,” said Llorente.

Marc Caputo, can be reached at