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Hospitals Likely To Get $25 Million Cut In Medicaid Reimbursement

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Tampa General Hospital
The Florida Channel
Budget negotiators agreed to reduce hospital Medicaid reimbursement rates by about $25 million.

Budget negotiators on Monday agreed to reduce hospital Medicaid reimbursement rates in the current fiscal year by about $25 million.

Senate Health and Human Services Appropriations Chairman Aaron Bean told The News Service of Florida that the decision to pare the rates was made by Senate Appropriations Chairman Rob Bradley and House Appropriations Chairman Travis Cummings, both Fleming Island Republicans.

Bean and other lawmakers have been negotiating health-care issues in a conference committee.

“It was settled before it got to our committee,” Bean, R-Fernandina Beach, said.

Justin Senior, chief executive officer of the Safety Net Hospital Alliance of Florida, said his association would continue to press to make hospitals whole.

“We are going to continue to try to impress upon the (House) speaker and the (Senate) president how important that money (is) and, in particular, how it impacts very specific hospitals around the state,” Senior said. “So we are going to continue to push for it.”

The reduction in rates is due to a calculation error that Medicaid officials made. In the budget process each year, lawmakers agree on an overall amount of money to spend on hospital services.

But the state uses “diagnosis related groups,” or DRGs, to set reimbursement rates.

In setting the DRG rates for the current fiscal year, the state over-estimated the number of "neonates," or infants, who would require hospital care.

Neonates are expensive to treat and, to maintain budget neutrality, the overall base DRG rate was adjusted downward.

The calculation mistake meant that hospitals, which were supposed to be paid $3.024 billion in the current fiscal year, were being reimbursed $134 million less than what was appropriated.

Hospitals in the last three weeks have pushed the Legislature to fix the error and to ensure it didn’t carry forward in the 2020-2021 budget, which is being negotiated.

On Monday, lawmakers agreed to address the error by including language in what is known as the “back” of the budget bill.

But the fix would result in a $2.99 billion appropriation for hospitals in the current fiscal year, or about $25 million less than what the Legislature agreed to spend last year.