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‘Life-and-death’ cuts laid out

By Jim Saunders
 3/12/2010 © Health News Florida

A dramatic expansion of Medicaid managed care, increased hospital taxes and slashed spending on some health and social programs are all part of a Senate committee's initial budget proposal.

The proposal, released Thursday by the Senate Health and Human Services Appropriations Committee, comes after weeks of hearings. It is the first step toward approving a budget for the fiscal year that starts July 1.

Major questions remain: The biggest is whether Florida will receive about $1 billion in additional federal money to help pay for Medicaid next year.

But committee Chairman Durell Peaden, R-Crestview, was clearly troubled by the proposed spending plan, saying cuts have gone to the "bone.''

"This is very serious business,'' Peaden said. "This is the life-and-death committee.''

Perhaps the most-sweeping part of the budget proposal would start requiring Medicaid recipients in 19 counties to enroll in managed-care plans during the next year. Also, it calls for that requirement to be extended to other counties over an 18-month period.

A similar pilot program already exists in Broward, Duval, Nassau, Baker and Clay counties. Supporters say requiring managed care will help control Medicaid costs, which are expected to top $19 billion during the 2010-11 fiscal year.

But the Senate budget proposal says the changes would save only about $30 million next year, roughly half of what the state Agency for Health Care Administration estimated in February. That lower projection stems, at least in part, from the time it would take to phase in the new requirements.

Michael Garner, president of the Florida Association of Health Plans, said the Senate plan for requiring managed care is similar to what his industry group has proposed. While savings might be modest in the first year, Garner said the state would get larger savings in the future as Medicaid costs are better managed.

But lobbyist Karen Woodall, a longtime critic of requiring Medicaid recipients to enroll in managed care, said there are "no grounds'' to expand beyond the pilot counties. She said she is concerned that savings might come from managed-care organizations withholding care from Medicaid patients.

"It needs to be based on medical quality, not just cost savings,'' said Woodall, who works on issues such as children's health care.

Peaden said as recently as last week that he did not favor an expansion because of questions about whether the pilot program saved money and improved care. He said Thursday that the expansion was included in the Senate proposal to help solve budget problems --- but he still didn't think it was the long-term solution for Medicaid.

"It's a stopgap measure,'' Peaden said.

Peaden's committee released the initial proposal Thursday, as lawmakers prepare to deal with an overall state budget shortfall of as much as $3 billion. The House Health Care Appropriations Committee is expected to release its initial budget proposal next week.

Ultimately, the House and Senate will approve separate spending plans before negotiating a final budget.

Lawmakers are moving forward with the proposals, despite not knowing whether Congress will approve about $1 billion in additional Medicaid money for Florida. The U.S. House and Senate have voted to approve the increase but have not agreed on a final bill.

Tony Marshall, a Florida Health Care Association official who lobbies the Legislature on nursing-home issues, called it "critical'' that Congress act on the issue. Without the additional money, the budget proposal released Thursday included a wide range of cuts and other maneuvers to plug budget holes.

As an example, the proposal called for about $280 million in Medicaid rate reductions for hospitals. But to make up for the lost money, it would increase a tax on hospital revenues --- and use the additional money to help draw down more federal matching funds.

Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, said the tax on inpatient care would go from 1.5 percent to 2 percent, while the tax on outpatient care would go from 1 percent to 1.5 percent. While the tax, which lawmakers call an "assessment,'' might not be readily apparent to patients, hospital-industry officials said it ultimately would be passed on through higher costs.

"A tax on hospitals is a tax on hospital patients,'' said Bruce Rueben, president of the Florida Hospital Association.

Other groups and patients would be more directly hit by cuts. A hard-hit area in the budget proposal was adult mental-health and substance-abuse programs.

Bob Sharpe, a former Medicaid director who is now president of the Florida Council for Community Mental Health, said cuts in those areas would total $98.9 million, with most of that coming in mental-health programs.

Sharpe said such deep cuts could have numerous ramifications, such as treatment beds closing, longer waiting lists for services and denials of care.
"This would devastate the adult system,'' Sharpe said.

Similarly, the Senate proposal would wipe out $28 million in state funding for the Healthy Families Florida program, which provides services to pregnant women and mothers of young children who might be at risk of child abuse or other problems.

Carol McNally, executive director of the program, said it served 12,930 families during the 2008-09 year. Like Sharpe, she described the proposed cuts as "devastating.''

"It (the program) is a hand-up, not a hand-out,'' McNally said.

Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at