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Shands takes surprise hit

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By Jim Saunders
5/28/2010 © Health News Florida

Gov. Charlie Crist vetoed $371 million from the new state budget today, largely sparing health- and human-services programs. But he immediately raised questions by vetoing millions of dollars for the Shands Healthcare System --- and by trying to prevent rate cuts for nursing homes.

Crist issued the vetoes as he signed a $70 billion budget for the fiscal year that starts July 1. He went along with lawmakers on numerous projects that they wanted, ranging from spending $8.5 million on a new Florida A&M University medical-education program in the Panhandle to helping fund senior-citizens centers in Miami.

But Crist vetoed nearly $9.7 million for Shands, a move that stunned Tony Carvalho, a lobbyist who helps represent Shands and other hospitals that serve large numbers of low-income patients. While Shands receives other money from the state, Carvalho said the Gainesville-based system has gotten the additional funding for years and that Crist has supported it in the past.

"I don't have any sense of what's going on,'' said Carvalho, president of the Safety Net Hospital Alliance of Florida. "I almost believe it's a mistake.''

Crist spokesman Sterling Ivey said the governor vetoed the Shands money because it was targeted at a single hospital. He said no other hospitals received the same type of additional funding. 

The governor also raised questions by vetoing fine print in the budget that called for about $199 million in Medicaid rate cuts for nursing homes. But he did not indicate how the state would make up the money, and he cannot simply set aside additional money for nursing homes without legislative approval.

Jerry McDaniel, Crist's budget director, said that could force lawmakers to come back later in the fiscal year and put additional money into the nursing-home system. In his written veto message, Crist said nursing homes also have faced rate cuts during the past two years and indicated he has concerns that some homes with large numbers of Medicaid residents coud be at risk of closing.

Tony Marshall, an official with the Florida Health Care Association who is one of Tallahassee's top experts on nursing-home funding, said he was not sure how Crist's veto of the rate cuts would work. But Marshall said his nursing-home industry group was pleased that Crist was trying to stop rate cuts.

"We've known that the governor had a real concern over the cuts,'' Marshall said.

Similar to nursing homes, Crist also vetoed budget fine print that called for cutting about $16.8 million in payment rates to providers in the developmental disability system.

But otherwise, Crist left the health- and human-services budget intact, except for vetoing $500,000 that was set aside for a marriage-education program.

Crist signed the budget and issued vetoes after months of debate --- and fretting --- in the Capitol that stemmed from sagging tax revenues and rising costs in programs such as Medicaid.

The governor also said this week that the massive oil leak in the Gulf of Mexico was influencing his thinking on the budget. The environmental disaster could hurt the tourism industry and, as a result, lower the amount of tax dollars that the state would otherwise collect during the upcoming year.

By vetoing projects, Crist could keep more money in state reserves to prepare for a disaster-related shortfall.

"I would like to have more in reserve than less, just to be safe,'' Crist said. 

The  health- and human-services portion of the budget totaled $28.5 billion, making it the largest chunk of the overall spending plan. The Agency for Health Care Administration, which primarily runs Medicaid, makes up $20.8 billion of that total.

Even as Crist signed the budget, however, a debate was raging in Congress about a proposal to funnel about $24 billion in additional Medicaid money to Florida and other states. With critics raising concerns about out-of-control federal spending, The Washington Post reported that congressional leaders Thursday were ready to remove the additional Medicaid money out of a broader bill and consider it after the Memorial Day holiday.

The proposal would extend through June 30, 2011, an increase in the federal Medicaid matching rate and provide about $1 billion to Florida. The increased rate, which was part of a federal economic-stimulus package, is currently scheduled to expire Dec. 31.

The new state budget includes contingency plans to spend part of the additional money if Congress approves it. That would include sending about $50 million to the financially troubled Jackson Memorial Hospital in Miami and using $57 million to help offset Medicaid rate cuts for nursing homes.

State lawmakers are constitutionally required to pass a balanced budget to take effect at the beginning of each fiscal year, July 1. They balanced the health- and human-services portion of the budget this spring, in part, by cutting Medicaid payment rates for large providers such as nursing homes and hospitals.

--Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at jim.saunders@healthnewsflorida.org.