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Hospitals Say They Aren't To Blame For Jump In Medicaid Costs

hospital workers in hospital
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

With lawmakers ready to dig into budget projections, a major hospital group tried to send a message Monday: Don't blame hospitals for spiraling Medicaid costs.

The Safety Net Hospital Alliance of Florida, which represents public, teaching and children's hospitals, issued a statement that said expected increases in Medicaid next year stem from more people entering the program and from fallout of the state's shift to a Medicaid managed-care system.

The group appeared to by trying to shield hospitals from potential criticism as House and Senate members prepare to discuss long-range financial projections Tuesday. The statement also came as Gov. Rick Scott has ratcheted up pressure on the hospital industry in recent months.

The projections, which will be presented to the Joint Legislative Budget Commission, show the state during the upcoming fiscal year spending an additional $601 million in general revenue on Medicaid. The state would face similar increases during the following two years.

Medicaid costs are the largest "driver" of projected spending increases during the 2016-17 fiscal year, said a draft of the long-range financial report, which will be presented to lawmakers by Amy Baker, coordinator of the Legislature's Office of Economic and Demographic Research.

"The human services policy area, primarily driven by Medicaid expenditures, has the largest recurring impact, totaling nearly $2.0 billion over the next three years,'' said the draft report.

But Jim Zingale, executive director of research and fiscal analysis for the Safety Net Hospital Alliance, pointed in his group's statement to average Medicaid enrollment that is expected to grow to nearly 4.2 million people in 2016-17. The draft report indicates average enrollment was about 3.75 million during the fiscal year that ended June 30 and is expected to be about 4 million during the current fiscal year.

"The projected growth in Florida's Medicaid budget is being driven primarily by an increase in low-income Floridians enrolling for health coverage and federal laws governing Florida's new statewide managed care program --- not because hospital Medicaid costs are dramatically rising,'' Zingale said.

"In fact, hospital costs will experience one of the smallest percentage increases across most of the major Medicaid program categories."

Florida last year finished carrying out a plan that shifted most Medicaid beneficiaries into managed-care plans. With that, Zingale said, the state is required to pay what are known as "actuarially sound" rates to managed-care plans. He said previous Medicaid reimbursements to hospitals were below the actuarially sound rates, causing costs to rise when the state went to managed care.

The hospital industry could face heavy scrutiny during the 2016 legislative session, which starts in January. A commission appointed by Scott has held meetings throughout the state in recent months to look at issues such as regulations and costs in the health-care industry and has focused heavily on hospitals.

In a May executive order creating the commission, Scott praised the state's shift to managed care and other changes in payments to hospitals and blamed growing Medicaid costs in past years for "crowding out our state's ability to invest in K-12 education, higher education and other priorities."