Florida House panel proposes $622 million cut to hospital funding

March 29--A House budget panel proposed cutting hospital funding by $621.8 million Tuesday but recommended increases in programs for mental health, veterans, children and the elderly.

The House Health Care Appropriations Subcommittee released its $34 billion budget for the state's six health agencies that handle Medicaid, children and families, the disabled, local health departments and elder affairs.

The panel is recommending reducing overall health care spending by $307.8 million but is proposing a deeper slice out of payments hospitals receive for serving low-income patients.

The big hospital cuts are offset by increases in other areas of health care spending, including $132.7 million more for health care and nutrition programs for children and women; $49 million more for nursing home and elder care; $37.9 million for mental health and disability programs; and another $13.1 million for state and local health departments.

The state's health care budget proposals aren't affected by Congress' failure last week to pass a health care alternative to the Affordable Care Act because state leaders don't anticipate making changes to Medicaid -- the state-federal program that funds health care for low-income residents -- until next year at the earliest.

State budget forecasters anticipate Medicaid spending, the greatest single expense in Florida's budget, to grow by about $400 million next year, an increase the state must cover to provide services to all eligible participants.

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But Gov. Rick Scott and other leaders have proposed reducing Medicaid spending through lower payments made to hospitals that serve the poor.

Hospitals have become a major theme this session: Scott proposed cutting $929 million from them in his budget at the beginning of the session. The House's proposal Tuesday would pare the cuts to $621.8 million. And the Senate, which is expected to release its health care budget Wednesday, also has signaled cuts.

Rep. Jason Brodeur, who chairs the House's health care budget subcommittee, said Tuesday that hospitals must be cut to "achieve large scale reductions" in general revenue funding because they receive such a large portion of this money.

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The House is relying on these cuts and stripping taxpayer money from economic development programs to provide tax breaks as well as fund other legislative priorities like public education.

The president of Florida's hospital lobby, Bruce Rueben, said the state should prioritize Medicaid funding because it cares for the most vulnerable patients.

"We're going to do our best to educate people that cutting this much money for funding health care services to low-income children, pregnant women, the disabled and the elderly is hard to understand, especially when we don't have a deficit," Rueben said.

The House and Scott are most ideologically aligned on targeting hospitals through legislation. Both support deregulating the industry and both have proposed serious funding cuts to it.

But they differ on methods.

The governor released a worksheet that would achieve nearly a third his proposed hospital cuts -- $298 million -- by eliminating supplemental payments to hospitals that provide a relatively low amount of services to Medicaid and charity care patients compared with their profit margins.

"Florida hospitals continue to have record profits and the governor is committed to fighting price gouging and unfair costs for Floridians needing important medical care," Scott noted in a news release with his budget proposal.

While the House is proposing to cut $478 million in supplemental payments to hospitals, it largely ignored Scott's worksheet.

"I don't think ... you can penalize somebody for being profitable," said Brodeur, R-Sanford.

Instead, his committee compared the number of days Medicaid patients spent in each hospital to the number of days all patients spent in each hospital.

More:Florida legislators focus on hospital costs, competition

The health budget committee then separated hospitals into four tiers based on their relative volume of Medicaid patients. Hospitals serving the most patients would receive 73 percent of their current supplemental payments, and hospitals serving the least would receive none of their current supplemental payments.

The list of affected hospitals won't be available until the end of the week. In addition, the committee is proposing to cut $144 million by reducing Medicaid reimbursement rates by 7 percent.

Brodeur compared his committee's methodology to voucher systems for education, saying that while the governor's budget proposal still focuses on the institution, his committee's proposal focuses on where the patient is served.

"This model moves us much closer to the money following the Medicaid patient," Brodeur said.

From 2009-15, the Florida Legislature cut $100 million to mental health hospitals, ranking 49th out of 50 states for spending on mental health per patient in 2012, according to Kaiser Health News.

During the meeting Brodeur said the House was committed to reversing this trend.

"In addition to restructuring of hospital payments, I think the big story on this budget is how much we are doing for mental health," Brodeur said, but could not provide an overall figure Tuesday for how much the funding increased.

Next year's baseline funding for mental health services increased by $23.4 million over the current year's but also included fewer local projects.

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