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Hospitals urge delay on new Medicaid payment system

Florida hospitals are pushing for a delay in the scheduled July 1 launch of a new Medicaid payment system. Some members of the House's Health Care Appropriations Subcommittee indicated that they agreed, saying there were troubled that hospitals that use Medicaid the most seemed to lose the most money under the new system.

Committee members asked representatives from the state's  Agency for Health Care Administration about losers and winners under the new payment system, called DRG, or diagnosis-related groups. Generally speaking, for-profit hospitals benefit the most and safety net hospitals -- the state's children's, teaching and public hospitals -- lose the most money under DRG.

Lawmakers also questioned AHCA's recommendation that there not be a transition to DRG with implementation happening all at once in less than six months. Some wondered aloud whether that could tie the state's hands in addressing any issues that could arise, such as if disparities linger or worsen.

 “I’m just wondering what is the best for Florida, and I need to hear more justification for no transition period," said Rep. John Wood, R-Winter Haven.

In releasing its final recommendation earlier this month, AHCA said the goal was to make the system simple, fair and to encourage more efficiency in how hospitals treat Medicaid patients. Any changes, such as altering the formula to benefit safety net hospitals, will have to be done by the Legislature.

Justin Senior, AHCA's deputy secretary for Medicaid, didn't take sides but warned lawmakers that doing so would be "robbing Peter to pay Paul" because all changes to Medicaid must be revenue-neutral. "If you’re going to reward certain hospitals, then money is coming out of the pockets of other hospitals that didn’t get the reward," he said.

At one point in the meeting, Democratic members of the subcommittee stepped into the wings to caucus together. They returned with questions about delaying the scheduled July 1 transition, perhaps for another year. That would require a change in state law since last year's budget included language requiring DRG implementation on that date.

Both the Florida Hospital Association and the Safety Net Hospital Alliance of Florida are encouraging a delay and say the state needs more time to study the impact of DRG. FHA President Bruce Rueben called the current proposal "deeply flawed" and said it was created without enough input from hospitals.

“Yes, there will be redistribution," he said. "But it ought to be based on sound policy reasons that all who are effected had an opportunity to discuss, debate and be heard on.”