Clock is tick­ing

Bills in­clud­ing Med­i­caid rate re­duc­tion head to Fla. gov­er­nor’s desk

Modern Healthcare - - THE WEEK IN HEALTHCARE - Beth Kutscher

Two bills that could af­fect hospi­tal bud­gets and merg­ers in Florida are await­ing ac­tion from Gov. Rick Scott. The Leg­is­la­ture passed a $70 bil­lion state bud­get—in­clud­ing a 5.6% rate re­duc­tion to Med­i­caid—as well as a bill that could open up public hospi­tal dis­tricts to ad­di­tional pres­sure to sell. Scott will have 15 days to sign, veto or line-item veto the bills once he re­ceives them.

The clock is al­ready tick­ing on the Med­i­caid ser­vices ap­pro­pri­a­tions bill, which landed on Scott’s desk March 14. If ap­proved, the cut to hos­pi­tals would amount to more than $303 mil­lion when the new Med­i­caid re­im­burse­ment rates take ef­fect July 1.

A spokesman for the gov­er­nor said Scott has not said whether he in­tends to sign the Med­i­caid bill. Scott had pro­posed a more aus­tere $66.4 bil­lion bud­get, in­clud­ing deeper cuts to state health­care pro­grams.

Hospi­tal and long-term-care providers were gen­er­ally up­beat about the bill, which the Leg­is­la­ture ap­proved March 9.

Bruce Rueben, pres­i­dent of the Florida Hospi­tal As­so­ci­a­tion, noted that hos­pi­tals are “re­lieved” that the cuts amounted to only a few hun­dred mil­lion—and not the $2 bil­lion Scott orig­i­nally pro­posed.

Reuben said, though, that the leg­is­la­tion fol­lows a round of cuts that to­taled $500 mil­lion last May. “When you take it all to­gether, it’s a pretty big hit,” he said, adding that hos­pi­tals may need to look at lim­it­ing or cut­ting ser­vices, which could af­fect the 3.2 mil­lion Florid­i­ans on Med­i­caid as well as pri­vately in­sured pa­tients. “Hos­pi­tals ob­vi­ously have a very big chal­lenge.”

Nurs­ing homes also got a re­prieve in the leg­is­la­tion—rate cuts amounted to only 1.25%, half of the 2.5% ex­pected, said Kris­ten Knapp, a spokes­woman for the Florida Health Care As­so­ci­a­tion, which rep­re­sents longterm-care providers. “The bud­get was our pri- mary fo­cus this ses­sion,” she said, “and we’re rel­a­tively pleased with the out­come.”

The roughly $35.2 mil­lion in rate re­duc­tions will be on top of the $187 mil­lion that was al­ready cut last ses­sion, Knapp noted. “We’re ap­pre­cia­tive that they at­tempted to mit­i­gate those cuts,” she said, adding that nurs­ing homes have had to ad­just work­ing hours and cut back on qual­ity of life pro­grams. “It’s been sig­nif­i­cant.”

The leg­is­la­tion also puts lim­its, start­ing Aug. 1, on the num­ber of emer­gency depart­ment vis­its Med­i­caid will re­im­burse for non­preg­nant adults over the age of 21—cap­ping them at six per fis­cal year at a cost to hos­pi­tals of $46.7 mil­lion, ac­cord­ing to the hospi­tal as­so­ci­a­tion. The bill would elim­i­nate pay­ments for pre­ventable hospi­tal er­rors, to the tune of $2.7 mil­lion, the as­so­ci­a­tion es­ti­mates.

As hospi­tal bud­gets are squeezed, public hos­pi­tals may also find them­selves un­der in­creased pres­sure to pur­sue a sale—if a sec­ond bill work­ing its way to­ward Scott is signed. The Leg­is­la­ture passed HB 711 (SB 1568) on March 7, but it has not yet reached the gov­er­nor.

The bill amends an ex­ist­ing statute to add more over­sight of public hospi­tal sales and leases—and also re­quires them to un­der­take a self-eval­u­a­tion of whether a deal might be in their best in­ter­est.

“A lot of this was driven by changes in the health­care sys­tem,” said Bruce Lamb, prac­tice leader and share­holder in the Tampa of­fice of law firm Gun­ster.

While many larger public hos­pi­tals be­lieve they are com­pet­ing ef­fec­tively with pri­vate health sys­tems, smaller public hos­pi­tals have faced op­er­a­tional chal­lenges. And though hos­pi­tals won’t be re­quired to pur­sue a sale, the self-re­view es­sen­tially opens their books to would-be buy­ers.

“What’s re­ally go­ing to be in­ter­est­ing is how this plays out,” Lamb said. “There will be a lot more ac­tiv­ity very quickly.”

Keith Arnold, gov­ern­ment af­fairs con­sul­tant at Florida law firm Fowler White Boggs, also noted that the leg­is­la­tion could be seen as invit­ing hos­pi­tals to merge. “I think the pen­du­lum has swung a bit too far,” he said.

If signed, the law also would re­quire the Agency for Health Care Ad­min­is­tra­tion to re­view po­ten­tial sales and leases. And it would spell out how pro­ceeds from the sale would be used—di­vided up equally be­tween in­di­gent care and health­care-re­lated eco­nomic de­vel­op­ment projects.

The bill came out of the bun­gled merger of Bert Fish Med­i­cal Cen­ter with Ad­ven­tist Health Sys­tem, which was called off last year af­ter a judge ruled against the deal. The tar­get hospi­tal’s own char­i­ta­ble foun­da­tion, the Bert Fish Foun­da­tion, had sued to stop the sale; it ar­gued the deal was il­le­gal be­cause board mem­bers had inked it in se­cret and sub­se­quent public hear­ings to rec­tify the vi­o­la­tions of Florida’s open-gov­ern­ment law were bi­ased in fa­vor of Ad­ven­tist.

Arnold and Lamb said they ex­pected Scott, for­mer CEO of for-profit Columbia/hca Health­care Corp., to sign the bill—with Lamb not­ing that it is con­sis­tent with his vi­sion for health­care in the state.

A spe­cial com­mis­sion cre­ated by the gov­er­nor in De­cem­ber sug­gested that the state has too many lo­cal tax­ing dis­tricts over­see­ing hos­pi­tals, and found that public hos­pi­tals have higher op­er­at­ing costs than their pri­vately owned peers.

It too ref­er­enced the failed Bert Fish deal and urged more trans­parency and public dis­clo­sure around the bid­ding process.

One bill was a re­sult of the bun­gled merger of Bert Fish, above, with Ad­ven­tist Health.

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