AHCA change to Medicaid rates will cost Fla. hospitals about $60 million

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Pointing to limits in the state budget, the Florida Agency for Health Care Administration on Wednesday made changes in expected Medicaid payment rates that will cost hospitals about $60 million, reports Jim Saunders of the News Service of Florida.

The reductions will be spread among dozens of hospitals across the state and were announced as AHCA finalized rates for the 2012-13 fiscal year. The issue centers on a complicated process that involves local governments contributing hundreds of millions of dollars in Medicaid money that can then be used to draw down additional federal funds for hospitals.

Local governments agreed to put up $392.7 million that would go to two pots of money for hospitals, but the 2012-13 budget approved by lawmakers only called for spending $367.3 million in those areas. AHCA said it had to stay within the budgeted amount — leading to reductions in what hospitals expected to receive.

“The agency is committed to following the law and will remain within the limits of its budget authority,” AHCA said in a notice released late Wednesday afternoon.

Officials with the Florida Hospital Association and the Safety Net Hospital Alliance of Florida were not immediately available for comment.

While the reduction in local money is about $25.4 million, hospitals also would receive less federal matching money than expected — bringing the total to about $60.1 million, according to Tom Wallace, AHCA’s bureau chief of Medicaid finance.

Hospital Medicaid rates and the contributions of local governments, known in Tallahassee as “intergovernmental transfers,” have been high-profile budget issues in recent years. Hospitals have grappled with rate cuts as lawmakers have looked for ways to balance the health- and human-services budget.

The parts of the budget involved in Wednesday’s decision are designed to boost hospital rates. One, for example, allows the use of the local money to drawn down additional federal funds and help hospitals “buy back” what would otherwise be cuts in Medicaid rates.

Another part allows certain hospitals to exceed what are the typical ceilings on Medicaid rates by using the local money to draw down additional federal dollars.

Jenn Ungruh, AHCA’s chief of staff, said this is the first year that the money committed by local governments has exceeded the amount included in the budget. She said the process is expected to change next year as the state moves forward with a plan that lawmakers have approved to revamp the way hospitals are funded in Medicaid.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.