Tallahassee’s Health Care Funding Debate: Missing the Point

In past years, the Florida Legislature debated Medicaid expansion, the Senate passed expansion bills twice, and the state’s press corps-- given that they had something to “cover”—did a tremendous public service in helping Floridians better understand the costs and benefits of decreasing the state’s rate of uninsured. But for the last few years, health care policy debates have ignored Medicaid expansion and, instead, focused on different issues, including this year’s debate over whether hospital rates for safety net providers should be “enhanced.”  Because respected Senate leaders, even within the same party, have opposing positions, it’s hard for stakeholders to understand which side to champion.  Consumer advocates support critical safety net providers.  But can they be supported through enhanced rates? What does that even mean?? 

​Understanding hospital funding, is not for the feint of heart—particularly in Florida.  Years of state cuts to the Medicaid program, including cuts to safety net hospitals, led to a confusing and arcane system of hospital funding.  Adding to the confusion is that separate funding formulas for different hospitals exist within the state’s managed care system (referred to as “LIP” payments) as opposed to the specific rates that each hospital is assigned for the relatively few patients who are still in “fee-for-service” rather than managed care (referred to as “rate enhancements”). 
 
In a nutshell, the Low Income Pool Program (LIP) provides a mechanism by which supplemental payments—separate and apart from regular managed care reimbursement rates—can be made to providers who treat a large percentage of uninsured patients.   The state match for the LIP program comes through local funding sources, known as intergovernmental transfers, or IGTs, rather than general revenue; most LIP funding goes to safety nets and it is a defined amount.  By contrast, a hospital’s “rate enhancements” represent a projection based on the rates paid by the State for patients in the fee-for-service system. Thus, under a managed care system, a hospital’s rate enhancement distribution can only be projected since it depends on 2 variables:1) the extent to which managed care company contracts with that individual hospital mirror the hospital’s “enhanced rate” agreed to by the State;  and 2) the extent to which a given number of the managed care organization’s enrollees actually receive “enhanced rate” services at that hospital.
 
As a health care consumer advocate, I’ve spent significant time unpacking and explaining hospital funding so that stakeholders could better understand how the debates over hospital funding fit within the larger health care debate. Notwithstanding these by these efforts, I’m not sure I understand these issues well enough to “take a side” in the current Senate debate.  But I do understand enough to note that the current debate isn’t raising the rights questions.
 
If we can agree that the goal of health care policy should be lowering costs and improving outcomes, two questions should be answered: 1) how can we get more people covered; 2) how can we ensure that coverage dollars are used to improve outcomes?   The first question is easy. Unless/until most people are covered, the health care system as a whole (it is ultimately one system), will never be able to effectively control costs and improve outcomes. Because over half a million low income Floridians don’t have access to employer based coverage or coverage in the marketplace, the answer to the first question is simple:  accept federal funding to pay for their care under the state’s Medicaid managed care program. 
 
Answering the second question is much harder. But because Florida requires that virtually all Medicaid recipients receive their health care services through a managed care organization (MCO), we can begin. First, MCOs must receive a sufficient amount of funding in order to ensure that medically necessary services are adequately available to their enrollees.  Because the federal government will reimburse Florida for roughly 60% of the MCO’s costs (for Medicaid expansion enrollees the federal government would pay 90%), Florida has to come up with a sufficient 40% “state match.”  If we do that, theoretically at least, the MCO rates paid to providers will be high enough to ensure adequate provider networks for enrollees —from hospitals to doctors to therapists to midwives. Second, the state Medicaid agency must have sufficient funding to adequately monitor timely access to all medically necessary services. 
 
But back to the safety net hospitals that treat a “disproportionate” number of patients on Medicaid. These patients are, by definition, low–income.  It is undisputed that poverty and poor health go hand in hand and that it costs more for providers to treat patients who present in poor health. Additionally, Florida’s safety nets treat a large number of immigrants who are living and working here but who are not eligible for health coverage, even under Medicaid and the ACA.  In short, Florida’s safety nets are critical and need to be supported.  What is less clear is whether we do that through enhanced hospital rates.
 
Moreover, improving the health outcomes of low income Floridians means doing a lot more than increasing safety net reimbursement rates. As Maggie Kuhn observed, “the war on poverty has never been more than a skirmish,” and immigration debate in America may be even more contentious than the health care debate. But if Florida can at least address the first question and finally accept federal dollars to cover half a million uninsured Floridians -- we will free up some of the local IGT dollars now used to help safety nets cover the cost of treating the uninsured. Imagine the potential for improved health outcomes if, for example, some of those local tax dollars were freed up for more affordable housing and healthy food gardens?  

​By Miriam Harmatz, Co-Executive Director of the Florida Health Justice Project