For many Florida hospitals, public health care programs, such as Medicare and Medicaid, represent a significant portion of the total patients served, and payments from these programs comprise a significant percentage of revenues. FHA is highly engaged with lawmakers to ensure the state budget prioritizes health care programs and services and includes no cuts to hospital payments for care provided.
Hospital finances fast facts:
- Healthy margins allow hospitals to provide life–saving care during public health emergencies, invest in trauma systems, subsidize vital community services such as mental health, and maintain an expert workforce.
- Hospitals’ Medicaid payments account for just 4% of overall general revenue spending.
- Hospitals receive just 60% of the cost of care they provide to Medicaid patients.
- The hospital directed payment program (DPP) is a supplemental payment program intended to reduce the Medicaid payment shortfall, but it requires annual federal government authorization and is not a justification for Medicaid cuts.
2023 Legislative Priorities
- Support fair and equitable hospital Medicaid reimbursement to reflect the efficient cost of care provided to low-income children, pregnant women, the elderly, and those with disabilities.
- Incentivize payment models that prioritize critical resources and models of care that support improved health care outcomes.
- Promote a standardized, integrated approach to the development of Medicaid policy and payment models to reduce readmissions and non-emergent use of the emergency department, increase access, and ensure payer accountability.
- Strongly consider options to reduce the Medicaid shortfall (reimbursement less than cost) through efforts to increase federal Medicaid funds to increase hospitals’ Medicaid reimbursement rates.
Florida Hospital Margins
Dramatic increases in labor cost and inflation are creating financial stress for Florida hospitals, with hospital expenses increasing more than 35% over the last three years.
Positive financial margins are essential for hospitals to invest in critical health care services to meet growing demand, keep pace with the rapid changes in health care and subsidize access to community services.
Hospital Reimbursement: Medicare vs Medicaid
While Medicare does not cover the cost of care provided, on average, it covers 90 percent of costs, compared with less than 60 percent of costs for Medicaid patients. FHA supports reimbursement that covers the costs of care provided.
Directed Payment Program (DPP)
Hospitals in Florida are reimbursed less than $.60 on the dollar of cost for care provided to Medicaid patients. Medicaid reimbursements to Florida Hospitals account for less than 4% of the overall State General Revenue budget.
DPP closes the gap on the shortfall; it is a solution to help address the funding gap between hospital Medicaid patient costs and Medicaid reimbursements for those patients.
Rural Hospital Capital Improvement Grant Program
There are 27 rural hospitals in Florida that support over 1100 beds and employ over 5,000 Floridians. Rural hospitals provide much-needed access to affordable, quality health care for patients close to home.
It is critical that Florida’s rural hospitals have the resources to utilize quality technology, equipment, and facilities to provide the highest level of care to their communities.
Patient Discharge Delays
Waiting for placement substantially increases hospital costs. The data shows over $500 million in estimated avoidable costs incurred by the hospitals with patients awaiting placement.
Timely discharges from the hospital allow beds to be available for patients who need hospital care, especially when patients often wait in the emergency department for inpatient beds.
Hospital Directed Payment Program Issue Brief
Florida hospitals historically have been reimbursed less than their actual costs for caring for Medicaid enrollees. On average, payment is 60% of total costs. This leaves an underpayment of 40%.
The Directed Payment Program provides funding for hospitals that provide inpatient and outpatient services to Medicaid managed care enrollees. As a Medicaid payment, this funding includes a combination of both Intergovernmental Transfers (IGTs) and federal dollars.
340B Drug Pricing Program
Recent years have been a complex tangle of legal and regulatory challenges to the program as pharmaceutical companies seek to limit participation and the federal government seeks to reduce Medicare payments for 340B hospitals.
FHA supports the reinstatement of hospitals in the 340B program that lost eligibility because of COVID-19 and state legislation prohibiting discriminatory practices by payers and pharmacy benefit managers (PBMs), including two-tiered reimbursement and exclusions of contract pharmacies.
Rural Hospital Capital Improvement Grant Program Issue Brief
The Rural Hospital Capital Improvement Program provides critical funding to rural hospitals to acquire, repair, improve, and upgrade systems, facilities, or equipment.
The program has not been funded since 2008. Between 1999 and 2008, the Department of Health awarded $34.45 million in grants under the program.
Florida hospitals and health systems are entrusted to provide access to quality health care for their patients and communities. Hospitals also offer charity care to patients that cannot afford treatment and contribute to the overall community benefit.
Charity care is one component of Florida hospitals’ total community benefit, which also includes education and training of health care professionals and community health activities and partnerships. Florida hospitals provided $1.8 billion in charity care in FY 2021-22, according to the most recent data from the Agency for Health Care Administration.
Minimum Wage Increase
The state fiscal year 2022-2023 budget included specific funding for an increase in the state’s minimum wage of direct care employees to $15.00 per hour. This increase requires all Florida Medicaid providers to submit a supplemental wage agreement by the Agency’s mandatory deadline.