Florida Gov. Rick Scott’s administration continues to target hospitals for potential Medicaid spending reductions in the coming year.
The Agency for Health Care Administration’s top four proposed budget cuts for the Legislature to consider during the 2018 session would reduce Medicaid payments to hospitals by nearly $1 billion. Those reductions would be on top of nearly $500 million in recurring cuts made to hospitals during the 2017 session.
“It would be devastating, for goodness sakes,” said Jan Gorrie, a hospital lobbyist and managing partner of the Tampa office of Ballard Partners. “I’m surprised to see the magnitude of the cut. It’s mind-blowing. It’s like, whoa.”
In addition to a list of proposed reductions for the Legislature to consider, AHCA also submitted its proposed budget requests for the upcoming year. It includes a request for an additional $66 million to cover a deficit in the Children’s Medical Services managed-care plan for the current year. The deficit is a result of lower enrollment in the Medicaid specialty plan than anticipated.
The agency also is requesting $925,000 for analytics of data submitted to what is known as the all-payer claims database. And $700,000 so the agency can implement a new Medicaid prepaid dental health program for children and adults.
Meanwhile, the agency’s top recommendation to save money is to alter a current policy that provides retroactive Medicaid eligibility for the 90 days prior to a beneficiary’s application being submitted. AHCA is recommending that the state trim retroactive eligibility to 30 days.
During the retroactive period, the state picks up the health care bills that accrued in the three months including paying for “uncoordinated and potentially inappropriate utilization of medical services,” budget documents note.
Trimming retroactive eligibility from 90 days to 30 days would reduce Medicaid spending by $98.4 million according to the agency’s budget documents. Hospitals would lose $58.3 million if the Legislature were to agree to the change.
Agencies annually compile proposed reduction lists as part of the budget process. The question is whether the Legislature will target the areas that have been identified by the agencies in what is expected to be a tight budget year.
A financial outlook prepared by state economists in September said Florida’s surplus may be as small as $52 million, but those projections did not include the state’s costs responding to Hurricane Irma.
AHCA compiled a list of six proposed spending reductions and assigned each proposal a priority number. The agency’s second-highest priority is reducing the amount Medicaid spends on reimbursing hospitals by $318 million in total funds by eliminating automatic rate enhancements.
Its third recommendation is restricting participation in the Medicaid “Medically Needy” program to about 1,600 pregnant women and children. The move would eliminate coverage for about 27,000 people currently covered under the program. The program provides Medicaid access to people who don’t qualify for Medicaid because of their income levels.
The fourth recommendation is eliminating an optional Medicaid program that provides coverage to 51,057 aged, blind and disabled people with incomes above what’s allowable for Social Security income but below 88 percent of the federal poverty level. Eliminating the “Meds AD” program would reduce total spending by $558 million.
The Medically Needy program and the Meds AD program have been offered up in the past by the agency as potential ways to save money, but the Legislature has not chosen to reduce them.
AHCA’s fifth recommendation is to reduce $135,150,336 in the Home and Community Based Services Waiver funding. It is “double budgeted” according to budget documents.
Lastly, the Legislature could reduce spending in Medicaid HMOs by 5.16 percent, or nearly $475 million. To achieve that level of reduction, though, the state would have to eliminate some of the services that currently are covered under the Medicaid managed care program, which would require federal approval.