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Florida Medicaid reimbursements cut by $6 billion in new fiscal year

Florida Healthflash, May 14, 2008

Most healthcare providers participating in Medicaid will see reimbursements reduced this summer when the state’s new budget goes into effect. In all, the 2008-09 budget for the state is about $66.2 billion, or about $6 billion less than the current year budget.

Ultimately the Florida Legislature passed a budget that trimmed Medicaid rates for nursing homes by $167 million, hospitals by $255 million and Medicaid HMOs by $55 million. Physicians who participate in the MediPass program will have a $1 reduction in the monthly fee they receive for managing care. Instead of receiving $3 per member per month, the physician will receive $2 per member per month. The administrative fee is on top of what the provider bills Medicaid for providing the care.

While the monthly fee was reduced, the fees that doctors are allowed to bill Medicaid for providing the care were not increased as organized medicine had hoped. In addition to lowering the administrative fees physicians receive for participating in MediPass, the Legislature included in the budget a requirement that people who participate in the primary care case management program reaffirm their participation in the program. If they don’t proactively choose to stay in MediPass, the state will assign them into a managed care plan, most likely a Medicaid HMO. The requirement could impact upward of 27,000 beneficiaries in 29 counties and only applies in areas of the state where there is a choice of two or more managed care plans to enroll in. The requirement is estimated to have a net savings of about $6 million this year.

Florida’s revenue collections have been falling for months, and legislators have already slashed by $1.5 billion the current year budget that covers spending until June 30. The new $66.2 billion budget will be sent to Gov. Charlie Crist, who has the power to veto individual spending items.

To lessen the impact of the budget cuts, the Legislature did agree to tap into $355 million from the Lawton Chiles Endowment, a reserve set up with proceeds from the state’s lawsuit with tobacco companies. That money helped the state fund for one year the Medically Needy program and the Med-AD program.

Medically Needy is an optional program that funds health care for people who—if not for a catastrophic illness or accident—would not qualify for the Medicaid program. MEDS-AD is a Medicaid buy in for elderly people who otherwise wouldn’t qualify for the program.

— Christine Jordan Sexton