Florida Hospitals Expected To Lose $103M Per Year Under Federal Plan To Close Medicaid Loophole

Florida's hospitals could lose $103 million per year if the federal government proceeds with a plan this winter to close the Medicaid loophole for 14 states, including Florida, the Miami Herald reports. The closure would result in a 7% reduction of the $2.5 billion that the state spends each year on hospital services for low-income residents and Medicaid beneficiaries (James, Miami Herald, 12/14). Under the Medicaid loophole, states pay city- or county-owned health care facilities more than the cost of health services, receive additional federal matching funds from CMS and require the facilities to return the additional state funds. States may pay the facilities a small fee for their participation and use the funds to cover health- or nonhealth-related costs (Kaiser Daily Health Policy Report, 1/4). The Bush administration on Nov. 20 announced plans to close the Medicaid loophole this winter for 14 states, including Florida, and phase out the loophole completely by 2010 (Kaiser Daily Health Policy Report, 11/21).

Detailed Losses
About 70 Florida hospitals participate in the state's use of the Medicaid loophole. Once the loophole is closed, South Florida hospitals that treat the most of region's uninsured and low-income patients would lose more than $50 million per year, the South Florida Sun-Sentinel reports. Hospitals in Broward County would lose $15 million per year, and Palm Beach County hospitals would lose $3 million per year. Jackson Memorial Hospital in Miami would "take Florida's biggest hit" at $34 million per year, and St. Mary's Medical Center in West Palm Beach would lose $1.2 million per year. The expected loss of funds under the loophole closure would come on top of state budget cuts for hospitals (LaMendola, South Florida Sun-Sentinel, 12/15). Earlier this month, the state Legislature reduced the state's Medicaid budget by $86 million (Miami Herald, 12/14). The "combination of financial hits" might cause some hospitals to reduce services, the Sun-Sentinel reports. For instance, the North Broward Hospital District, which would lose about $11 million under the planned loophole closure, next month will consider a reduction in services (South Florida Sun-Sentinel, 12/15).