Collier, Lee hospitals and nursing homes face 7 percent Medicaid cut

In Collier, the NCH Healthcare System would face reduced Medicaid reimbursement of $3.6 million and the Physicians Regional Heathcare System would see a reduction of $573,000

The living won’t be easy this summer for administrators of nursing homes and hospitals as they grapple with a huge Medicaid cut from the state budget, unless Congress lessens the pain.

Both industries face the prospect of a 7 percent Medicaid cut in reimbursement for patients on the insurance program for the poor and disabled.

That translates into huge sums at the community level, where individual hospitals and nursing homes are ill-prepared to absorb the cuts since Medicaid reimbursement already doesn’t cover costs.

It means passing more of the burden to those who can pay, said Bruce Rueben, president of the Florida Hospital Association (FHA).

“It is a hidden tax on everyone who has insurance or who pays out of pocket,” he said. “There’s only so much you can do, reduce services or pass the costs on to the insured.”

From a statewide perspective, the FHA estimates the 7 percent cut would be $287 million in the coming year.

In Collier, the NCH Healthcare System would face reduced Medicaid reimbursement of $3.6 million and the Physicians Regional Heathcare System would see a reduction of $573,000, according to the hospital association.

NCH operates Downtown Naples and North Naples hospitals; Physicians Regional runs Physicians Regional at Pine Ridge and Collier Boulevard.

The Lee Memorial Health System, which has four hospitals in Lee County, would see its Medicaid reimbursement drop by nearly $8 million.

Exempt from the Medicaid cuts are freestanding children’s hospitals, namely All Children’s Hospital in St. Petersburg and Miami Children’s Hospital; the Children’s Hospital of Southwest Florida at HealthPark Medical Center is not a freestanding children’s hospital. Also exempt are rural hospitals.

Todd Lupton, chief financial officer for Physicians Regional, said the 7 percent Medicaid cut will mean the hospitals will continue to provide the highest level of care that they can but with fewer resources.

“It will certainly make things more difficult, but we still have to provide the best care we can to those in need,” Lupton said. “We intend to continue to provide the same services to our patients, but I can envision that many hospitals will have to cut needed services. This is the second consecutive year of Medicaid cuts in Florida, and it’s unfortunate that the federal government has just passed a health-care reform bill to improve access to health-care services for those in need while the state of Florida has chosen to reduce reimbursement to the providers for that very care, in effect limiting access.”

CONTRIBUTED PHOTO

Allen Weiss

Dr. Allen Weiss, president and chief executive officer of NCH, said the hospital has expected reduced reimbursement from Medicaid for some time.

“For the past several years, NCH has been prudently managing its resources in anticipation of an environment of reduced reimbursement from governmental payers,” he said. “This brave new world for hospitals is another reason why we have emphasized the twin strategies of integration and technology to create the efficiencies needed to maintain superior quality and financial strength.”

The hope nevertheless is that the 7 percent cut can be trimmed to 5 percent if Congress extends for another six months a stimulus measure where it picks up a bigger share of the funding for Medicaid, which is jointly financed by the federal government and states.

The Federal Medical Assistance Percentages is set to expire Dec. 31 and the extension would buy more time for states to revamp how they finance health care for their neediest residents on Medicaid. Both the U.S. Senate and House have included the six-month extension in their budgets and that’s a good sign going into reconciliation, Rueben said.

“This (state) budget has a lot of hope built into it,” Rueben said. “I don’t want to jinx it but if I had to guess, I believe they will extend it.”

The hospital association hasn’t calculated what the cuts to individual hospitals would be based on a 5 percent reduction.

Lupton, of Physicians Regional, said he expects the federal government would look closely at extending the Medicaid enhancement program.

“Again, in the face of the legislation that they have just passed, it seems unlikely to me that the federal government would turn right around and reduce the amount of reimbursement to the states to fund Medicaid,” he said.

For the nursing home industry, the 7 percent cut would be a loss of $200 million, said Tony Marshall, senior director of reimbursement for the Florida Health Care Association, which represents nursing homes.

The cut could be trimmed by $57 million if Congress acts on the extension, so the bottom line would be a loss of $142 million in reimbursement statewide, he said.

“For an average facility, that is a $310,000 impact,” Marshall said, with respect to the 7 percent scenario. “That’s $12.82 per patient per day.”

Medicaid reimbursement now for nursing homes in Florida is $185 per patient per day while the average daily cost per patient is $195 _ equalling a $10 a day loss per patient, Marshall said.

The loss has to be made up from patients on Medicare and private insurance.

Compound the losses by further reductions in Medicaid and there’s no way to cope except by scaling back services where it’s allowed, Marshall said.

“I think (nursing homes) are at a loss at how they can operate,” he said.

In Collier, the seven nursing homes that accept Medicaid would be affected by a total of $1.54 million and Lee County’s 17 Medicaid nursing homes would face a collective loss of $4.67 million, according to industry calculations.

Page Rehabilitation and Healthcare Center in Fort Myers would see its revenue drop by $500,000 if the 7 percent cut moves forward but it could go down to $100,000 if Congress acts on the extension. That’s possible by nursing homes paying an assessment to the state to draw down the additional federal money, said Wes Edwards, chief executive officer of the nursing home that previously was called Shady Rest Care Pavilion.

“It’s a short-term fix,” he said. “Next year we face the same crisis. Next year is going to be difficult.”

Out of 180 beds, 118 are Medicaid and hospice beds, which reimburse at Medicaid rates, and the rest are Medicare and private-pay patients, Edwards said.

If the 7 percent cut becomes reality, the nursing home faces no choice but to re-examine services and employees who are not tied to quality mandates, he said. That would mean housekeeping, dietary, laundry, administration and central services.

“We will have to cross that bridge when we get to it,” Edwards said. “We hope we don’t.”

__ Connect with reporter Liz Freeman at www.naplesnews.com/staff/liz_freeman