Legislative Challenges on the HorizonLegislative Challenges on the Horizon

Brian D. Ballard Managing Partner, Smith & Ballard

Robert BroadwayVice President, Corporate Strategy

Bethesda Healthcare System

Outcome of 2010 Legislative SessionOutcome of 2010 Legislative Session

Budget OverviewBudget Overview

Legislature faced a $3 billion revenue shortfall leading up to Legislature faced a $3 billion revenue shortfall leading up to the 2010 Session, including a $1.8 billion shortfall in the the 2010 Session, including a $1.8 billion shortfall in the Medicaid program.Medicaid program.

$70.4 billion state budget for FY 2010-2011 passed.$70.4 billion state budget for FY 2010-2011 passed.

Included across the board spending cuts, federal stimulus Included across the board spending cuts, federal stimulus funds, $400 million in Gaming Compact funding, and $600 funds, $400 million in Gaming Compact funding, and $600 million in Trust Fund sweeps. million in Trust Fund sweeps.

$371 million vetoed by the Governor.$371 million vetoed by the Governor.

Medicaid Spending Medicaid Spending

Approximately 26% of the state budget Approximately 26% of the state budget

Approximately $20 billion appropriated for Medicaid Approximately $20 billion appropriated for Medicaid servicesservices

Caseload GrowthCaseload Growth

Florida is facing close to 2.9 million people on Medicaid Florida is facing close to 2.9 million people on Medicaid for FY 2010-2011for FY 2010-2011

Additional 1.4 million people added to Medicaid Additional 1.4 million people added to Medicaid program by 2014 under federal health care reform program by 2014 under federal health care reform (Eligibility expanded to 133% federal poverty level)(Eligibility expanded to 133% federal poverty level)

Chart provided by Florida House Full Appropriations Council

Key Health Care Budget ItemsKey Health Care Budget Items

Hospital inpatient and outpatient cuts – 7%, except for free-Hospital inpatient and outpatient cuts – 7%, except for free-standing, licensed Children’s hospitals and rural hospitals standing, licensed Children’s hospitals and rural hospitals ($287 million reduction)($287 million reduction)

Legislative authority to allow hospitals taking cuts to “buy Legislative authority to allow hospitals taking cuts to “buy back” reductions with the use of local tax money.back” reductions with the use of local tax money.

Fully fund Medicaid eligibility for pregnant women to 185% of Fully fund Medicaid eligibility for pregnant women to 185% of the federal poverty level. the federal poverty level.

Medically Needy and MEDS AD programs fully funded through Medically Needy and MEDS AD programs fully funded through June 30, 2011 rather than partial year funding.June 30, 2011 rather than partial year funding.

Dept. of Health budget cuts included $4.9 million reduction to Dept. of Health budget cuts included $4.9 million reduction to Area Health Education Networks; $3.4 million to Children’s Area Health Education Networks; $3.4 million to Children’s Medical Services; and $$2.6 million to Healthy Start Coalitions. Medical Services; and $$2.6 million to Healthy Start Coalitions.

$9.4 million for creation of the Florida Health Information $9.4 million for creation of the Florida Health Information Exchange Infrastructure.Exchange Infrastructure.

Low Income Pool Funding Low Income Pool Funding

6-Month Enhanced FMAP Funding6-Month Enhanced FMAP Funding

Appropriates $1 billion for various LIP funded programs and includes the Appropriates $1 billion for various LIP funded programs and includes the following key components:following key components:

Allocation factor is set at 14.8% for IGT contributors.Allocation factor is set at 14.8% for IGT contributors.

Appropriates funding for the LIP categories (e.g., Regular DSH, Appropriates funding for the LIP categories (e.g., Regular DSH, Safety Net Payment, Provider Access Payments, etc).Safety Net Payment, Provider Access Payments, etc).

Provides an additional $26 million for non-hospital primary Provides an additional $26 million for non-hospital primary

care services. Requires AHCA to award grants to those care services. Requires AHCA to award grants to those programs most capable of reducing health spending and programs most capable of reducing health spending and improving the health status of uninsured and underinsured improving the health status of uninsured and underinsured persons.persons.

Allows AHCA to make LIP Medicaid payments to hospitals in Allows AHCA to make LIP Medicaid payments to hospitals in an accelerated manner that is more frequent than on a an accelerated manner that is more frequent than on a quarterly basis.quarterly basis.

12-Month Enhanced FMAP Contingency Plan12-Month Enhanced FMAP Contingency Plan

If the enhanced FMAP is extended until June 30, 2011 by the U.S. If the enhanced FMAP is extended until June 30, 2011 by the U.S. Congress during the upcoming fiscal year, the LIP distribution will be Congress during the upcoming fiscal year, the LIP distribution will be amended as follows: amended as follows:

Provides $30 million in nonrecurring general revenue, $25 million to Provides $30 million in nonrecurring general revenue, $25 million to be allocated for Jackson Memorial and $5 million for Shands be allocated for Jackson Memorial and $5 million for Shands Hospital.Hospital.

Provides an additional $50 million for non-hospital primary care Provides an additional $50 million for non-hospital primary care issues ($10 million in payments to primary care hospitals and $40 issues ($10 million in payments to primary care hospitals and $40 million for primary care issues).million for primary care issues).

Establishes a new Safety Net category with distributions based on Establishes a new Safety Net category with distributions based on Medicaid and charity care days, totaling $10.5 million.Medicaid and charity care days, totaling $10.5 million.

Includes hold harmless payments for public and children’s hospitals Includes hold harmless payments for public and children’s hospitals of $7.3 million to maintain FY 2009-2010 level of LIP funding.of $7.3 million to maintain FY 2009-2010 level of LIP funding.

Includes buy back of historical rate reductions for trauma hospitals Includes buy back of historical rate reductions for trauma hospitals of $141 million.of $141 million.

Allocation factor of 14.6% due to FMAP change.Allocation factor of 14.6% due to FMAP change.

U.S. Congress approved H.R. 1586 (Public Law 111-226), which U.S. Congress approved H.R. 1586 (Public Law 111-226), which provides for a two quarter extension of the increase Federal provides for a two quarter extension of the increase Federal Medical Assistance Percentage (FMAP). containing a six-month Medical Assistance Percentage (FMAP). containing a six-month extension of an enhanced match for the Medicaid (FMAP) and Title extension of an enhanced match for the Medicaid (FMAP) and Title IV-E programs. Provides states $16.1 billion through a “phased-IV-E programs. Provides states $16.1 billion through a “phased-down” enhanced match:down” enhanced match:

6.2% FMAP increase until December 2010 (included in current 6.2% FMAP increase until December 2010 (included in current Appropriations Act FY 10/11) Appropriations Act FY 10/11)

Phased-down enhanced match based on H.R. 1586: Phased-down enhanced match based on H.R. 1586:

3.1% FMAP increase for first calendar quarter of FY 20113.1% FMAP increase for first calendar quarter of FY 20111.2% FMAP increase in the second calendar quarter 1.2% FMAP increase in the second calendar quarter

Revised blended FMAP rate for the Medicaid program is 64.83% Revised blended FMAP rate for the Medicaid program is 64.83%

Current implementation approach under consideration is a Current implementation approach under consideration is a proportional reduction to the LIP items funded with enhanced proportional reduction to the LIP items funded with enhanced FMAP. Legislative Budget Commission meets on September 14 to FMAP. Legislative Budget Commission meets on September 14 to take action on budget amendments incorporating the revised take action on budget amendments incorporating the revised FMAP formula. FMAP formula.

Key Medicaid Proposals Key Medicaid Proposals

Medicaid ReformMedicaid Reform

Legislature proposed significant changes to the current fee for service system withLegislature proposed significant changes to the current fee for service system witha complete transition into managed care. The Senate proposed shifting Medicaida complete transition into managed care. The Senate proposed shifting Medicaidrecipients in 19 counties in 1 year using the existing 1115 Medicaid Reform Waiver.recipients in 19 counties in 1 year using the existing 1115 Medicaid Reform Waiver.The Senate also approved seeking a federal Medicaid waiver to allow the state toThe Senate also approved seeking a federal Medicaid waiver to allow the state tomanage the Medicaid program within an annually specified appropriation. manage the Medicaid program within an annually specified appropriation.

The House proposed an overhaul of Medicaid with transition to managed care by The House proposed an overhaul of Medicaid with transition to managed care by 2013:2013:

The state is divided into 6 regions. The state is divided into 6 regions.

HMOs and Provider Service Networks (PSNs) are approved to provide HMOs and Provider Service Networks (PSNs) are approved to provide services through a competitive procurement with each plan approved by services through a competitive procurement with each plan approved by AHCA.AHCA.

Number of HMOs and PSN’s is Number of HMOs and PSN’s is limitedlimited in each region. in each region.

HMOs and PSNs provide services in the entire region – not just specific HMOs and PSNs provide services in the entire region – not just specific county/counties in that region.county/counties in that region.

Hospitals are required to participate in the managed care plans; Hospitals are required to participate in the managed care plans; reimbursement fees are set between 100% and 150% of Medicaid rate after reimbursement fees are set between 100% and 150% of Medicaid rate after the procurement process is complete.the procurement process is complete.

Senate Bill 1484 Relating to MedicaidSenate Bill 1484 Relating to Medicaid

Makes changes to the statutes to conform to the funding decisions Makes changes to the statutes to conform to the funding decisions included included

in the General Appropriations Act for FY 2010-11. in the General Appropriations Act for FY 2010-11. Key provisions include the following: Key provisions include the following:

Directs AHCA to request an extension of the 1115 Medicaid Reform Directs AHCA to request an extension of the 1115 Medicaid Reform Waiver by July 1, 2010, and to preserve the LIP provisions of the Waiver by July 1, 2010, and to preserve the LIP provisions of the waiver. waiver.

Directs AHCA to convene a workgroup of stakeholders to develop Directs AHCA to convene a workgroup of stakeholders to develop methodologies to maintain the use of intergovernmental transfers methodologies to maintain the use of intergovernmental transfers and certified public expenditures in a Medicaid managed care and certified public expenditures in a Medicaid managed care environment. Requires AHCA to issue a report by Jan. 1, 2011on environment. Requires AHCA to issue a report by Jan. 1, 2011on the developed methodologies. the developed methodologies.

Creates the Medicaid and Public Assistance Fraud Strike Force with Creates the Medicaid and Public Assistance Fraud Strike Force with the Dept. of Financial Services to develop a statewide strategy and the Dept. of Financial Services to develop a statewide strategy and coordinate state and local efforts and resources to prevent, coordinate state and local efforts and resources to prevent, investigate and prosecute Medicaid and public assistance fraud. investigate and prosecute Medicaid and public assistance fraud.

Directs HMOs to adopt anti-fraud plans. Requires all Medicaid HMOs Directs HMOs to adopt anti-fraud plans. Requires all Medicaid HMOs to report suspected instances of overpayment, fraud, abuse to the to report suspected instances of overpayment, fraud, abuse to the Office of Medicaid Program Integrity within 15 daysOffice of Medicaid Program Integrity within 15 days

2011 Session – What to Expect2011 Session – What to ExpectBudget ChallengesBudget Challenges

Slow Economic Recovery Slow Economic Recovery

Potential $2.5 billion budget gapPotential $2.5 billion budget gap

Uncertainty of the 1115 Medicaid Waiver Extension/LIP FundingUncertainty of the 1115 Medicaid Waiver Extension/LIP Funding

Deep Sea Horizon Oil ImpactDeep Sea Horizon Oil Impact

Medicaid ReformMedicaid Reform

Hospital Issues Hospital Issues

Alternative Managed Care Models CriticalAlternative Managed Care Models Critical PSN ExpansionPSN Expansion Medical HomesMedical Homes

Adequate Rate Reimbursement levelsAdequate Rate Reimbursement levels

Preservation of LIP and Intergovernmental Transfers (IGTs)Preservation of LIP and Intergovernmental Transfers (IGTs)

HMO IssuesHMO Issues Increase transition of Medicaid recipients from fee-for-Increase transition of Medicaid recipients from fee-for-

service to full service to full risk-bearing managed are plansrisk-bearing managed are plans

Increase Nursing Home Diversion slots and require non-Increase Nursing Home Diversion slots and require non-skilled nursing skilled nursing home patients to enter diversionhome patients to enter diversion

Additional enrollment in special needs plansAdditional enrollment in special needs plansIntegrate long-term care services into managed care modelIntegrate long-term care services into managed care model

Tort ReformTort Reform

Medical Malpractice Reform for doctors who accept Medical Malpractice Reform for doctors who accept Medicaid patientsMedicaid patients

Sovereign Immunity for ER Physicians (proposals filed Sovereign Immunity for ER Physicians (proposals filed during the 2010 during the 2010 session)session)

Florida Politics Florida Politics 2010 General Election Landscape2010 General Election Landscape

Governor’s RaceGovernor’s RaceRick Scott (R)Rick Scott (R)

Alex Sink (D)Alex Sink (D)

Cabinet RacesCabinet RacesAttorney General: Attorney General: Pam Bondi (R)Pam Bondi (R) Dan Gelber (D) Dan Gelber (D)CFO: CFO: Jeff Atwater (R)Jeff Atwater (R) Loranne Ausley (D) Loranne Ausley (D)Ag Commissioner:Ag Commissioner: Scott Maddox (D) Adam Putnam (R)Scott Maddox (D) Adam Putnam (R)

Legislative RacesLegislative Races11 State Senate 11 State Senate 26 State House 26 State House 1 U.S. Senate1 U.S. Senate24 U.S. Representatives24 U.S. Representatives

Reapportionment on the HorizonReapportionment on the HorizonHighlightsHighlights

Every 10 years, after the federal Census, the boundaries of the Every 10 years, after the federal Census, the boundaries of the state’s congressional, state House and state Senate districts are state’s congressional, state House and state Senate districts are redrawn.redrawn.

The Census Bureau completes delivery of redistricting data to The Census Bureau completes delivery of redistricting data to states in states in

April 2011.April 2011. Approximately Timeframes for Reapportionment Process:Approximately Timeframes for Reapportionment Process:

July-November 2011- public testimony taken July-November 2011- public testimony taken January or February 2012- Reapportionment Session January or February 2012- Reapportionment Session March-April 2012-prepare new state legislative and March-April 2012-prepare new state legislative and

congressional districts maps for submission to the congressional districts maps for submission to the Florida Supreme Court and U.S. Justice Department.Florida Supreme Court and U.S. Justice Department.

Joint Resolution on legislative redistricting Joint Resolution on legislative redistricting notnot subject to veto by subject to veto by the Governor.the Governor.

Congressional redistricting is enacted by the Legislature Congressional redistricting is enacted by the Legislature but but subject to gubernatorial veto.subject to gubernatorial veto.

Get Involved in Government RelationsGet Involved in Government Relations

Why?Why?Hospital Representatives are vital to educating legislative Hospital Representatives are vital to educating legislative

candidates and lawmakers on the changingcandidates and lawmakers on the changingdynamics of the healthcare industry. dynamics of the healthcare industry.

How?How?Campaign Activities Campaign Activities Local visits with legislators/educational briefingsLocal visits with legislators/educational briefingsCapitol visits before and during SessionCapitol visits before and during Session

When?When?

Key Dates:Key Dates:Organizational Session – November 16, 2010Organizational Session – November 16, 2010House & Senate Interim Committee meetings –December House & Senate Interim Committee meetings –December

to Februaryto FebruaryRegular Session- March 8, 2011Regular Session- March 8, 2011

Q & AQ & A