County Medicaid tab rises, could get worse

PANAMA CITY — Bay County’s Medicaid payments were up by more than $500,000 in 2009, and could go higher this year if the local economy doesn’t improve.

And a proposed legislative change in Tallahassee could make the situation even worse next year.

Florida counties are obligated by state law to split part of the cost for Medicaid, the federal insurance program for the poor, with the state Agency for Healthcare Administration (AHCA). Three components make up what each county pays AHCA for Medicaid: hospital charges, nursing homes and HMOs.

Hospital charges usually make up the majority of the county’s Medicaid payments. For example, in 2008, Bay paid AHCA $1,436,600; $1,174,000 was for hospital charges. Hospital fees jumped nearly 45 percent in 2009, though, to $1.7 million.

“It’s a surprise,” said County Commissioner Jerry Girvin. “The critical issue is just what is causing it? ... Have we reached the top of it, or could this get worse?”

The surge in hospital charges matches numbers from Bay Medical Center and Gulf Coast Medical Center. Both served more Medicaid patients and thus ran up higher charges in 2009.

Bay Medical’s Medicaid admissions jumped 17.2 percent in 2009, causing an increase in charges from $95.3 million to $111.7 million. Gulf Coast’s Medicaid admissions went up nearly 32 percent, causing charges to go from $93 million in 2008 to $122.5 million in 2009.

The number of Bay County residents on Medicaid has increased just under 25 percent in the last two years, jumping from 21,955 in December 2007 to 27,358 in December 2009, according to the AHCA. Statewide Medicaid enrollment also rose 25 percent in two years, from 2.16 million in 2007 to 2.7 million in 2009.

Because Medicaid reimburses hospitals less than private health care providers do, the increase in Medicaid patients hits hospital budgets as hard as it hits the county’s.

“Because of economic conditions, people have lost their jobs that traditionally had commercial payers,” said Bay Medical vice president of finance Chris Brooks, who estimated Medicaid reimburses between one-third and one-half of what private insurers pay.

“Having a higher Medicaid mix makes us make more difficult financial decisions as far as how we allocate capital,” Brooks said. “It definitely hurts our bottom line.”

An economic turnaround and a decrease in Medicaid admissions would help hospitals, but if an AHCA budget proposal in Tallahassee is approved this year, counties still could feel a pinch.

Gov. Charlie Crist asked state agencies to cut proposed budgets by 10 percent. AHCA has proposed raising county reimbursements for nursing home patients on Medicaid.

State law caps county contributions at $55 per patient per month. AHCA’s proposal would raise that limit to $202. Bay County spent $264,000 for nursing home Medicaid patients in 2009; that number could exceed $1 million with the higher cap.

The Florida Association of Counties is staunchly opposed to the proposal, which AHCA projects will pull in an extra $67 million from counties.

“We feel that Medicaid is a state responsibility, so we would argue it if it was a dollar, but we are talking about millions of dollars,” said Cragin Mosteller, the association of counties’ spokeswoman. “You would quadruple the cost, essentially crippling local governments that are already hobbled.”

AHCA says insurance costs have skyrocketed while county Medicaid contributions have remained constant, creating a disparity.

“The county billing limit as a percent of the average Medicaid cost per person per month went from over 10 percent of the total Medicaid cost in fiscal year 1978-79 to approximately 1.2 percent by 2007-08,” AHCA wrote in an e-mailed statement.

The proposed increase would result in counties paying 3.7 percent of the cost of nursing home care, which would be similar to what they paid in the late 1980s, according to AHCA.

Bay County, like much of the state, dealt with slumping property values and reduced ad valorem income in 2009, and had to make cuts. Those factors could worsen in 2010, not leaving much left over in the budget to deal with a substantial Medicaid cost jump.

“When you look at that kind of increase in what is already a lean year, we’re going to have to start cutting in other areas,” Girvin said. “I’m not going to run around saying the sky is falling at this point, but if that does come to pass, it’s going to not only make this county, but counties across the state make serious decisions about what we fund.”