Flagler Hospital sees some upsides amid state’s uncertainty over Medicaid, LIP funding

With big cuts to Medicaid looming and Low Income Pool funding once again up in the air, Flagler Hospital CEO Joe Gordy says regardless of how next year’s allocation shakes out, the hospital should be in a better financial position than before.


“No matter what the cut is, we’re going to have more Medicaid money than we had before,” he told The Record on Thursday. “This legislative session, we didn’t get hurt at all, we got helped.”

Thanks to Senate Bill 2514, Flagler, one of seven sole community hospitals in Florida, now meets the state’s definition of a rural hospital and, thus, stands to receive increased Medicaid reimbursements.

The appropriations bill for health care, successful in both chambers, amended the definition to provide that sole community hospitals also qualify as rural hospitals regardless of bed size. Classification as a sole community hospital depends on factors such as whether the facility is in a federally-designated rural area, the hospital’s capacity and the hospital’s distance from other hospitals. Only Flagler and Lower Keys Medical Center were considered sole community hospitals but not rural hospitals.

Gordy said there was essentially no distinction between his facility and the rural hospitals because Flagler is a “safety net” hospital keeping low-income and underinsured or uninsured people from having to travel longer distances for care.

He said the bottom line is Medicaid doesn’t cover the cost of care but that the new designation could cut losses in half. He said 60 percent of the hospital’s patients are on Medicare, 12 to 13 percent are on Medicaid, and another 6 to 7 percent don’t have any coverage and are unable to pay.

“That’s an unusual situation,” Gordy said. “It’s just a fact of geography. I’m not complaining, it just is.”

An appropriations request for equitable funding as a sole community hospital says Flagler’s estimated costs for 2016 are about $9 million over its current Medicaid reimbursement and that the hospital would be subsidizing more than $7 million in costs for care, including neonatal and mental health services, provided to indigent patients not qualifying for Medicaid and unable to afford to pay for the necessary care received. (The Florida Times-Union reported on Tuesday that the $2.9 million request for Flagler Hospital Medicaid Rate Enhancement, sponsored by Rep. Cyndi Stevenson and Sen. Travis Hutson, received $750,000 to be split with a sister facility.)

Next year’s budget, which starts July 1, includes $521 million in Medicaid cuts for hospitals. The News Service of Florida on Tuesday reported lawmakers and hospital-industry officials are hoping the LIP money will soften the blow of those cuts.

Gordy told The Record there are definitely hospitals facing deep cuts that will not be thrilled with this year’s outcomes.

“I’ve always said, don’t plan your life around government money because it’s unreliable,” he said.

The News Service of Florida report says although Gov. Rick Scott’s administration reached an agreement with the federal government on as much as $1.5 billion for the state’s LIP program, the actual amount going to hospitals could be closer to $1 billion due to challenges coming up with the full local share to draw down on up to $929 million in federal funds. The LIP program provides supplemental funding to health care providers to offset the costs of providing uncompensated care to underinsured and uninsured individuals.

Legislators refrained from including any LIP money in the state budget approved Monday as state and federal officials continue negotiations over how the LIP money could be used. The state Agency for Health Care Administration is expected to submit a budget amendment to the House and Senate once details are hammered out.

Gordy said ACHA’s previous formula “heavily favored” the state’s larger teaching hospitals but that a new formula based on charity care spending compared to net revenue is “very advantageous” to Flagler.

He said historically his facility has gotten about $900,000 but that the new formula — assuming it holds — could yield as much as $6 million in some scenarios. He said any increases to the hospital’s Medicaid reimbursements because of its rural designation would throw off those metrics and likely bump the hospital into a lower tier for LIP money.

Gordy said Hurricane Matthew, which happened to coincide with the beginning of the hospital’s fiscal year, posed an additional challenge because people who are fully insured put off elective surgeries such as knee replacements when hit with bills for floor replacements, kitchen appliances and new drywall. He said only now are those numbers starting to recover.

“We’re not going to recover from the hole, we’re just trying to make the hole smaller,” he said.

The News Service of Florida contributed to this report.