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Medicaid change hits teaching hospitals

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Published:   |   Updated: March 13, 2013 at 09:55 AM
TAMPA -

The state's attempt to simplify its complex and antiquated hospital payment system could inadvertently shrink the area's number of aspiring doctors, putting a strain on hospitals.

Nearly half of the University of South Florida's medical residents spend two to three years in supervised practice at Tampa General Hospital, one of six specialized statutory teaching hospitals in Florida.

Salary, benefit and malpractice insurance costs for each of the 301 resident doctors run $100,000 a year. USF Health and leaders at the Level-1 trauma hospital were troubled to learn they may lose the $10 million a year now designated by the state for specialized hands-on medical training.

"I would have to reduce my (resident physician) workforce," Charles Paidas, vice dean of clinical affairs and graduate medical education at USF Health, said of the proposal.

A recalculated Medicaid payment system is moving money set aside for six medical residency programs into a single pot for the state's 220-plus hospitals.

Critics say the six teaching hospitals are expected to train doctors and provide specialized care that isn't available elsewhere, but the money to pay for it is being "stripped" away.

"It's like they are erasing the whole methodology," said Steve Short, Tampa General's chief financial officer. "It's as if we have the same costs as a community hospital, and that's simply not the case."

The residency financing debate is just one part of the brewing conflict over the Agency for Health Care Administration's "Diagnosis Related Group" or DRG model.

All but four psychiatric hospitals in the state are affected by the new formulas, which will reimburse hospitals for overall medical care of the poor, not the amount of time patients are kept or number of tests they undergo.

Of the 97 hospitals heavily dependent on Medicaid funding, 61 will see a bump in reimbursements, estimates show.

Two thirds of the 36 losing money will see decreases of 10 percent or less in the more straightforward and financially efficient plan, said Justin Senior, AHCA's deputy secretary for Medicaid.

Penalizing teaching hospitals was not the intention. "The element of simplicity is what put it there," he said.

An AHCA consultant presenting the formula in Tallahassee last week said the scenario is tough and "admittedly it's scary" for hospitals facing millions in lost payments.

Still, the state is moving forward with the plan to eliminate special health care payment categories and focus on paying hospitals for quality of care.

"The policy is that we are not doing anything particular for the teaching hospitals," consultant Mal Ferguson said of the plan, which next week will begin moving through state legislative committees.

Tampa General depends on its 301 resident doctors in every department of the hospital and at community clinics, said Paidas, a pediatric surgeon. They are supervised but function in many ways like the 400 attending physicians on staff.

Without residents, Paidas said, it is impossible to keep the Level-1 hospital staffed around the clock with specialists in areas such as neurosurgery, pediatrics and orthopedics.

Short said Tampa General has to consider inviting fewer first-year residents to its program next year as a way to absorb the $10 million loss. As it is, the hospital covers the cost of 100 of the resident doctors without any money from the state or federal government. Washington provides a significant portion of resident training support through its Medicare payment system.

"I think the (state) formula needs to be seriously changed because these are missions we are being asked to provide," Short said.

Tampa General, Shands Teaching Hospital in Gainesville, Jackson Memorial Hospital and Mount Sinai Medical Center in South Florida, Orlando Regional Medical Center and Shands in Jacksonville provide about 70 percent of the state's medical residency slots, said Tony Carvalho, president of the Safety Net Alliance of Florida.

The rest, including half of the USF College of Medicine residency class, are assigned in smaller numbers at other facilities in Tampa and across the state.

But the six teaching hospitals are being harder hit than others, critics of the proposal say. They face losing at least $84.5 million in Medicaid funding under the formula, said Jim Zingale, executive director of research and fiscal analysis for the Safety Net Alliance, which represents 14 hospitals serving predominately poor and uninsured populations.

"I honestly can't see how you run those places" under the new formula, Zingale said.

"The upheaval is going to be incurred day one … that means cuts to services."

Bruce Rueben, president of the Florida Hospital Association, is urging a one-year transition to the new payment plan. Hospitals have not been given time to understand or provide input on a formula that no longer weighs factors such as cost-of-living differences in various parts of the state, he said.

"It's almost as if they want to dumb this down," Rueben said.

But right now, the overly simplified changes might only accomplish creating unhealthy division within the hospital industry, he added.

Delaying the launch of the new payment system will only stoke criticisms, said Senior, the AHCA administrator.

"You're just opening the issue up and pushing stuff down the road," he said.

The state's Medicaid recalculation favors some hospitals, in particular smaller hospitals that in the past received little reimbursement for treating people on Medicaid, the state's subsidized health insurance for children, the poor and disabled.

Some examples: Tampa General overall faces an 8 percent decrease in Medicaid dollars it receives. And nearby St. Joseph's Hospital will see payments drop 6 percent. Florida Hospital Tampa, however, will see an increase of 11 percent, according to the final AHCA payment estimates.

The H. Lee Moffitt Cancer Center, which is in a category separate from the main teaching hospitals, faces a $640,000 loss in graduate medical education, spokeswoman Patty Kim said. The National Cancer Institute facility also could lose another $1.5 million in Medicaid reimbursement under the new calculations, she said.

Community hospitals, including some owned by for-profit chains, mostly support the new calculations because they fairly reimburse facilities that have been slighted in the past for treating the poor, said Alan Levine, Florida Group president for the Health Management Associates chain.

"I'm not saying the (other hospitals) shouldn't be funded for what the cost of care is," said Levine, whose company includes Pasco Regional Medical Center and is taking over ownership of Bayfront Medical Center in St. Petersburg. "What I'm saying is that the system design doesn't give the state any latitude for the hospitals that also are providing care."

However, the state can't overlook the importance and role of teaching hospitals, said Levine, who last week was appointed to the Florida Board of Governors, which oversees higher education.

Legislators, who will be debating the new system this spring, need to be cautious that this move forward doesn't inadvertently damage programs essential to training Florida's next generation of physicians, he said.

"Generally, we have to make sure our teaching hospitals are provided the resources they need, whether it comes from the GME (General Medical Education) pool or another," he said. "They are important for reasons other than providing care."

This latest threat to medical residency programs exacerbates the fact that Florida already lags in the number of doctors in training. Despite being the nation's fourth most populous state and home to major medical schools, the number of resident doctors in practice is half the national average.

U.S. Rep. Kathy Castor, D-Tampa, said attempting to boost the numbers has been complicated, and is made more difficult by political debate about reducing costs in the Medicare system, the largest source of graduate medical education money for any hospital.

Over the next few months, Congress will be looking for savings during debates over the debt ceiling and other critical funding issues.

President Barack Obama's administration has identified medical residencies as one area that could get less financial support.

Castor is adamant that Florida needs more resident doctors to care for state residents, and she has lobbied in Washington, D.C., to add several hundred more slots.

Now, she said she is preparing for budget fights by looking for alternative savings in Medicare, in areas such as prescription drug coverage.

These debates in Congress and in Tallahassee distract from the critical teaching taking place among residents and supervising physicians, said USF Health administrator Paidas, who also conducts his pediatric practice at Tampa General.

People in the Tampa area need to understand that having medical residents at any hospital elevates the care patients get. Nurses, doctors and hospital staff are challenged to be their best in a teaching situation, even at a time when health care is struggling financially. Fewer residents will be a loss for everyone, Paidas said.

"If our (federal) payments or state allocations … are reduced, it's only going to make a tough situation worse," he said.


mshedden@tampatrib.com (813) 259-7365

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