April 12, 2013

Senate Budget Debate Focuses on Conversion to DRG Payment Methodology

The Florida Senate approved its proposed General Appropriations Act for Fiscal Year 2013-14 amid much discussion about the policy issues contained in the Senate proposal for conversion to the new Diagnosis Related Group (DRG) payment methodology. Debate focused on the recommended policy to divert current funding from hospitals that utilize local tax funds for hospitals in their communities. This new policy requires that 45 percent of the federal share earned under this program must be diverted to the general pool of funding that is then to be distributed to all hospitals statewide. An estimated $185 million would be put into the DRG inpatient base rate and distributed to all hospitals regardless of their community's commitment to provided local taxes to support hospitals. After much explanation and discussion the Senate approved the policy but stated this would be an issue addressed in the budget conference process.