Florida’s health care system is under strain as hospitals struggle with Medicaid reimbursement rates that fall far short of the actual costs of care. Hospitals are reimbursed for just 47% of the audited cost of labor and delivery services, 62% for inpatient pediatrics, and 49% for adult inpatient psychiatric care, leaving significant shortfalls that threaten critical services.
To address this crisis, Florida proposed a Medicaid State Directed Payment (SDP) program for 2025 that would increase reimbursement amounts to better reflect the true cost of care. The program uses a provider tax model—similar to how gas taxes fund roads—that hospitals contribute to in order for the state to draw down available federal matching dollars. Like 48 other states, Florida employs this federally permissible approach to increase Medicaid payments for underfunded services. Florida’s proposal, which ties 6% of the SDP to improved performance on reducing C-section rates, hospital readmissions, and improving transitions in care for individuals with mental illness, was submitted in May to the federal government.
Despite the federal Centers for Medicare & Medicaid Services (CMS) approving 32 other states’ hospital SDP preprints for FY 2025 and beginning approvals for FY 2026 preprints—many submitted after Florida’s—Florida’s application remains stalled. CMS has approved similar or larger programs in other states, including Illinois and Texas, even where litigation was pending. The delay has real consequences: as maternity, behavioral health, and pediatric services are reduced due to inadequate reimbursement, Floridians increasingly turn to emergency departments, the most resource-intensive entry point into the health care system.
Hospitals need fair payment and predictability to invest in workforce development, expand clinician education and training programs, adopt new technology, and maintain high-quality care. According to the Florida Hospital Association, every additional day CMS delays approval of the state’s SDP program places these goals further out of reach.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://www.floridatoday.com/story/opinion/2026/02/10/florida-medicaid-delay-endangers-care-access/88595322007/