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Budget signed, LIP deal formalized (sort of), health care done for now

Just hours after Gov. Rick Scott quietly signed a state spending plan into effect, the federal government gave Florida a long-awaited “agreement in principle” letter that all but formalizes an agreement between Florida and the federal government on hospital funding for the next year.

The coveted agreement, which the state had hoped to secure in April so the Legislature could draft a budget before the end of the 2015 regular legislative session, lays out a two-year agreement that expires in June 2017, which is when the underlying Medicaid 1115 waiver that makes Low Income Pool possible expires. The waiver also allows Florida to operate its mandatory statewide Medicaid managed program statewide.

The two-page letter was sent to Deputy Medicaid Secretary Justin Senior and is signed by Centers for Medicare and Medicaid Services Acting Director Vikki Wachino. CMS and Florida have been working closely to reach final agreement on Low Income Pool funding.

Meanwhile, the budget put an additional $400 million recurring general revenue into hospital rates and directs $1 billion in Low Income Pool dollars to a variety of hospitals based on a plan hammered out between the House and Senate.

Jan Gorrie, managing partner of the Tampa office of Ballard Partners and a lobbyist for large urban hospitals around the state, said the “high five” from the federal government and the signing of the budget is good news for Florida hospitals.

However, CMS also indicated next year LIP will be further ratcheted back. “So our work is cut out for us. No rest for the weary,” she said, noting that the Legislature returns to Tallahassee in about two months to begin a round of meetings in preparation of next year’s Session, which starts in January.

And even before the start of the January session Florida will be working on what a new Low Income Pool distribution model for 2016-17 looks like. Wachino’s letter makes clear that the the $1 billion Low Income Pool money in fiscal year 2015-16 will be distributed as outlined in the General Appropriations Act, but that the $608 million for the following year will be distributed based on the volume of provider uncompensated care and in accordance with a new distribution formula.

The letter notes that Florida will have to submit a new formula to the federal government by October 31 and that CMS will work with Florida to approve the new distribution method before December 31, 2015.

“Florida may not claim federal financial participation for LIP payments [in 2016-17] until a new methodology is approved by the federal government,” the letter notes.

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