Federal government won’t extend $2 billion in Low Income Pool funding

Stethoscope on money background

A $2.2 billion pot of money that Florida uses to help reimburse hospitals for treating the poor as well as to train physicians expires at the end of June and won’t be extended, a high-ranking federal official said in Orlando on Tuesday.

“There’s not going to be an extension of LIP this year,” Eliot Fishman said at the Associated Industries of Florida 2015 Health Care Affordability Summit.

Gov. Rick Scott built his proposed budget for the 2015-16 fiscal year on the assumption that the money would be forthcoming. If the money isn’t replaced with another source, it could blow a hole in the budget.

Asked for a response, AHCA’s Shelisa Coleman called, “Justin Senior and Medicaid staff met with Federal CMS last week to continue dialogue about the future of the LIP program. There has been no update since our last meeting.  Conversations are expected to continue this week. We look forward to working with them on areas of agreement.”

Florida Hospital Association President and Chief Executive Officer Bruce Rueben called Fishman’s message “sobering.”

“We have a lot of work to do. We have to sort all this out and figure out what we can do in working with the Agency for Health Care Administration to create a plan for the citizens of the state of Florida.”

Fishman is director of the Children and Adults Health Programs Group in the Center for Medicare and Medicaid Services. As such he leads CMS’s activities around, among other things comprehensive waiver services.

Florida’s Low Income Pool — commonly called LIP — program is made possible under the sweeping Medicaid 1115 Reform Waiver the state uses to operate its statewide Medicaid managed care program. LIP is funded through intergovernmental transfers (county dollars), state dollars and matching federal funds.

The federal government last year agreed to extend the waiver for three years but said in correspondence to Florida that the LIP program would be extended only through June 30, 2015 in order to “provide stability for providers as Florida transitions to statewide Medicaid managed care, while allowing the state to move toward a significantly reformed Medicaid payment system.”

When the federal government extend the LIP program it required the state to hire an independent party to study hospital rates and submit a report to the state and federal government. A draft of the report noted that if LIP was eliminated or reduced there would be significant problems for safety net hospitals — the community-based hospitals that treat Florida’s uninsured and under insured — as well as the actuarial soundness of Medicaid payments for hospitals.

The state would need to come up with an alternative funding source, the Navigant report noted, which could include taxing health maintenance organizations, hospitals or infusing additional general revenue into the program. Other alternatives include expanding Medicaid access under the federal health care reform law.

The Florida Legislature has been reticent to expand Medicaid to 133 percent of the federal poverty level: $33,253 annually for a family of four and $15,654 for an individual.

Christine Jordan Sexton

Tallahassee-based health care reporter who focuses on health care policy and the politics behind it. Medicaid, health insurance, workers’ compensation, and business and professional regulation are just a few of the things that keep me busy.


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