Update: Feds Cut Critical Hospital Funding Program To $1 Billion

May 21, 2015

The federal government is giving Florida $1b for a critical hospital funding program.

Florida will see a critical healthcare funding program cut in half, and the federal government says the state should expect more cuts going forward.

The Low income Pool is not insurance. It reimburses hospitals and other providers for treating under, and uninsured, patients.

In a letter to the state, the federal government says the cuts to LIP could be made up if Florida expanded Medicaid. It’s also expressing concern about how the state reimburses healthcare providers who serve poor Floridians.

The Centers For Medicare and Medicaid Services says Florida's low Medicaid reimbursement rates are an obstacle for access to healthcare, especially for children.

CMS cited a lawsuit against Florida filed by dentists. A ruling by a judge agreed with dentists that the state's low Medicaid reimbursement rates hindered access to pediatric dental care, and CMS notes payment rates for Medicaid have not improved significantly.

"These concerns are buttressed by the finding in the independent report that the state commissioned that during the time LIP has been in existence, provider payment rates have been cut by 25 percent, continuing a trend that started before LIP was created,"  wrote CMS Director Vikki Wachino, in a letter to the Florida Agency For Healthcare Administration.

“So what CMS is saying is there are other ways for you to make sure you’re adequately paying your providers through which you can draw down federal matching dollars. One way is expanding Medicaid—you’ll get a 100 percent federal match. But also, the state of Florida has a responsibility to pay providers better, and they can put up more state dollars with or without the LIP," said Georgetown University expert Joan Alker.

The 55 percent cut in LIP funding still puts a significant hole in Florida's budget.

Senate President Andy Gardiner says the federal LIP decision bolsters his chambers’ position the state should expand Medicaid.

“It’s better outcomes for everybody if you’re providing insurance options which is why the Senate put forward a free market approach just for this situation," Gardiner said. "Whereas this program starts to go away—the low income pool—that the residents of the state of Florida have options for insurance.”

Lawmakers return June 1 restart work on a budget after failing to get a deal earlier this month, due to an impasse over healthcare funding.

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Update: 11:50 a.m.: In a letter to the Florida Agency for Healthcare Administration the federal government makes clear the state should expect future cuts in the LIP program, as it is phased out. This year's $1 billion renewal money is half of  current funding levels, and next year federal support won't be more than $600 million.

Even as the federal government agreed to give Florida money, it chastised the state for the way it currently funds health insurance for the poor. The Centers For Medicare and Medicaid Services says Florida's low Medicaid reimbursement rates are an obstacle for access to healthcare, especially for children.

CMS cited a lawsuit against Florida filed by dentists. A ruling by a judge agreed with dentists that the state's low Medicaid reimbursement rates hindered access to pediatric dental care, and CMS notes payment rates for Medicaid have not improved significantly.

"These concerns are buttressed by the finding in the independent report that the state commissioned that during the time LIP has been in existence, provider payment rates have been cut by 25 percent, continuing a trend that started before LIP was created,"  CMS Director Vikki Wachino said in her letter to the Florida Agency For Healthcare Administration.

Read the letter below:

Fed Letter To Florida on LIP Renewal

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Breaking: The federal government will keep a critical healthcare funding program flowing for a little while longer. The federal Centers for Medicare and Medicaid Services says the state will get $1 billion in federal money that reimburses hospitals and some other healthcare providers, for treating uninsured and under-insured patients.

Check back later on for more on this story.