Gov. Scott Is Balancing State’s Budget With Money That May Not Exist

Gov. Rick Scott’s proposed budget for the new fiscal year includes $1.3 billion for Florida hospitals providing care to uninsured people. However, that pool of money might stop existing this summer.

The money—known as LIP funding, or Low-Income Pool funding—has been used to compensate hospitals for treating people without insurance. When the Affordable Care Act was passed, though, that money was supposed to be phased-out as more people got covered under programs such as the health insurance marketplace or expanded Medicaid.

But, because Florida has refused to expand Medicaid with federal dollars, largely for political reasons, there are still many Floridians without insurance getting care at hospitals.

However, that hasn’t meant the federal government is going to completely change its plans.

According to Carol Gentry with Health News Florida, federal officials told members of the state’s health care industry that LIP money is set to expire in June.

The nation’s Medicaid chief said Tuesday the federal funds Florida hospitals have depended on to pay for the uninsured will not be arriving any more.

There is “no way” that Florida’s “Low Income Pool” program will continue when it expires in June, said Eliot Fishman, director of the Medicaid division of the Centers for Medicare and Medicaid Services (CMS).  “Not in its present form.”

Fishman’s message blows a hole in Gov. Rick Scott’s budget, which includes $2 billion in federal funds for the Low Income Pool, or “LIP.” Half of the LIP is federal matching funds.

The loss of this funding also puts pressure on the Legislature, which is to open its 2015 session in three weeks.

It was clear from Fishman’s formal presentation that CMS is impatient with what it sees as Florida’s stubbornness to incorporate funding from the Affordable Care Act that is designed to replace LIP and other older ways to cover indigent health care.

Fishman noted that a number of states are experimenting with new ways to use the Medicaid funds to pay for health care in ways that reward quality of care and cost-effectiveness.

A few years ago, Scott said he supported expanding Medicaid in the state, but he didn’t expend any energy into getting the measure passed in the Florida Legislature. That’s why the state has yet to accept the billions of federal dollars for health care coverage for low-income people in the state.

Federal officials have said they would be willing to work with state lawmakers on coming up with different ways of using that money to fit Florida’s health care needs, but state lawmakers have been distrusting of the federal government—making any arrangement difficult. In the meantime, hospitals face looming debts as a result of providing care to people without insurance. About a million people in the state still don’t have health care coverage.

Scott balanced his budget under the assumption the federal government would somehow continue giving the state LIP funds.

According to The Tampa Bay Times/Miami Herald, 

Last month, Scott unveiled a $77 billion budget assuming that LIP money would be included. Last year, it took until April for federal officials to tell Florida that it would renew the LIP fund and two other supplemental programs that together total about $2.2 billion.

But that was only to be a one-year extension. In the meantime, Florida was asked to study its Medicaid financing system and find ways to increase transparency to make sure the money is being spent appropriately. A 244-page report required by federal regulators was released in January that warned Florida was at risk of losing $1.3 billion in federal funds.

“These funds are critical for maintaining access to essential hospital services for the state’s large Medicaid and uninsured population,” the report concluded. “Not having these funds available for payment to Florida’s hospitals may exacerbate an already tenuous situation.”

Without LIP payments, the report noted, the average reimbursement for hospitals to treat Medicaid patients would be about 62 percent of the actual cost.

Florida hospital leaders are very concerned. Most are poised to go into the red for millions of dollars.

However, Scott’s office believes that the money will still be given to Florida’s hospitals, while state lawmakers aren’t so sure.

GOP leaders in the Legislature are making plans in the event they don’t get the money. Democrats are warning Florida’s Republican governor and the Republican-led Legislature that they are throwing the state’s finances into chaos.

The Times/Herald reports,

The Legislature will ultimately pass its own budget that will have to make up the difference if the LIP isn’t included. House Appropriations Chairman Richard Corcoran, R-Trinity, said he had received no definitive word, and nothing in writing, from the federal government on LIP.

Senate Health and Human Services Appropriations Subcommittee Chairman René García, R-Hialeah, said he had received “mixed signals” from the federal government on the future of LIP.

He had not been told Florida would no longer receive the money, he said.

“My thought is that what’s happening in D.C. right now is a struggle between politics and policy,” he said.

García said he was working on a contingency plan in the event Florida cannot negotiate a new deal with the federal government. While the specifics are still being worked out, García said he and others were considering different federal and state funding streams.

“It is possible that we are going to have to look at the $1 billion surplus,” García said. “We would have to look at everything.”

Some state lawmakers have said they are optimistic the state and feds will be able to work out a plan. Even if the state doesn’t get LIP funding, budget officials in Florida are hopeful they will get some version of the program.

–Ashley Lopez, Florida Center for Investigative Reporting