CMS Folds in Florida Medicaid Impasse, but Funding Cuts Mean Expansion Still Pays

The Obama Administration says that Florida can receive $1 billion this year and $600 million next year to pay for uncompensated care in safety net hospitals. However, the administration made it clear that more funding awaits the state if Medicaid expansion reaches those up to 138% of the federal poverty line.
Published Online: May 25, 2015
Mary K. Caffrey
Florida Governor Rick Scott has won this round with CMS over funding for hospitals that care for the uninsured, but the structure of the deal still makes Medicaid expansion the best option for the long haul.

That’s what Republican Senate President Andy Gardiner said late Thursday after word spread that CMS had sent a letter to Scott that it had determined the state qualified for $1 billion for fiscal year 2016 its Low-Income Pool (LIP), the program that pays for uncompensated hospital care. However, CMS’ letter stated that starting in the next fiscal year, funding would drop to “a more sustainable” $600 million, and the new waiver would end in June 2017.

According to The New York Times, CMS reiterated that expanding Medicaid to 800,000 Floridians could bring $2.1 billion a year to state hospitals. Business leaders and hospital executives have been pressing state lawmakers since early this year to approve Medicaid expansion as permitted under the Affordable Care Act.

The impasse over whether Florida would expand Medicaid had threatened to shut down the state’s government, as legislative leaders and Scott, a fellow Republican, could not agree on how to deal with an LIP waiver that had been set to expire June 30, 2015. CMS had long warned it would not continue the LIP in its current form, and had said in late April that Florida should look to expand Medicaid as a way to provide care to the uninsured.

Scott sued, saying that CMS was trying to compel the state to expand Medicaid, which the US Supreme Court had ruled in 2012 it could not do. In the meantime, Gardiner and the Senate promoted a conservative Medicaid expansion program, called the Florida Health Insurance Affordability Exchange Program, or FHIX. It combines Arkansas-style provisions that allow Medicaid beneficiaries in the tier between 100% and 138% of the federal poverty line to receive premium credits to shop for coverage on an exchange.

“With some exceptions, participants are required to work or go to school, and to pay a small amount for premiums, office visits, and prescriptions,” Gardiner wrote in an op-ed in The Orlando Sentinel, which appeared the day after the CMS announcement.

Gardiner, a hospital system executive, continues to promote his plan as the logical next step in the movement toward accountability that began when the LIP was created by President Bush and then-Governor Jeb Bush. Even though the immediate crisis has been averted, Gardiner said nothing has changed—ultimately the state must find a new way to care for uninsured patients.

“The news brings certainty to what we have known for over a year—the LIP program is changing and Florida needs a new way to address uncompensated care,” he wrote in a memo to lawmakers. “Clearly, a conservative, free-market expansion of healthcare coverage is the most fiscally responsible approach.”

It is not known yet if the Scott administration will withdraw its lawsuit. Of note, CMS is requiring Florida to resubmit its fiscal year 2016 proposal before the state can count on the $1 billion, and adopt a budget for the upcoming fiscal year.

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