Florida Standoff Could Disrupt Managed Care Progress in Medicaid

Governor Rick Scott's decision to sue CMS could harm an opportunity to expand a pilot program in Medicaid managed care first championed by former Republican Governor Jeb Bush, which was found to save $118 million a year. It was praised by the conservative Heritage Foundation.

Florida Governor Rick Scott’s decision to sue CMS over the fate of a funding agreement for hospitals that serve the uninsured has fallout in many directions. One overlooked area, according to an editorial in Florida Today, is the missed opportunity to expand a successful Medicaid managed care program started by a former Republican governor, Jeb Bush, who is now exploring a run for president.

The editorial was among several this weekend that criticized Scott’s April 16 announcement that he will sue CMS to keep intact the current agreement, called the Low-Income Pool or LIP. Right now, the $2.2 billion program that pays hospitals caring for the uninsured includes $1.3 billion in federal funds. It is set to expire June 30, 2015, a date that has been known for a year.

Many have called on Scott to simply expand Medicaid to those earning between 100% and 138% of the federal poverty line, which is permitted under the Affordable Care Act (ACA). Scott endorsed this at one point but has since changed his mind. Florida’s legislature has been meeting for the past 6 weeks to find a way to replace the LIP.

For Scott and critics of Medicaid expansion, including Florida House Speaker Steve Crisafulli, CMS’ position is an affront to Florida’s right to not expand the program that funds healthcare to the poor. In 2012, the US Supreme Court ruled that the federal government could not compel states to expand Medicaid, which Scott cited in announcing his plans to sue.

“Not only does President Obama’s end to LIP funding in Florida violate the law by crossing the line into a coercion tactic for Obamacare, it also threatens poor families’ access to the safety net healthcare services they need,” Scott said in a statement.

But for CMS and those who support expansion—including hospital groups and state business leaders—it wastes federal dollars to funnel money into expensive emergency room care for the uninsured when more efficient, less expensive options exist. In recent months, CMS has adopted aggressive goals to tie Medicare reimbursement to quality, and just this week the president signed an historic, bipartisan bill to replace the sustainable growth rate formula with a Medicare plan that will reward value-based models. A decision to continue LIP in its current format would be at odds with CMS’ recent initiatives.

Estimates for the number of uninsured Floridians have been between 800,000 and 850,000, while estimates for the number of potential beneficiaries of Medicaid expansion have been as high as 1 million.

CMS’ agreement with Florida was considered a demonstration model that was part of the state’s transition to Medicaid managed care, a process that has won praise from conservative groups, a point noted in the Florida Today editorial. Last year’s extension was designed to give the state time to develop a long-term solution. At the time, Scott was in a heated re-election battle with former Governor Charlie Crist, a one-time Republican turned Democrat, who had vowed to expand Medicaid.

Republican Senate President Andy Gardiner has put forth a proposal based on the alternative first championed by Bush during his time as Florida governor. The pilot program allowed nearly 3 million beneficiaries in several counties to enroll in private HMOs, using Medicaid dollars to pay for premium instead of paying providers directly. The program was credited with saving taxpayers $118 million a year; the conservative Heritage Foundation estimated statewide savings at $900 million.

“From where I sit, it is difficult to understand how suing CMS on day 45 of a 60-day (legislative) session regarding an issue the state has been aware of for the last 12 months will yield a timely resolution to the critical healthcare challenges facing our state,” Gardiner told the Tampa Bay Times.

So far, there has been no direct response to Scott’s threat from CMS. White House Press Secretary Josh Earnest told reporters, “It’s difficult to explain why somebody would think that their political situation and their political interest is somehow more important than the livelihood and health of 800,000 people that they were elected to lead.”

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