Florida health officials remain uncertain about the future of a program that funnels $1 billion a year to hospitals and other medical providers — or whether the state will have a fallback if the program is eliminated.
Phil Williams, the state’s assistant deputy secretary for Medicaid finance, said Wednesday that top officials went to Washington this week to try to reach agreement on extending a Medicaid pilot that includes the funding program, known as the “Low Income Pool.”
Federal officials told the state last month they are looking at ending the Low Income Pool in December 2013. In the program, local tax dollars are used to draw down federal matching funds.
Adding to the state’s concerns, Williams said federal officials have indicated they do not know whether Florida would be able to switch to another funding program — known as the “Upper Payment Limit” program — to replace part of the $1 billion.
In the past, state and hospital-industry officials have assumed Florida could use the Upper Payment Limit program if LIP ended. Such a move, however, likely would lead to a cut of $300 million a year or more.
“The bigger question is, will it (LIP) just go away in total, or will there be something that replaces LIP as we know it today?” Deanna Schaeffer, an official with Halifax Community Health System in Daytona Beach, said Wednesday after a meeting of a state group that works on Low Income Pool issues.
The Low Income Pool, which was included in a controversial Medicaid pilot that started operating in 2006, is designed to send additional money to hospitals and other providers that serve large numbers of low-income and uninsured patients.
Hospitals, which have grappled with Medicaid rate cuts in recent years, are fiercely protective of the LIP program. The group that met Wednesday, known as the Low Income Pool Council, makes recommendations to the Legislature about how the money should be distributed — a contentious process that includes battles within the hospital industry.
“The basic problem last year, we had more mouths to feed than loaves of bread to feed them,” said University of Florida physician Joseph Tepas, who serves on the council. “That’s not going to change this year.”
Florida has been working for the past year to try to get federal approval of a three-year extension of the Medicaid pilot. That pilot is controversial because it requires most Medicaid beneficiaries in Broward, Duval, Baker, Clay and Nassau counties to enroll in managed-care plans.
The pilot was supposed to expire June 30, but the state has received a series of temporary extensions to try to reach agreement with the federal Centers for Medicare & Medicaid Services. The latest temporary extension is scheduled to end Aug. 31.
Federal officials have expressed support in letters to AHCA for continuing the pilot program. But state Medicaid officials said they were surprised last month when the federal government indicated it might end LIP in December 2013, cutting off the money before the proposed end of the pilot.
Williams said the federal government has indicated it wants to also end similar programs in other states. Federal officials have not explained their LIP reasoning in letters made public by AHCA, but one factor could be the federal health overhaul that will require almost all Americans to have insurance in 2014 — at least in theory reducing the need for extra payments to care for the uninsured.
Beyond the pilot, lawmakers this spring approved a statewide Medicaid managed-care plan that was expected to include LIP money. That statewide program, which also needs federal approval, could start shifting people into managed-care plans in 2013.
With the Aug. 31 deadline looming for the pilot, Williams said Agency for Health Care Administration Secretary Elizabeth Dudek and other officials from AHCA and the governor’s office were in Washington this week for talks.
Williams said the issues, however, go beyond the potential future elimination of LIP. He said, for example, the federal government is seeking to put new conditions on the LIP money.
Those conditions would require 20 hospitals that receive the largest shares of LIP money to take steps such as increasing primary-care capacity, reducing hospital readmissions and improving diabetes services.
By Jim Saunders
