The CMS will not renew a Medicaid waiver in Florida expiring at the end of June that provides more than $1 billion a year to help the state's hospitals with uncompensated-care costs for low-income and uninsured patients. That may put additional pressure on Florida Republican leaders to consider expanding Medicaid to low-income adults under the Affordable Care Act.
Since 2005, Florida has had a Section 1115 Medicaid waiver establishing a low-income funding pool to aid the state's hospitals. The state has received between $1 billion and $2 billion annually to support safety net providers.
“CMS will not extend Florida's Low Income Pool (LIP) in its current form,” a CMS spokeswoman said. “(We) will work with the state to develop payment approaches for Florida's Medicaid beneficiaries to ensure adequacy, equity, accountability and sustainability for Florida's Medicaid funding.”
Her comments follow a statement by Eliot Fishman, director of the CMS' Children and Adults Health Programs Group in the Center for Medicaid and CHIP Services earlier this month at an Orlando healthcare conference about the CMS' intention not to renew that waiver.
The CMS position did not surprise Bruce Rueben, president of the Florida Hospital Association, who said the CMS had signaled its intention last May when it renewed the waiver for the funding pool for only one year rather than the usual three.
Now hospitals around the state are waiting to see what alternative funding pool will be negotiated by the CMS and the state to replace the low-income pool. “It would have a devastating impact if it just went away and there was nothing else,” said Rueben, whose group has been pushing hard for a Medicaid expansion under the ACA.
Losing the funds would hurt hospitals that have the highest proportion of Medicaid and uninsured cases, and could lead a reduction in services and staff at those hospitals, though it's unclear if it would lead to any hospital closures, Rueben said.
The Republican-dominated Florida Legislature has refused to expand Medicaid under the ACA. Hospital leaders and business groups that favor expansion say that would at least partly ease the financial burden on hospitals in caring Medicaid and uninsured patients even if the low-income pool is not renewed. Some observers think the Obama administration is trying to apply pressure on the state to accept the expansion by withholding approval for the pool.
While some states that have not expanded Medicaid have seen a series of hospital closures in the past year, Florida has lost only one hospital since the ACA allowed the expansion last year. When the Edward White Hospital closed in November, it's owner, HCA West Florida, blamed continuing declines in hospital admissions as well as the cost of maintaining the aging building, not the state's decision to reject Medicaid expansion.
When the CMS extended the low-income fund last year, it asked Florida officials to commission an independent report to recommend Medicaid reforms that would ensure healthcare access for beneficiaries without the low-income pool. A leading suggestion made by Navigant, the contractor hired to produce the report, was to expand Medicaid to adults with incomes up to 138% of the federal poverty level. But even that wouldn't solve all the state's problems.
“Increasing the number of recipients enrolled in Medicaid will increase the volume of patients for which hospitals receive payments below cost,” the report said. “Thus, even with Medicaid expansion, we believe continuation of the LIP program, or some form of replacement for the LIP program will still be needed.”
In January, Republican Gov. Rick Scott unveiled a $77 billion state budget assuming that the LIP money would be renewed. A spokeswoman for the state Agency for Health Care Administration, which runs the state Medicaid program, said state officials remain optimistic that they can work out some kind of deal with the Obama administration. “Our discussions with CMS about LIP are ongoing,” said Shelisha Coleman, a spokeswoman for the state's Agency for Health Care Administration. “Conversations are set to continue this week.”
If the LIP funding ended, it would create a $1.3 billion hole in Florida's budget. Senate Appropriations Chairman Tom Lee, R-Brandon, told the Miami Herald that the CMS' announcement had sent Florida lawmakers "back to the drawing board." He added that "whether it's by the name of LIP or some other name, a program might still exist. But we're going to have to work with CMS to modify our current operating mode so they can cooperate with us."
The odds of Medicaid expansion in Florida are uncertain to doubtful. Both newly re-elected Scott and senate leaders have expressed support for expansion in the past, but house leaders continue to express opposition.
Two major business groups, Associated Industries of Florida and the Florida Chamber of Commerce, each have released Medicaid expansion proposals including work requirements and monthly premium contributions.
Expanding Medicaid could provide coverage for about 669,000 Floridians, with the state getting as much as $51 billion in federal Medicaid dollars over 10 years, according to the Kaiser Family Foundation.
Follow Virgil Dickson on Twitter:@MHvdickson
