WASHINGTON—The CMS is appearing to blink in its stare down with Florida over Medicaid expansion. The agency informed state officials that it tentatively plans to renew a waiver that has provided Florida billions in supplemental Medicaid funding to help hospitals with uncompensated-care costs.
The Obama administration had tied renewal of the waiver—which it warned a year ago was ending—to Florida's expansion of Medicaid to adults with incomes up to 138% of the federal poverty level. HHS and CMS officials have said the administration does not want to provide supplemental hospital-care funding for people Florida could cover through a Medicaid expansion. The state filed a lawsuit in return, as it felt the Obama administration was trying to force it to expand coverage, something the U.S. Supreme Court had ruled against.
Now, the CMS appears to have had a change of heart. “We have preliminarily concluded that 2015-2016 funding should be consistent with what the funding will be at $1 billion, consistent with the funding for LIP (Low Income Pool) prior to 2014, to maintain stability while the system transitions,” Vikki Wachino, director of the Center for Medicaid and CHIP Services at the CMS, said in a May 21 letter to the state.
Starting in mid-2016, funding will drop to $600 million as “a more sustainable and appropriate level to cover the state's remaining uncompensated-care costs,” she added. The new waiver would end in June 2017.
“This 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,” Republican Senate President Andy Gardiner said in a memo to lawmakers Thursday. “Clearly, a conservative free-market expansion of healthcare coverage is the most fiscally responsible approach.”
The CMS' willingness to continue the low-income pool in any form comes despite the agency finding the state's April 20 waiver application lacking in several ways. The state claimed it calculated its funding requests by specifically including costs tied to patients who would be eligible for expanded Medicaid, but CMS felt the state “makes no reduction in the overall size of the pool to account for the potential effects of expanded coverage.”
It also raised concerns the state didn't adequately address how continuing the low-income pool would help ensure provider payment rates or how it would be sufficient to promote provider participation and access.
The letter also addressed whether the CMS is attempting to use the future of the low-income pool to get the state to expand Medicaid, a claim made in a pending lawsuit against the Obama administration by the state.
“The decision about whether to or not to expand Medicaid is a state option, as we've noted previously,” Wachino said. “Therefore, the state's expansion decision does not affect the size of the LIP itself.”
It's unclear if the lawsuit filed by Gov. Rick Scott's administration will move forward. A spokesman for the governor said Scott's office was still reviewing the letter.
"In a state with the third highest number of uninsured, we must be prepared to implement long-term, sustainable solutions that ensure all Floridians have access to affordable, quality healthcare services," a spokeswoman for the Florida Hospital Association said. "Extending healthcare coverage and continued supplemental funding, as proposed in the Senate's plan, is the most fiscally responsible path forward."
