Fight over hospital funding for poor in Florida ends quietly

TALLAHASSEE — The tumultuous debate over the future of health care funding for the poor came to a quiet end Tuesday as the governor signed into law a budget that includes $1 billion to pay for charity care and raise Medicaid rates at Florida hospitals.

In a letter to state officials, the federal Centers for Medicare and Medicaid Services (CMS) said they have "agreed in principle" to a Florida plan for distribution of the Low Income Pool (LIP) funds that pay for hospital care for Medicaid beneficiaries and the low-income uninsured. The plan also calls for paying higher Medicaid rates to hospitals, particularly those that care for large numbers of uninsured patients.

State lawmakers had to redesign the LIP program and raise Medicaid reimbursement rates because the federal government reduced LIP money for Florida by $1.2 billion for the coming year, which led to a budget impasse between the House and Senate this spring and then to a special session on the budget that ended last week.

The Senate, siding with business groups, hospitals and health insurers across the state, wanted to offset the loss of LIP money by creating a privately-run insurance exchange to draw down federal Medicaid expansion money available under the Affordable Care Act. But the House rejected the plan, resulting in the budget standoff.

Government regulators agreed to extend Florida's nine-year-old LIP program but capped spending for the coming year at $1 billion in combined federal and state funds. Under the agreement, combined LIP spending will be capped at $608 million the following year, starting in July 2016.

For this year's budget, legislators decided to inject $400 million in state funds, which will draw down $600 million in federal matching funds, to raise Medicaid rates for hospitals — offsetting the reduction in LIP funds with higher rates.

After suing the federal government for allegedly coercing Florida to expand Medicaid by withholding an approval on the state's LIP proposal, Gov. Rick Scott on Tuesday signed the state budget, including the compromise on LIP. The federal and state money, combined with local matching funds, will result in a total of $2.17 billion in LIP and Medicaid rate enhancements for hospitals across the state.

In a statement, Scott credited his lawsuit for pushing the Obama administration into "finally agreeing to continue funding the Low Income Pool program."

But in a letter to the state Agency for Health Care Administration, CMS Director Vikki Wachino said the agreement is based on principles the agency laid out in a letter from April 21, before the Legislature ended its regular session. The principles stipulate that federal LIP funds "should not pay for costs that would be covered in a Medicaid expansion."