1. Health

Florida lawmakers will re-evaluate funding model for safety net hospitals

Published Apr. 14, 2014

TALLAHASSEE — With the federal government making clear last week that no new Medicaid money is coming Florida's way, legislators say it's important they re-evaluate a new funding model that safety net hospitals say will cost them hundreds of millions of dollars a year.

"Tiering" is set to take effect in July unless the law is changed before session ends May 2. It requires counties that use local dollars to draw down more federal money for hospitals to begin sharing that money statewide.

Lawmakers in charge of crafting the budget say changes to the new funding model, or at least a delay, will be at the top of their health care agenda when negotiations begin next week.

"I do believe that there's probably enough uncertainty that we could leave it alone the way it is this year," said Rep. Matt Hudson, R-Naples, the House's health care budget chief.

The state had hoped that more Medicaid funding from the federal government might mute the impact of tiering. In its November application to renew the Medicaid managed care program, Florida also requested an expansion of its $1 billion "Low Income Pool" (LIP) program.

Under that proposal, the money that helps provide health services to poor and uninsured Floridians would be combined with other Medicaid funding programs and increased to $4.5 billion annually.

That is off the table, for now.

Instead, the federal government told Florida on Friday the status quo would remain in place for another year. The letter from the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services outlined a one-year extension of the LIP fund and two other supplemental programs that together total about $2.2 billion.

That same letter also authorized a three-year continuation of the state's privatization of Medicaid through managed care.

The federal government is also requiring the state to study its Medicaid financing system and find ways to increase transparency and ensure the money is going where it is needed. That report is due March 1, 2015.

A continuation of the current Medicaid funding model mutes the impact of "tiering" somewhat, but safety net hospitals are still asking the Legislature for a fix.

Jackson Health System was bracing for a $140 million hit as a result of the new law. Hospital administrators revised that estimate down to $85 million in light of Friday's news.

But they anticipate an additional $35 million loss because Jackson's Medicaid reimbursement rates would be higher than other hospitals, meaning managed care companies will likely send their patients elsewhere.

"The situation is still dire," CEO Carlos Migoya said. "Every year is another hurricane — and they are all category fives."

Migoya said he had made the case to Miami-Dade lawmakers and the powerful budget chairs, and planned to fight through the end of session.

"The appropriations chairs are very aware of the impact of tiering and trying to help us out in every way they can," Migoya said.

Meanwhile, Democrats continue to tie the state's hospital funding issues to the lack of Medicaid expansion, which correlates with a loss of $51 billion in federal money.

"The need for the additional federal dollars through an extension of the LIP program that was announced on Friday is more pronounced than ever given the ill-considered refusal by Gov. Rick Scott and Republican legislative leaders to expand Medicaid to 1 million low-income Floridians," Rep. Mia Jones, D-Jacksonville, said in a statement Monday.

During the months since Florida first submitted its request to revamp and expand the LIP program, U.S. Sen. Bill Nelson and U.S. Rep. Kathy Castor, D-Tampa, have remained in contact with federal officials about the issue.

Both say politics and Florida's opposition to Medicaid expansion impacted the feds' decision to keep the status quo for another year.

"The one-year limit is designed to keep an incentive for Florida to expand Medicaid," Nelson spokesman Dan McLaughlin said via email. "CMS is not going to continue providing Medicaid supplements to states that won't expand the program."

Florida's health care system is in transition with the continued rollout of managed care, uncertainty around tiering and concern about how LIP dollars are being used, Castor said. The state's refusal to accept Medicaid expansion dollars sends a bad message on top of that, she said.

"That's our money now that's stuck up in Washington; money that people have paid already," Castor said. "That's caused a lot of consternation and a lot of concern."

Times/Herald staff writer Kathleen McGrory contributed. Contact Tia Mitchell at (850) 224-7263 or