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Lawmakers scramble to plug $1.3 billion deficit in health budget

 
Published Feb. 11, 2015

State lawmakers were scrambling to find $1.3 billion to plug a sudden budget deficit after a top Medicaid chief said Tuesday that Florida will lose federal money to help hospitals treat poor and uninsured patients.

Eliot Fishman, director of the Children and Adults Health Programs Group in the Center for Medicaid and CHIP Services at the Centers for Medicare & Medicaid Services, or CMS, told attendees at an Orlando health care conference that the federal government won't extend Florida's "Low Income Pool" program, or LIP, that reimburses hospitals that treat large numbers of poor and uninsured patients, according to news media reports.

The money was set to expire on June 30 with no agreement in place that it be renewed.

Fishman's announcement appears to overturn a main premise by Gov. Rick Scott that the fund would be available next year, thrusting his budget projections into disarray. A Scott spokeswoman, Jackie Schutz, characterized Fishman's statement as far from conclusive, pointing out that state officials were meeting with the CMS today to discuss the LIP extension.

But Democrats seized on Fishman's comments as proof that the refusal by Republicans to approve Medicaid expansion was to blame.

"Gov. Rick Scott and the Republican-led Legislature have understood for many years that federal law provided for Medicaid expansion in place of the 'Low Income Pool' monies for hospitals," U.S. Rep. Kathy Castor, D-Tampa, said in a statement. "Gov. Scott and the Florida Legislature should not block progress any longer and bring our tax dollars home to Florida."

Even if Florida legislators expanded Medicaid as envisioned under the Affordable Care Act, the state's safety-net hospitals would still need additional funds to cover the costs of treating the uninsured and Medicaid patients.

Last month, Scott unveiled a $77 billion budget assuming that LIP money would be included. Last year, it took until April for federal officials to tell Florida that it would renew the LIP fund and two other supplemental programs that together total about $2.2 billion.

But that was intended to be only a one-year extension. In the meantime, Florida was asked to study its Medicaid financing system and find ways to increase transparency to make sure the money is being spent appropriately. A 244-page report required by federal regulators and released in January warned that Florida was at risk of losing $1.3 billion in federal funds.

"These funds are critical for maintaining access to essential hospital services for the state's large Medicaid and uninsured population," the report concluded. "Not having these funds available for payment to Florida's hospitals may exacerbate an already tenuous situation."

Without LIP payments, the report noted, the average reimbursement for hospitals to treat Medicaid patients would be about 62 percent of the actual cost.

According to an analysis by the Safety Net Hospital Alliance of Florida, a nonprofit that advocates on behalf of publicly funded medical centers, the state's six statutory teaching hospitals — including Jackson Memorial in Miami-Dade County and Tampa General in Hillsborough County — risk losing nearly $600 million a year in funds if the LIP program ends with no successor plan in place on June 30.

Jackson Memorial would lose $237.2 million; Tampa General would lose $85.2 million; University of Florida Gainesville would lose $106.7 million; University of Florida Jacksonville would lose $94.4 million; Orlando Health would lose $54.8 million; and Mount Sinai Medical Center in Miami Beach would lose $16.2 million.

In total, the Safety Net Hospital Alliance estimates Florida hospitals risk losing nearly $1.5 billion a year in funding without LIP or a successor plan that would help hospitals pay for care for the uninsured and underinsured.

"That's a lot of money we're hoping doesn't go away,'' said Tony Carvalho, president of the Safety Net Hospital Alliance, "and if it does, it would be financially catastrophic for those hospitals.''

Despite the looming scenario, Scott's budget chief, Cynthia Kelly, assured wary lawmakers as late as last week that the odds were good that the LIP would be renewed another year.

"We are very optimistic with the discussions that are going on with the federal government," Kelly told the Senate Appropriations Committee on Feb. 4. "We are hopeful that the federal funds that we are including in the budget will still be available."

Sen. Arthenia Joyner, D-Tampa, pressed Kelly to identify a backup plan just in case the federal government didn't renew the program for an extra year. Kelly wouldn't say what the plan was or whether she even had one.

A spokeswoman for Scott said he would take questions about the LIP funding at an education summit on Tuesday afternoon. But Scott left before reporters could get to him.

The Legislature will ultimately pass its own budget that will have to make up the difference if the LIP isn't included. House Appropriations Chairman Richard Corcoran, R-Trinity, said he had received no definitive word, and nothing in writing, from the federal government on LIP.

Senate Health and Human Services Appropriations Subcommittee Chairman René García, R-Hialeah, said he had received "mixed signals" from the federal government on the future of LIP.

He had not been told Florida would no longer receive the money, he said. "My thought is that what's happening in D.C. right now is a struggle between politics and policy," he said.

García said he was working on a contingency plan using different federal and state funding streams if Florida cannot negotiate a new deal with the federal government. "It is possible that we are going to have to look at the $1 billion surplus," García said.

Democrats sounded more urgent alarms about the lack of LIP funding.

"It was fiscally irresponsible in the first place to even make that assumption," said Rep. Janet Cruz, D-Tampa. "The governor had the audacity to plug that money in the budget under some sprinkling of pixie dust."

Times/Herald staff writers Kathleen McGrory, Steve Bousquet and Mary Ellen Klas contributed.