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House and Senate agree on new LIP model

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Budget chairmen state Sen. Tom Lee and state Rep. Richard Corcoran early Friday came to terms on what was the biggest stumbling block during the 2015 session and what Lee called the “linchpin” of the budget: supplemental Medicaid funding.

After working for days, the House made a Low Income Pool offer to the Senate that takes advantage of the full $1 billion in supplemental payments that the federal government advised Florida it would approve. That is a reduction from the current LIP program, which is set at $2 billion plus.

Though it’s a reduction from the current LIP formula Senate President Andy Gardiner and House Speaker Steve Crisafulli agreed to spend $400 million in new recurring general revenue for hospital rates to try to offset the LIP loss.

Gardiner gave praise to Crisafulli for agreeing to put $400 million in new recurring general revenue into healthcare funding. He called it a “major step forward.”

In addition to coming to agreement on LIP funding the two chambers also agreed to some funding issues in the budget that state Sen. Rene Garcia and state Rep. Matt Hudson could not come to terms with.

However, the chambers have not agreed on so-called budget “proviso” language yet–which is the language accompanying budget items in the General Appropriations Act–as well as the so-called back of the budget issues, or items that receive funding but are outlined in the “back of the bill” as opposed to being included in an agency’s budget.

Moreover, the chambers still must come to agreement on the conforming bill. The conforming bill is a different piece of legislation and it amends substantive healthcare policy to reflect spending decisions made in the General Appropriations Act.

Legislative leaders indicated that they planned on meeting again on Friday to offer compromises on those issues and to put healthcare spending policy decisions to a rest for the 2015-16 year.

The LIP agreement was a 53-paged document that shows the impact of the complex formula  the Legislature agreed to and is hopeful the Centers for Medicare and Medicaid also will approve. The new formula adds four hospitals with Level II trauma centers that had not previously received assistance. Those hospitals are all HCA facilities.

The agreement assumes there will be near $548 million in transfers of county money to the state to be used for the Low Income Pool program. That money, which will draw down matching federal funding, will be spent on a variety of silos that go into hospital funding, including:

  • $100 million for a new graduate medical education program proposed by the Florida Senate to incentivize hospitals to create residency slots for areas expected to experience a shortfall, including psychiatry.
  • $217 million in additional funding for “essential community providers.” Hospitals that will benefit the most from the “essential community provider” moniker include: Jackson Memorial, $55.4 million; Memorial Health, $16 million; UF Health Gainesville $15.1 million; Broward Health, $14.7 million; and Lee Memorial, $13.9 million.
  • $208.6 million increase for DRG, or diagnostic related group, rates. That’s how hospitals are paid for inpatient care. For outpatient care hospitals are paid on a cost basis and $107.6 million in additional funding was made possible for that, too.
  • $204.5 million for teaching physicians at the University of Miami, University of Florida, and the University of South Florida.

The Safety Net Hospital Alliance of Florida President Tony Carvalho on Friday issued a statement saying his association is very grateful the Legislature recognized that the Legislature needed to bump up general revenue to offset the loss of Low Income Pool funding.

“While we are still analyzing the details of this agreement to understand its full impact on our safety-net hospitals, this state funding support is crucial to our hospitals’ ongoing mission of providing highly specialzied health services to the state’s most vulnerable residents, regardless of their ability to pay.”

The formula also includes an 8-percent guaranteed return on investment for the counties and hospitals that contribute the matching county funding. That’s a reduction of .5 percent from the current return on investment.

LIP funding–as well as the use of Medicaid dollars under Obamacare–were the issues that prevented the Florida Legislature in the regular session from passing the one bill it is required to pass: the General Appropriations Act.

Gov. Rick Scott assumed the full $2 billion would be available when he built his proposed budget for fiscal year 2015-16. When it became clear that the feds would not approve the LIP program at the current funding level. Scott advised in correspondence that he would not use general revenue to backfill the loss of federal dollars.

Scott has said that he continues to watch the process when asked about the Legislature’s use of $400 million in new recurring general revenue to shore up the loss of federal dollars.

A quick review of the 2015-16 LIP runs compared to current year runs indicates that  the larger facilities were spared significant harm and that Shands Jacksonville and its sister facility, Shands Gainesville, were held harmless Jackson Memorial Hospital may have lost $7 million compared to last year’s level and Tampa General may be ahead $1 million.

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