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Feds advise Florida that LIP could be $1 billion this year, $600 million next year

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The budget impasse paralyzing the state could come to an end soon as the federal government advised Florida today in a letter that it could receive an additional $1 billion in supplemental Medicaid funds to help pay hospitals for providing care to the uninsured and poor.

The state can expect $600 million in supplemental dollars — officially known as Low Income Pool– for 2016-17, according to the letter that the Centers for Medicare and Medicaid Services sent to Deputy Medicaid Director Justin Senior Florida officials on Thursday.

The federal government still has not given the state final approval of its proposed amendment to the Medicaid 1115 waiver.

“However, in recognition of the state’s request for timely feedback as well as the Florida Legislature’s calendar and time frames for resolving a fiscal year 2015-2016 budget, we are prepared at this point to provide preliminary feedback on this proposal,” the letter reads.

The $1 billion figure Florida was advised it could receive is less than half of the current $2.1 billion program but is what the state received in LIP funds for the first nine years of the program.

The letter notes that the two years of funding should help support the stability of Florida’s providers while the state makes changes to its payment structures. The letter notes that Florida has a “number of options”  to increase payment rates and draw down increased federal dollars for those rates.  One option is for the state to broadly increase the Medicaid rates it pays hospitals or to increase the Medicaid rates in managed care organizations “and used to support hospitals.” The letter notes that the state could use intergovernmental transfers to fund those rate increases or could use general revenue to increase the rates.

The CMS letter notes that the House of Representatives offered general revenue on funds to better pay providers.

Another way to increase funds would be to expand Medicaid, as the Florida Senate proposed.

“Should the state elect this option, it would serve as an additional means for the state to support providers in delivering care to the low-income population,” the letter reads. “The Urban Institute has projected that coverage expansion would increase revenues by Florida hospitals by over $2 billion. This revenue, if added to LIP funding, either alone or in combination with the above options, could significantly increase provider revenues in the state.”

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